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EXECUTIVE SUMMARY

The project explains the concept of succession planning and how it is


important for the successful functioning of a business. It proceeds to
highlight the business functioning trend in India which mainly is about
family businesses. But seeing the recent trend of few of the big Indian
businesses opting for proper professionally planned succession planning,
it isn‘t long when India will pick up this practice in every aspect.
Many recent examples of succession planning in the Indian businesses
have been stated such as axis bank, Tatas, Infosys, ONGC, Eicher etc.
With main focus on Murugappa group and Infosys succession planning.
Murugappa group of companies is a great example of family business
training their heirs in a professional manner to lead the business where as
Infosys shows how a proper committee should be formed for looking out
for a successor well in advance.
INTRODUCTION TO HUMAN
RESOURCE MANAGEMENT

Human resources are the most valuable and unique assets of an


organization. The successful management of an organization's human
resources is an exciting, dynamic and challenging task, especially at a
time when the world has become a global village and economies are in a
state of flux. The scarcity of talented resources and the growing
expectations of the modern day worker have further increased the
complexity of the human resource function. Even though specific human
resource functions/activities are the responsibility of the human resource
department, the actual management of human resources is the
responsibility of all the managers in an organization.

It is therefore necessary for all managers to understand and give due


importance to the different human resource policies and activities in the
organization. Human Resource Management outlines the importance of
HRM and its different functions in an organization. It examines the
various HR processes that are concerned with attracting, managing,
motivating and developing employees for the benefit of the organization.

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INTRODUCTION TO
SUCCESSION PLANNING.
Succession Planning
“Thinking About Tomorrow Today”

In organizational development, succession planning is the process of


identifying and preparing suitable employees through mentoring, training
and job rotation, to replace key players — such as the chief executive
officer (CEO) — within an organization as their terms expire. From the
risk management aspect, provisions are made in case no suitable internal
candidates are available to replace the loss of any key person. It is usual
for an organization to insure the key person so that funds are available if
she or he dies and these funds can be used by the business to cope with
the problems before a suitable replacement is found or developed.
Succession Planning involves having senior executives periodically
review their top executives and those in the next-lower level to determine
several backups for each senior position. This is important because it
often takes years of grooming to develop effective senior managers. There
is a critical shortage in companies of middle and top leaders for the next
five years. Organizations will need to create pools of candidates with high
leadership potential.
Succession planning involves a careful balancing of the concerns and
needs of a firm’s founding and senior managers, on the one hand, and its

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more junior investment professionals and managers, on the other hand.
The founding and senior managers want to be properly rewarded for their
efforts in building and growing the firm, and this may include rights to
continue to participate in fund economics after these managers have
begun to wind down their active involvement. These desires must be
balanced against the need to provide increased economic benefits and firm
governance rights to junior managers and investment professionals in
order to develop the next generation of managers for the firm.

Definition
Succession planning can be broadly defined as identifying future potential
leaders to fill key positions. Wendy Hirsh1 defines succession planning as
'a process by which one or more successors are identified for key posts (or
groups of similar key posts), and career moves and/or development
activities are planned for these successors. Successors may be fairly ready
to do the job (short-term successors) or seen as having longer-term
potential (long-term successors).'
According to Hirsh, succession planning sits inside a very much wider set
of resourcing and development processes called 'succession management',
encompassing management resourcing strategy, aggregate analysis of
demand/supply (human resource planning and auditing), skills analysis,
the job filling process, and management development (including graduate
and high-flyer programmes).
Enforcing the succession plan:
A careful and considered plan of action ensures the least possible
disruption to the person’s responsibilities and therefore the organization’s
effectiveness. Examples include such a person who is:

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• suddenly and unexpectedly unable or unwilling to continue their role
within the organization;
• accepting an approach from another organization or external opportunity
which will terminate or lessen their value to the current organization;
• indicating the conclusion of a contract or time-limited project; or
• moving to another position and different set of responsibilities within the
organization.
Coverage
Organisations differ in size, scope and type, so it is difficult to point to
any single model of succession planning. However, it is most common for
succession planning to cover only the most senior jobs in the organisation,
plus short-term and longer-term successors for these posts. The latter
groups are in effect on a fast-track, and are developed through job moves
within various parts of the business. This focus on the most senior posts -
perhaps the top two or three levels of management - means that even in
large organisations, only a few hundred people at any given time will be
subject to the succession planning process. It also makes the process more
manageable, because it is much easier to concentrate on a few hundred
individuals rather than (say) several thousand. That said, however, many
large organisations attempt to operate devolved models in divisions, sites
or countries where the same or similar processes are applied to a wider
population.

The role of HR
Succession planning needs to be owned by line managers, and should be
actively led by the chief executive who has a key role in ensuring that it is
given the importance it deserves by other senior managers; ensuring that

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there is a healthy pipeline of potential leaders is about nothing less than
the future of the organisation. But it is not realistic for CEOs and those
around them to have sole responsibility for this; they have neither the time
nor the expertise.
The HR function therefore has a critical role in supporting and facilitating
the process, not least in compiling all the necessary information on
potential candidates. Any career move at senior level is a process of
multiple dialogues, in which a senior representative from HR will collect
views from senior line managers in an iterative fashion, testing,
challenging and amending them as the dialogue goes on, making sure that
all possibilities are covered, and maybe putting proposals for decision to a
succession development committee. HR departments are of course also
heavily involved in giving career advice and information to individuals,
and assessing and advising on their development needs. The HR function
is also centrally concerned in the design and management of assessment
processes and information support, including the development and
maintenance of computerised databases.

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IMPORTANCE OF SUCCESSION
PLANNING

Succession planning is an essential part of doing business, no matter how


certain your future appears. It's easy to put off planning when everything
seems to be going so well, right? Wrong. Now is the time to begin
succession planning. Here are some reasons why it can't — and shouldn't
— wait:

• You can't plan for disaster. No matter how good you and your
staff are at revenue projections or economic predictions, no one can
truly plan for disaster. Whether it's an unforeseen illness, a natural
disaster, or a CEO's decision to suddenly retire, the reasons for
having a succession plan in place before it is needed are endless. So
while you can't plan for disaster, you can put into place a series of
contingencies that will help your company stay afloat if, in fact,
catastrophe occurs.
• Succession planning benefits the business now. Just as business
practices have evolved over the years, succession planning has also
grown and changed. It's no longer a plan that can only be accessed
when leadership is going to change; a succession plan can be used
before its "real" intent is necessary. It can be used to build strong
leadership, help a business survive the daily changes in the

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marketplace, and force executives to review and examine the
company's current goals.
• Succession planning gives your colleagues a voice. If you're
running a family business, the process of succession planning will
give family members an opportunity to express their needs and
concerns. Giving them that voice will also help create a sense of
responsibility throughout the organization, which is critical for
successful succession planning. Resist the temptation to solely
carry the entire weight of creating and then sustaining a plan.
• A succession plan can help sustain income and support
expenses. Talking about money should be a priority. People
generally don't want to work for free and things don't pay for
themselves. A succession plan can provide answers as to what you
— and your staff — will need for future income, as well as what
kinds of expenses you may incur once you step out of the main
leadership role. Ask yourself questions about your annual income
and other benefits including health and dental insurance for you and
your dependents, life insurance premiums paid for by the company,
your car, professional memberships, and other business-related
expenses.
• Succession planning gives you a big picture. Some companies
mistakenly focus solely on replacing high-level executives. A good
succession plan can go further, however, and force you to examine
all levels of employees. The people who do the day-to-day work are
the ones keeping the business going. Neglecting to add them to the
succession planning mix could have dire consequences. As you

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develop your plan, incorporate all layers of management and their
direct reports.
• Succession planning strengthens departmental relationships.
When regular communication occurs between departments you are
more likely to experience synergy, which breeds a culture of
strength. Make sure that you link your succession planning
activities with human resources. After all, HR is about people. By
including HR in succession planning, you can incorporate elements
like the employee-evaluation process, which can help when
deciding whether to fill vacancies with internal candidates.
• Succession planning keeps the mood buoyant. Change — a
major component of a succession plan — is exciting and can bring
a company unforeseen rewards. Still, change can be a source of
tremendous stress, especially when people's livelihoods are at stake.
As you put your succession plan together, consider its positive
effects on the business. Planning for the future is exciting and, if
done correctly, can inspire your workers to stay involved and
maintain company loyalty. It's true that a plan is often put into
place to avert catastrophe, but it's also a company's way of
embracing the future — a business strategy that is essential for
survival.

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SUCCESSION PLANNING
PROCESS

Succession planning recognizes that some jobs are the lifeblood of the
organization and too critical to be left vacant or filled by any but the best
qualified persons. Effectively done, succession planning is critical to
mission success and creates an effective process for recognizing,
developing, and retaining top leadership talent.

Success factors
There are several factors typically found in successful succession
planning initiatives. For example:
Senior leaders are personally involved.
Senior leaders hold themselves accountable for growing leaders.
Employees are committed to their own self-development.
Success is based on a business case for long-term needs.
Succession is linked to strategic planning and investment in the future.
Workforce data and analysis inform the process.
Leadership competencies are identified and used for selection and
development.
A pool of talent is identified and developed early for long-term needs.
Development is based on challenging and varied job-based experiences.
Senior leaders form a partnership with human resources.
Succession planning addresses challenges such as diversity, recruitment,
and retention.

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Effective succession planning

The following information includes:


• A graphic representation of a six-step process for effective succession
planning
• A table with descriptions of each step in this process.

Step 1: Link Strategic and Workforce Planning Decisions


This step involves:
Identifying the long-term vision and direction
Analyzing future requirements for products and services
Using data already collected
Connecting succession planning to the values of the organization
Connecting succession planning to the needs and interests of senior
leaders.

Step 2: Analyze Gaps


This step involves:
Identifying core competencies and technical competency requirements
Determining current supply and anticipated demand
Determining talents needed for the long term
Identifying “real” continuity issues
Developing a business plan based on long-term talent needs, not on
position replacement.

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Step 3: Identify Talent Pools
This step involves:
Using pools of candidates vs. development of positions
Identifying talent with critical competencies from multiple levels—early
in careers and often

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Assessing competency and skill levels of current workforce, using
assessment instrument(s)
Using 360° feedback for development purposes
Analyzing external sources of talent.

Step 4: Develop Succession Strategies


This step involves:
• Identifying recruitment strategies:
- Recruitment and relocation bonuses
- Special programs
• Identifying retention strategies:
- Retention bonuses
- Quality of work life programs
• Identifying development/learning strategies:
- Planned job assignments
- Formal development
- Coaching and mentoring
- Assessment and feedback
- Action learning projects
- Communities of practice
- Shadowing.

Step 5: Implement Succession Strategies


This step involves:
Implementing recruitment strategies (e.g., recruitment and relocation
bonuses)

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Implementing retention strategies (e.g., retention bonuses, quality of work
life programs)
Implementing development/learning strategies (e.g., planned job
assignments, formal development, Communities of Practice)
Communication planning
Determining and applying measures of success
Linking succession planning to HR processes
– Performance management
– Compensation
– Recognition
– Recruitment and retention
– Workforce planning
Implementing strategies for maintaining senior level commitment.

Step 6: Monitor and Evaluate


This step involves:
Tracking selections from talent pools
Listening to leader feedback on success of internal talent and internal
hires
Analyzing satisfaction surveys from customers, employees, and
stakeholders
Assessing response to changing requirements and needs.

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LEADERSHIP COMPETENCIES
FOR SUCCESSION PLANNING

COMMUNICATION [VERBAL & WRITTEN]

Communicates effectively with others in an open, timely and sensitive


manner.

Typical Behaviours:

• Demonstrates effective communication: listens generously, seeks to


understand, provides feedback and communicates in a positive
manner, and ensures others understand messages
• Establishes trust and credibility in working relationships through
open, honest, consistent and frequent dialogue.
• Organizes, interprets and disseminates all information to internal
and external audiences including complex work and advice clearly,
concisely and plainly.
• Consults with everyone affected, listens to all views and considers
them fairly.

DECISIVENESS
Is proactive and demonstrates the ability to make informed, balanced
decisions in a timely manner and stand behind them.

Typical Behaviours:

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• Understands fully the effect and consequences of each decision and
stands accountable for decisions.
• Deals with performance issues in a timely, fair and constructive
manner
• Demonstrates commitment to performance management in actions
and words
• Takes decisive action/is proactive in moving initiatives forward or
solving problems.

DISCRETION

Demonstrates good judgment

Typical Behaviours:

• Shows consistency balanced with fairness

• Ensures decisions are consistent with the directional focus of the


University

• Uses conflict resolution skills effectively

• Considers all sides of an issue and balances all interests, including


future impacts

LEADERSHIP OF THE DEPARTMENT/UNIT


Sets and communicates direction to further the Strategic University
Plan, supports the department or unit and provides appropriate
opportunities for individual development.

Typical Behaviours:

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• Establishes scope for decisions by individuals and balances this
with need to make independent decisions.

• Administers and supports staff development in a proactive,


equitable and consistent manner.

• Provides recognition to support teamwork and individual


contribution

• Communicates on behalf of the department/unit when required

• Ensures the development and application of performance measures


and targets to assess results

• Provides opportunities and promotes an environment that


encourages continuous development

• Supports [coaches/mentors] others to take responsibility for


achieving the highest possible levels of performance

• Builds effective communication links with other departments and


effectively facilitates resolution of issues/needs, which cross-
departmental lines.

• Pushes decision making down to the appropriate level and provides


necessary guidance and support to other decision makers.

ORGANIZATIONAL COMMITMENT

Demonstrates identification with, support and commitment to the


organization

Typical behaviours:

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• Puts aside personal preconceptions and self-interests and
concentrates on the common goal and the betterment of the
University.

• Demonstrates pride in working for Athabasca University

• Supports the University [e.g. Its plans, policies, programs] in a


positive constructive manner.

• Promotes and acts with integrity in dealing with students and


employees.

TEAM PLAYER
Works in all types of committees and groups, supports the committee
or group and contributes to its effectiveness.

Typical behaviours:

• Respects and anticipates the needs, feelings, and opinions of others

• Encourages discussion of issues and concerns

• Creates a sense of community; facilitates communication within the


group

• Recognizes the value of teamwork

VISION

Views current events and future possibilities from multiple


perspectives, develops future oriented scenarios and
communicates these effectively to others in the organization.
Typical behaviours:

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• Suggests and embraces new methods and ideas that enhance the
achievement of Athabasca University’s vision.

• Clearly understands and communicates the AU vision as it applies


to the department or unit.

• Keeps in mind the organization context and direction, looks beyond


the immediate environment for opportunities for improvements and
enhancements.

• Continually scans current and future environment and identifies


themes and emerging issues.

ANALYTICAL/SYSTEMIC THINKING
Takes a logical approach to planning and problem solving and establishes
priorities. Analyzes issues and problems systematically and thoroughly.
Focuses on critical details while maintaining a broad perspective.

Typical behaviours:

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Grasps complexities and critical details quickly and accurately

Develops well-defined, step-by-step approaches to analyze and solve


complex problems.

Identifies relevant alternative and evaluates the potential consequences of


each before taking action

Makes an effort to solve common problems by drawing from previous


experience or similar circumstances.

Assembles and integrates information from a variety of sources to present


what is relevant to a given issue or situation.

ACCURACY AND THOROUGHNESS


Makes sure that work is done correctly, completely, and with high
quality in a timely manner.

Typical behaviours:

• Verifies assumptions and information by checking with credible


sources, experts or first hand experience.

• Carefully reviews own work for accuracy and completeness

• Carefully reviews other people’s work for accuracy and


thoroughness.

• Identifies and addresses all details that are needed to ensure smooth
functioning

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• Follows up to make sure that tasks have been completed and others
have met commitments.

SERVICE ORIENTATION
Anticipates and responds to the needs of internal and external
customers. Develops and maintains strong relationships with internal
and external customers.

Typical behaviours:

• Responds promptly to customer needs or requests of others

• Expends significant time and effort to meet important commitments


made to internal or external customers

• Offers unsolicited help to those in need.

• Takes advantage of opportunities to present examples and scenarios


illustrating importance of client service

• Presents examples and/or suggestions on how to improve services


to customers

• Presents arguments and/or suggestions that convince clients that


their interests are being well served.

CONFIDENCE
Demonstrates a genuine belief in the likelihood of personal success
and communicates a positive self-esteem to others.

Typical behaviours

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• Creates a feeling of confidence in the department or units ability to
provide timely and quality service.
• Shows strong assertiveness skills when dealing with customers and
peers.
• Demonstrates a genuine belief in the likelihood of personal success.

PERSERVERANCE
Continues steadfastly toward results/objectives until the desired
result is achieved or is no longer reasonably attainable.

Typical behaviours:

• Leads by example, ensuring actions are implemented and goals are


achieved

• Focuses on outcome, allows flexibility on how the outcome is


achieved.

ADVANTAGES OF SUCCESSION
PLANNING
Succession planning is an essential part of doing business, no matter how
certain your future appears. It's not easy to put off planning when

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everything seems to be going so well. Here are some reasons why it can't
— and shouldn't — wait:

 You can't plan for disaster.


 Succession planning benefits the business now.
 Succession planning gives your colleagues a voice.
 A succession plan can help sustain income and support expenses.
 Succession planning gives you a big picture.
 Succession planning strengthens departmental relationships.
 Succession planning keeps the mood buoyant.

Besides the obvious benefit of not leaving your company in the lurch of
proper Succession Planning will help your company in other ways, too.
Here’s a rundown of the benefits. Remember, not all benefits will apply,
depending on your specific situation. Succession Planning can:

 Reduce taxes, in some situations with family-owned businesses.


For example, if a company gets new ownership after an owner's
death, lack of planning can result in steep estate taxes. Other tax
issues, such as transferring ownership to a child, might apply.
 Ensure continuity. Customers, clients, vendors, and employees all
want and need to know that a business will continue to function as
they know it, even when there’s a leadership change. Choosing and
grooming a successor who fits your mold will help this happen.
 Provide training plan for possible successors. If you identify who
you might choose as a successor early, you’ll know that that person

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needs more training and one-on-one time with your current leader
to gain as much knowledge for the position while it’s still possible.
 Help you plan for the future direction of the company.

MISTAKES TO BE AVOIDED IN
SUCCESSION PLANNING.

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Many mistakes are commonly made in establishing succession planning
programs. They are worth enumerating. It is also worthwhile to describe
some ways to avoid these common mistakes.

 Assuming that Success at One Level Will Guarantee Success at

Higher Levels. An individual’s success at one level is no guarantee


of success at higher levels of responsibility. The reason is simple:
the competencies required for success at each level are different.
Hence, it is important to separate thinking about how well someone
does his or her current job and how well he or she might do a job at
a higher responsibility level.
 Assuming that Bosses Are Always the Best Judges of Who Is

Promotable. A second mistake is to assume that, for purposes of


succession planning, bosses are always the best judges of who is
promotable. That is not always true. Bosses are self-interested
players in the succession game. They have a stake in what happens
to people. Indeed, some bosses do not want to see their best people
promoted for fear of an inability to replace them. Some bosses
grade people by their own standards - with the result that some
individuals who are quite unlike the boss are not considered for
promotion. While the support of a boss is useful in developing
individuals, more objective assessments, such as multi-rater
assessment are excellent in aiding the manager’s assessment.
 Assuming that Promotions Are Rewards. Some employees have

an entitlement mentality in which they feel that long service with an


organization should always be rewarded with promotions. But

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business decisions must be based on who will do the best job, not
who is “owed” a promotion because of greatest seniority. Workers
must continually be reminded that doing jobs at each level requires
different competencies, and the best way for them to compete is to
prepare for future challenges rather than expect promotions for past
performance at a different level of responsibility.
 Trying to Do Too Much Too Fast. The strong results-orientation

of many organizations today emphasizes quick results. Senior


leaders expect to see all the components of a comprehensive
succession system in place immediately. That is not always
realistic. It is advisable to think of implementing systematic
succession in a phased way - either from the top down or else
starting in specific divisions or locations with greatest need.
 Giving No Thought to What to Call It. A fifth mistake is to

devote no time to considering what to call the succession program.


As any marketer knows, product names do matter. It is not
necessary to call a spade a spade. Many organizations choose
alternative names–such as “leadership development program,”
“human capital management program,” or even “talent program.”
 Assuming that Everyone Wants a Promotion. A sixth mistake is

to assume that everyone wants a promotion. That is not always true


today. In many downsized organizations, workers have seen what
pressures their bosses have to deal with. Some say “leave me out of
that.” Hence, it is unwise to assume that everyone wants a
promotion–or even to assume that money will convince everyone.
It will not. Check first. Find out what people want to do. For that
reason, many organizations launch both a top-down succession

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planning program and a bottom-up career planning program to
galvanize development
 Lack of understanding how it works and how it benefits the
organization.
 Lack of a formal written plan for the person or position(s).
 Lack of availability of human and financial resources; lack of
budgetary commitment.
 Superficial approach; lack of real understanding of the procedures,

processes and requirements of each area the individual is exposed


to during the process.
 The requirements of the Managers/Executives are not fulfilled in

providing dedicated instructions, guidance regarding skills,


knowledge and abilities needed for the candidates to be successful.
 Failure to identify key employees who may have concerns with
your succession plan.
 Failure to plan for disability.
 A rigid, inflexible plan NOT tailored to the needs and abilities of
the personnel involved.
 Too long a wait for real movement/promotion, disillusionment,
may result in some people leaving due to apparent inertia in the
system.
 Selection of unqualified or unmotivated people for inclusion in the
Succession Plan. Quality of the individuals selected is paramount to
the success of the process.
 Complex program, requiring considerable paper work, follow-up,
reporting

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SUCCESSION PLANNING: THE
INDIAN PERSPECTIVE
Companies in India have approached succession planning in different
ways and experience has shown that few have built strategies that
encompass the three critical facets of the exercise: board succession, CEO
succession and building a leadership pipeline.

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Three categories of company exist in India : first, the widely held and
professionally managed companies; second, the family-promoted/family-
controlled companies, but with significant holding by minority
shareholders; third, government companies where there is a significant
minority holding. Owing to the differences in structure and functioning of
these companies, succession planning strategies could differ, though the
issues tend to remain the same.

The roundtable discussion detailed here addressed each of the above


facets; it contains numerous insights as well as questions regarding the
state of succession planning in India.

Succession planning is a challenge across the globe – but particularly so


in India. Indian leaders, while highly adaptable and strongly
entrepreneurial, generally perform poorly in terms of teamwork and
succession planning. Infact, the KFI/Economist survey ranked Indian
leaders
among the lowest performers on this count. This is evident in the fact that
today, fewer than 20% of Indian businesses work to develop future
leadership, or to engage actively in succession planning. Strong Indian
leadership has been emerging across multinational companies (both
Indian and foreign), but these competitive traits, and the drive to succeed
in global markets, have not yet been focused on developing people. India
now requires its leaders to work towards nurturing its pool of future
managers, instead of merely driving their companies.

According to the ABB (Assocham Business Barometer)report of 2007

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Corporate India not ready with succession plan, says Assocham
Business Barometer
India Inc. has a long way to go for putting in place its succession plan at
top level, which has an important bearing on the market valuations of the
companies, confidence of the business associates and morale of their
employees, an Assocham Business Barometer Survey has revealed.

The ABB Survey of 275 leading management consultants, corporate,


academicians and professionals on ‘Missing Link in Succession
Plan’ found that a select few companies in India formulate and effectively
implement succession plan for the key positions in their
organization structure. This was confirmed by 75 per cent of the ABB
respondents. They rated Indian companies four on a scale of 10 in terms
of long term planning and grooming of the successor to the head of a firm.

Ninety two per cent of those surveyed said a considerable weightage is


being given to the companies, which have a hierarchy in place top-down.
The analysts rate succession planning as a crucial component of an
impeccable management structure.

The leadership acts as a catalyst in building goodwill and brand valuation


of an organization. Such factors play deciding role in determining the
worth of a company in the bourses. The share market has rewarded the
corporate entities having properly structured succession plan with higher
valuations.

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Eighty-nine of the management consultants and academicians said a well-
placed succession plan is an important component of corporate
governance. Non-existence of a second in command of a business entity
could harm the interests of minority and widely dispersed shareholders as
an element of ‘uncertainty’ prevails.

“Leadership performs an instrumental role in laying down the long-term


foundation and imparts strength to the organization. As a good corporate
governance practice the board of directors and management should set up
a clearly defined succession policy defining the number two and three
positions in an enterprise, even among the family-owned and
run businesses”, Mr. Venugopal Dhoot, President, ASSOCHAM said.

Corporate governance calls for setting of guidelines to be followed by the


Board of Directors and the management of the company in order to
safeguard the interest of stakeholders, which include shareholders,
investors, employees, consumers, suppliers and the society.

The long-term competitiveness and efficiency level of a firm could get


adversely affected due to lack of a succession plan, according to 83 per
cent of the experts surveyed by ABB. The performance of a company gets
hampered without a well-defined hierarchy and affects the team spirit of
the staff.

As many as 67 per cent of the respondents expressed their concern that


employees' morale gets affected in the absence of uncertain management
chart. They feel that a question mark is put after a stage in the growth path

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of even the best performing official due to the absence of clearly laid
succession policies.

Management line of command becomes highly concentrated in a company


with a single individual at the helm. It does not trickle down through a
well-defined structure. Fifty-nine per cent experts felt that in a highly
concentrated command structure, a ''coterie'' is established among the
CEO who is not fed the true picture by those who benefit from such a
situation. Well performing employees with self-dignity get demoralized
lot and become vulnerable to high attrition.

About 55 per cent of the consultants were convinced that the movement of
professionals across the companies is to some extent influenced by the
succession plan and overall hierarchy structure of these organizations.

Family run business is a way of life for India Inc. However, it


has not come as a hindrance for the growth of these business concerns.
Although it is easy to define succession planning in such firms, off late
instances of intra-family disputes are being increasingly witnessed. This
could hurt the interest of minority shareholders, as this is an evidence of
gaps in corporate governance among such companies, 72 per cent of the
ABB respondents felt.

Around 60 per cent of the survey respondents were optimistic that the
family run businesses in India are moving fast towards professionalising
their organization set up. Twenty five per cent of them believed that the
change in the management set up of these companies is taking place at
very slow pace. Some of the IT companies in India have set excellent

32
example of timely identifying, planning and grooming of the successor to
the key person leading the organization.

The factors like lack of long-term vision, self-confidence of existing CEO,


majority shareholders exercising control over management, are
responsible for absence of successors at top position in large number of
Indian companies, the ABB found.

When asked about the performance of India vis-à-vis other mature


economies like US, UK, Germany, Japan in terms of corporate head
selection, 59 per cent of the ABB respondents said that India Inc is
catching up fast . As the Indian companies are going global making their
presence is felt around the world with large number of overseas mergers
and acquisitions taking place, it is imperative for the Indian business
houses to realize the need and importance of identification and grooming
of the heir to their leaders.

The management of a business enterprise is not driven by an individual.


Companies commanded solely by one person holding top position can run
into the risk of ill health, natural disaster, possibility of frauds, dispute
with the Board.

According to reports in 2010 Indian companies are more ready to


have succession planning

Economic Developments in India have put the focus on how to develop


and prepare leaders to manage in a growing economy. The primary
business priorities for Indian organizations according to their top
executives are growth and improving and leveraging their talent.

33
DDI India Leadership Report findings
o About 4 in 10 leaders in India identified themselves being as in a high-
potential program, a greater proportion than being in the global sample.
o Organizations in India were more likely to have succession plan for
higher-level managers compared to the average organization worldwide.
o Although 44 percent of multinational organizations in India had a
process to identify multinational leaders, only 26 percent had a process to
develop them.
The number of businesses

in India having intra-company succession plans for their mid-level


managers is decidedly more than anywhere else in the world, reveals the
India Leadership Forecast launched by talent management expert,
Development Dimensions International (DDI).
The report reflects an increased demand for internal leadership
development due to the high growth rate
of organizations in the recent years. The statistics suggest that 61% of
Indian organizations have a process to identify high-potential Leaders
compared with 50% of the global organizations. High-potential leaders
that are placed in accelerated development programmes are more positive
and confident about their future roles. Nearly 42% of Indian organizations
have such special programmes in place to help leaders face future
challenges.
These frameworks enable leaders to identify the areas that they find
challenging, discover what is expected of them in their new roles and help
new leaders implement a development plan, which can be applied in their
daily activities. They also aim at developing effective decision-making

34
skills managing relationships for greater impact.
Organizations in India are more effective at clearly communicating the
importance of such leadership modules by monitoring them at regular
levels and intervals. Commenting on the Leadership Forecast
Report findings, Richard Wellins, Senior Vice President, DDI, said,”
Leadership transition can be one of the most stressful experiences in a
person’s life, most notably because leaders are expected to be successful
in the new role. Good leadership will be important in the future, to help
control costs, cope with increasing change and tackle the expected
upturn".
Economic Developments in India have put the focus on how to develop
and prepare leaders to manage in a growing economy. The primary
business priorities for Indian organizations according to their top
executives are growth and improving and leveraging their talent.
DDI has spent the last 40 years developing leaders at every level—nearly
6.3 million worldwide—and helping organizations optimize their
leadership talent.

In a well-funded, high growth economic environment, it is imperative


for India Inc. to craft effective leadership transfer mechanisms. Be it
family-run businesses, PSUs or professionally-managed companies,
the responsibility for effective succession planning and its
implementation rests with shareholders’ representatives – the
company’s Board
January 2005: Reliance Group, India’s largest private sector enterprise,
is split as the two Ambani brothers agree on a legal segregation of assets.
While Anil Ambani would take over the telecom, infrastructure, media

35
and power businesses, elder brother Mukesh Ambani would take charge
of Reliance Industries, which operates in petrochemicals, oil and gas
exploration, refining and textiles. The death of business monarch
Dhirubhai Ambani in 2002 without leaving a will triggered a drama that
resulted in the division of assets between the two estranged brothers.

April 2009: P. J. Nayak, Chairman & Managing Director of Axis Bank


resigns after losing 1-8 in the voting for appointment of Shikha Sharma,
Head of ICICI Prudential Life Insurance, as the new MD of Axis Bank.
While the members of the Bank’s Board submitted that Sharma had
experience in banking and insurance industry, Nayak vehemently
disagreed with the Board’s decision stating that an insider should take
over as his successor. Despite the Board’s several recommendations
previously to groom and develop a successor, Nayak paid no heed and
was vocal with his views that advance succession planning was not
practiced at public sector banks.

April 2010: Infosys Technologies reconstitutes its CEO Nominations


Committee to include K. V. Kamath, Non-Executive Director of ICICI
Bank, along with previous members Jeffrey Lehman, Professor at Cornell
University (Chairman) and Deepak M. Satwalekar, CEO of HDFC
Standard Life Insurance, to hunt for Narayan Murthy’s successor – a
candidate who not only should have deep understanding of the IT Industry
and Infosys, but should also possess Murthy’s ‘personal style of
leadership’.
One of the most overwhelming challenges faced by organizations in India
and across the globe is CEO Succession Planning. The recent turn of

36
economic events has posed a serious threat to the corporate health of
organizations as stakeholders in even the most stable and successful
organizations questioned the business acumen, ability to sustain
confidence and decision-making capabilities of its business leaders.
Although the world economy is emerging from the aftermath of this
recession, there is still the dagger of ‘establishing a strong leadership
bench’ hanging over companies who are struggling towards a post-
downturn recovery.

Dr. Shalini Sarin, Country HR Partner & Director – HR, Schneider


Electric India emphasizes this point - “‘Do we have an effective
succession planning process to assess and develop future leaders?’ – it is
precisely at this critical juncture of global economic recovery that such a
question is gaining prominence.” After a brief but torrid, financial
downturn, India is back on a growth trajectory and is reckoned as the
second largest growing economy with a GDP of $1.4 trillion and an 8.8%
GDP growth rate. In such a well-funded and high growth economic
environment, it has become almost compelling for companies to have a
well-defined and articulated succession plan and an able leadership
pipeline to sustain future growth.
Succession Planning in India
The Indian business environment is largely driven by family-run
businesses, public sector enterprises and professionally managed
companies (mostly MNCs). Without doubt, family-run businesses make
for a huge percentage of business houses in India. Family-run companies
account for roughly 50%* of the market capitalization of publicly traded

37
companies in India and contribute to around 55%* of GDP; hence, the
relevance of these companies for the overall economy.
If number are to be believed, only 13% of family-run businesses survive
till the 3rd generation and only 4% go on to the 4th generation.
Additionally, one third of the business families disintegrate because of
generational conflict at the leadership levels. Professionally run
succession planning is key for the sustainability of businesses. Family
disputes and the lack of succession planning has triggered the decline in
fortunes of many business families. Traditionally, succession planning in
family-run businesses has always been a hush-hush affair, clearly
depending upon the life expectancy of the founding chairman or patriarch.
Succession planning in family-run businesses is generally an intuitive
process with the family patriarch taking the decision as to who will take
charge of the business empire. Dr. Ganesh Shermon, Partner & Country
Head - People and Change Practice, KPMG says, “Traditionally, family-
run businesses focused on dividing the silver among the next generation
rather than grooming the right person to take up the job. However, with
changing times, family-run businesses need to ensure that the chosen
successor has necessary education and skills and should be made to work
his / her way up the management. Alternatively, companies should be
bold enough to appoint a professional manager when there is no suitable
candidate within the family. Companies such as Ranbaxy, Murugappa
Group and Eicher have set a precedent in this regard.” In 1998, when
Dabur India realized the might of behemoth MNCs and their scale of
operations, it valued the need for a professional to run the operations of
the company in order to build a professionally-managed company with
strategic business outlook. And that’s when Dabur India roped in an

38
outsider as its CEO, Ninu Khanna, rather than passing the reins to a
family-member. Sunil Duggal, Dabur’s CEO since 2000 has taken the
business to new heights by strategic acquisitions and has expanded the
product portfolio to make Dabur a comprehensive FMCG company from
an Ayurvedic products seller. Today, majority of the Board members at
Dabur do not belong to the Promoter family. The Tata Group too is on the
lookout for a successor to Ratan Tata, who retires in 2012, and for other
group companies too, as the Heads of Tata Steel and Tata Motors head
toward retirement.

Passing on the reins of the organization to a family member has a lot of


legal implications too. Hiralal Walchand, Director, Walchand Associates,
which deals in will trust services and family law, says “Family members
(sometimes even far-off relatives) join companies as employees but
demand legal ownership rights during division of assets. This should be
avoided as dividing assets amongst so many claimants completely
devalues the company.” In case of listed family-run business houses, the
first step towards planning a strategic succession is to increase the
holdings in various group companies. Explains Walchand, “Increasing
holding by the parent company wards off the risk of future acquisition. B.
K. Birla, for instance has been working toward increasing the family’s
stake in its group companies of cement, textiles, et al.” Once that is
achieved, the patriarch can appoint either family members or internal and
external candidates to take on the mantle. This ensures that when the
patriarch steps down, there is no change in the way business is done. In
the recent succession plan chalked out by RPG Enterprises, Group
Chairman R. P. Goenka segregated the ownership and control of various

39
group companies amongst his sons Harsh Goenka and Sanjiv Goenka
where the former was named the Chairman and the latter Vice Chairman.
The business will, however, continue to run the same way with each
brother continuing to control and run the companies they were handling
previously.

In the case of PSUs, many of the appointments are guided by political


considerations. The fact that quite a few of the top jobs at PSUs are either
unfilled or manned by acting CEOs indicate the lack of importance
attached to the process of top management succession planning.

In spite of the political stifling, some PSUs have formulated very strong
succession planning practices. Dhruv Prakash, Managing Director - India,
Leadership and Talent Consulting, Korn/Ferry International, says, “PSUs
are unique in that almost invariably grow their own timber. Public sector
companies really do not have a succession planning system per se, they
have an internal promotion system.” Companies like Indian Oil, Bharat
Petroleum, Hindustan Petroleum, BHEL, NTPC, ONGC, State Bank of
India have worked on establishing leadership competency frameworks,
assessed managers for development and taken follow up actions in terms
of internal training and developed courses in collaboration with the IIMs.

Some of these practices can be compared to the best in the private sector.
For instance, ONGC conducts succession planning three levels below the
Board and NTPC conducts rigorous succession planning two levels below
the Board. NTPC has constituted a high level Succession Planning
Committee (SPC) comprising of the Chairman and the Functional
Directors to own the process of succession planning. NTPC has identified

40
28 unique leadership positions for succession planning. Most of the
positions fall under the two top executive levels - General Managers and
Executive Directors. Against each position at least three potential
successors are identified for grooming. This is done to ensure that
sufficient depth is maintained in the leadership pipeline at all times.
Succession planning is a shared responsibility of the HR function and the
organization’s leadership. NTPC’s CMD, R. S. Sharma was recently
succeeded by Arup Roy Choudhury, former CMD of National Buildings
Constructio Conrporation (NBCC).

The search for a successor for CMD (Chairman & Managing Director) is
done pretty much the same way as the search for other Board level
appointments where an advertisement is put up for the vacancy by the
Enterprise Selection Board and shortlisted candidates sent to the ministry.
The final decision for appointment is made by the Cabinet Committee.
The concurrent CMD is not involved at all in this process. In July, state-
owned telecom units, Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar
Telecom Nigam Ltd. (MTNL) advertised vacancies for the post of CMD.
The Enterprise Selection Board, formed under the leadership of K. M.
Chandrashekhar, Cabinet Secretary, has received close to 100 applications
and will soon announce the successor to Kuldip Singh, CMD of MTNL
and Gopal Das, CMD of BSNL.

Professionally-run companies in India, mostly MNCs and a handful of


home-grown companies like Infosys, are more forthcoming when it comes
to chalking out a strategic succession planning process. Professionally-
managed companies have definite processes and employ latest techniques
while identifying potential successors. Take for instance Larsen & Toubro

41
(L&T). Well before two years of current Chairman A. M. Naik’s
retirement, the organization has systematically and strategically put in
place a succession planning process and will announce the name of the
new Chairman six months before Naik retires so that s / he is able to get
proper handholding. In many of the MNCs operating in India, the decision
to find a successor is more in tune with business strategy and growth
vision for the future of the organization. Kellogg India recently roped in
Sangeeta Pendurkar, former VP-Strategy & Commercial Leverages at
Coca Cola India to head its Indian operations as MD, replacing Anupam
Dutta. Pendurkar’s experience in revamping Coca Cola India’s tea and
coffee business (Georgia) and introducing innovative regional brands such
as Minute Maid and Nimbu Fresh made her a suitable choice for Kellogg
India’s strategic plan to strengthen the company’s stranglehold on the
breakfast segment by introducing more regional flavors.

In certain other professionally-managed organizations, senior leaders have


the responsibility to design their own succession planning process, as in
Lucent Technologies, where senior managers are expected to develop at
least two potential successors using job rotations, challenging work
assignments, special projects and executive coaching. Companies like
Hindustan Unilever, P&G and ITC have traditionally groomed most of
their senior management internally using a combination of talent review
sessions, comprehensive training programs, job rotations and a
combination of HR and leadership metrics.

Role of the Board & the CEO


For corporate Boards, CEO succession planning should be one of the
most important commitments toward the organization. Even though

42
Boards across the spectrum realize the need for an effective succession
plan, they seldom devise processes and practices and devote sufficient
time to this activity. Dr. Arvind Agrawal, President and Chief Executive
Corporate Development & HR - RPG Enterprises, says, “It is imperative
for the management / executive Board to participate in the whole
succession planning process. I am talking about the involvement of
management or executive Board and not the legal Board. The process of
succession planning is simple but the real difference lies in its execution
and that’s where most companies falter. The process demands full
dedication of the top management and not mere compliance as one of the
points on a meeting agenda.” Not having a strategic succession planning
process and an effective CEO successor is a potential risk to companies
and it is the obligation of the Board to timely address this risk. This is also
lacking because most companies do not have a Chief Risk Officer (CRO)
to identify the potential threats that may arise due to little or no succession
planning. In simple words, it is the responsibility of the Board to make
sure that the framework and guidelines for succession planning are in
place and are practiced to evaluate the developments on a regular basis.
While corporate Boards play a critical role in succession planning in
professionally managed companies, their role is limited in family run
businesses where the family patriarch is generally the one who takes such
decisions. In PSUs, the final decision of choosing the successor is taken
by an external authority (generally the Cabinet) in consultation with the
Board.
“Normally only banks have CROs, as this is a mandatory requirement. It
is not a very common role”, says Prakash from Korn/Ferry, “and
wherever they are, they tend to restrict their role to systemic risks like

43
technology risk, financial risk, political / regulatory risk, and not really
people risks. CEO succession is the Board’s responsibility and the
responsibility of the CHRO and from my experience, does not normally
come under the risk officer’s purview.” Adds Poonam Barua, Founder
Chairman, Forum for Women in Leadership, “In the global scenario, best
performing companies worldwide are increasingly looking at voluntary
compliance practices and provisions for having a Chief Risk Officer who
reports to the Board (and not to the CFO), and identifies the challenges in
the succession planning process, including the need to increase diversity
on company Boards. Ultimately, Board diversity and succession planning
is not just an HR issue, but a corporate governance issue. The Chief Risk
Officer will also need to identify lack of diversity as an important risk for
the company. Companies such as GE, KPMG, Deloitte, IBM, PepsiCo,
Nokia, Microsoft, et all have huge diversity programs to ensure more
women move into top management positions.”

The Board is responsible for clearly conveying to the CEO that his / her
performance will also be measured by his / her ability to manage
succession. Additionally, the Board, in consultation with the CEO, is
responsible for detailing out the criteria of selection of the next CEO. The
CEO’s role, on the other hand, is to identify high potential leaders and
spend disproportionate resources to develop them, besides monitoring the
outcome of succession planning activities at all levels in the organization.
Sometimes, the CEO’s failure to identify a suitable successor acts as an
impediment to the growth of the organization. When Rohinton Aga, MD,
Thermax passed away in 1996, Abhay Nalawade was appointed his
successor. However, roughly five years later, the entire Board of

44
Governors had to resign en-masse as the company struggled to compete in
the changing business environment. While Rohinton Aga nurtured and
grew Thermax over a long period of time, he did not pay enough attention
to succession planning. Nalawde has, in fact, been quoted to have said,
“Mr. Aga never made it explicit that he would have wanted me to become
the Managing Director.” Stephen A. Miles, Vice Chairman at leadership
advisory firm Heidrick & Struggles and Prof. David Larcker from
Stanford Graduate School of Business re-iterate this point - “The CEO’s
role is to develop viable internal successors so there are real internal
candidates for the Board’s evaluation and to be an advisor to the Board on
the strengths and weaknesses of the candidates. The CEO does not own
this process. Many want to own it but the Board must own the process and
manage the CEO.” In PSUs, the current CEO or CMD plays little or no
role whatsoever in selecting his / her successor, which again is very
dangerous for business continuity and hence, corporate health.

The Leadership Pipeline


A recent research by Heidrick & Struggles and Stanford University’s
Rock Center for Corporate Governance (based on a survey conducted on
140 CEOs and Directors on Boards of North American public and private
companies) found that while 69% of respondents think that a CEO
successor should be ready to replace the departing CEO, only 54% are
actually grooming executives for this position. In the Indian context, the
2010 DDI India Leadership Report findings highlight that while 44% of
multinational organizations in India have a process to identify leaders,
only 26% have a process to develop them.

45
It goes without saying that grooming and developing leadership talent is
the broader solution to succession planning and readiness - and it is
largely the responsibility of HR to undertake this process. According to
Prakash of Korn/Ferry International, “This aspect should be addressed
from a short-term as well as a long-term perspective. In the short-term, the
need is for identifying the right CEO candidate who can carry the
organizational strategy forward. The long-term process is an enhanced
version of the short-term process, except that it is conducted proactively,
across all levels, and throughout the year.”
While identifying future leaders from the existing talent pool, certain key
aspects must always be considered. Says Dr. Sarin of Schneider Electric,
“Understanding the make-up of the existing talent pool is critical. The
goal is to evaluate the target group on a performance-versus-potential
matrix to pinpoint key talent. Competencies that leaders must exhibit to
move the business forward today and in the foreseeable future can be
measured against established standards and improved through training
and development. Building a suitable competency model aligned to
business strategy is the key. It is also important to assess if the
individual’s values are aligned with that of the organization.” In a well-
considered succession planning process, the Board of Directors, most
often in conjunction with the CEO, determine which competencies are
essential to executing the company’s strategy. Most often, the Board
focuses on key senior executives who appear suited to lead in the future.
Once the set of competencies and criteria for the CEOs role are
established, all short-listed executives and a few standout high-potential
executives undergo a comprehensive assessment.
One critical aspect where most companies falter while identifying the

46
future CEO is comparing the potential successor with the outgoing CEO –
a process wherein they end up roping clones. Instead, companies must
develop a skill and experience profile for the job and evaluate candidates
against this benchmark. The skill and experience profile is generally a
detailed document which lays down the required skills, capabilities,
experience in various functions, which allows the Board to evaluate future
CEOs. Additionally, the foundational assessments of internal candidates
can then be used to assess these prospects against the future needs of the
company instead of comparing them to each other or the current CEO.
This helps in toning down the typical perception of a rat race and in the
process becoming a part of the overall growth strategy and risk
management of the organization.

A STUDY ON MURUGAPPA
GROUP SUCCESSION PLANNING
The Murugappa Group, headquartered in Chennai (Madras), India has
grown from humble beginnings to become a very important conglomerate.
The company started as the dream of a driven entrepreneur in Burma in
the early 1900s. Today it boasts revenues of US$ 850 million and

47
employs 22,500 people in its 27 business units. The company is presently
undergoing a major change, as it restructures its family governance
system. It realises that change is necessary if they want to continue to
compete in the world marketplace. Though adaptation is not always easy,
the Murugappas find strength through their heritage and values.

An entrepreneurial spirit
The family traces its business history to 1760 when the great-great great
grandfather
of the founder was active in trading and money lending.
He had five sons who each, separately, built successful businesses that, in
later generations, led to leadership in several industries in India. The
family came from a long line of members of the Chettiar sub-clan of the

48
Vaisyas caste-merchants and professionals with business interests
primarily in Burma, Malaysia, Sri Lanka and Vietnam, known for their
scrupulous honesty, trustworthiness, cleverness in trade and proficiency at
money matters.
The Group's founder was Dewan Bahadur Arunachalam Murugappa
Murugappa Chettiar (known as Dewan Bahadur), the youngest of three
sons, born in 1884.
Following Indian tradition, the majority control of his deceased father's
entire estate went to the eldest son, with Dewan Bahadur receiving
virtually nothing for all his work. The unfairness of this policy spurred
him to divide his estate equally among histhree sons - Murugappa,
Vellayan and AMM. He did this while they were young men and while he
was still alive to give them the freedom and the opportunity to be a family
energetically pursuing business together. He also encouraged free speech
among his sons until a decision was taken; then the courtesies due to an
elder had to be honoured. This, too, varied from the norm in society at the
time where respect for the elder was paramount.
All three of Dewan Bahadur's sons shared their father's venturesome
business spirit and complemented each other in their managerial styles.
Murugappa was marketing and external relations-oriented; Vellayan was
finance-oriented; and AMM was operations-oriented, with a focus on
details.
In the early 1930s, Dewan Bahadur and his sons made several decisions
that were critical to their later success. At a time when 70% of Chettiar
wealth was in Burma, they repatriated much of their monies to India so
that the Great Depression, World War II and Burmese national
movements didn't bankrupt the family; they had aninsight that India was

49
on the verge of industrialisation; and they decided to take the family's first
steps into major industry.
With the repatriated funds, they established a sandpaper plant (the
beginning of today's US$ 65 million abrasives business called CUMI);
they purchased a steel safe manufacturing company; they started an
insurance company; and they bought a rubber plantation. The Murugappa
Group was born.
In 1931, Dewan Bahadur's eldest son, Murugappa, visited the US for the
International Chambers of Commerce Convention. This trip broadened
the family's view of possibilities for making money and expanding the
company.When Murugappa returned from the US, he kept an eye out for a
business opportunity he could set up and lead in India. When he heard
from an acquaintance that there was market demand in India for a quality
manufacturer of steel security furniture such as safes, cashboxes and filing
cabinets, he moved forward with family support, commencing production
in 1940.
A much larger foray, conceived during the same time period, was to enter
thebusiness of making abrasives, a product used by manufacturers to
sand,
sharpen and smooth equipment, materials, components and end-products.
The family's rationale was that if world war broke out, the volume and
variety of goods imported on British ships would decrease; thus, local
manufacturing would expand with the new opportunity. The family
cleverly negotiated to buy, dismantle, ship and install an abrasives plant
from the American Midwest to its location in India. The plant was
operational in 1942.
About a decade later, AMM made contact with the three largest abrasives

50
companies in the world - to seek a joint venture for access to new
technologies. When all three were disinterested or very slow to respond,
he contacted and struck a deal with Carborundum USA and Universal of
UK. Before anything official was signed, the largest company in the field
made overtures and showed interest. Since the family had given its word
to the British company, they would not go back on it to negotiate with one
of their larger, first choice firms. This was the first of many successful
joint venture arrangements (since 1952 named Carborundum Universal of
Madras, India or CUMI).
After India gained independence in 1947, the Murugappa family was
among the first in India to form a joint venture. With introductions by Sir
A Rarnaswami Mudaliar, some experience in steel manufacturing of safes
and with a vision for bicycles in India, Tube Investments of India (TII)
was formed in 1949. TII began as a bicycle assembly firm representing
the English Hercules brand in India. The English partner began with a
43% interest. Over time, TII grew, integrated into most all components,
and diversified into steel tubes for furniture, industry and other
applications. Hercules became the number one bicycle company in India.
The British
partner eventually departed the industry, turned the Hercules, BSA and
Philips brand over to the Murugappas and divested its ownership position.
One of the patterns in the Group's development is that their foreign
partners lose interest in the Indian venture due to acquisition, management
or strategy changes and sell back their shares to the family at a better than
fair price because of the trusting relationship they had built. This
happened, for example, with CUMI in 1982when its UK parent sold back
its shares. CUMI, now publicly traded, is 43% controlled by the family.

51
Adaptation and growth
In India's government-regulated economy, the Murugappa Group found it
necessary to adapt in order to prosper. In the 1980s, Indian law prohibited
formation of a business group, so the family followed the system of
crossholding
controlling shares among separate public companies. Recently
that law has changed, and the family is restructuring again to become a
holding company.
Because of government regulation in the past, it was difficult to obtain
licenses for new businesses. Between 1964 and 1980, the Group applied
for 17 licenses. Out of the 17 license applications, one was granted and
the other 16 were not. The Group decided not to pursue these because of
their values. Consequently, to grow, they sought acquisition of sick units
to turn around. In the last 20 years, 17 additional companies have been
acquired.
The most well publicised acquisition occurred in 1981 with the purchase
of Madrasbased EID Parry - a huge, decrepit, yet symbolic business that
the Group had been interested in since 1958. Parry, the second oldest
commercial name in India, included fertilisers, pesticides, confectionery
and also sugar mills. For years EID Parry's creditors were asking the
Group to take over its management, given the Group's management
reputation and acumen. The family repeatedly turned down the overtures,
responding that without control EID Parry wasn't in the family interests.
Eventually, the creditors relented and the family gained control of the
publicly traded company. The agreement made headlines because it
showed the Group's commitment to invest in what many in India felt was
a risky venture, but what they saw as an opportunity to grow. EID Parry is

52
now a business with US$ 265 million in sales and is 41% family-owned.
With EID Parry came a 7% holding in a joint venture fertiliser company,
Coromandel Fertilisers Ltd Chevron and IMC Global partnered in the
fertiliser growth area then later sold out. EID Parry developed a unique
organic pesticide from indigenous neem seeds that is often acclaimed to
be the best in the world. EID Parry is also in the sanitary ware business.
However, not all businesses have been a success. For example, the Group
has divested a cement company, sold its electronics business and faced
difficulties with its long held construction company.
Business and philanthropy
Today the Group includes seven substantial business units comprising 27
companies in a variety of industries: CUMI, TlI, Coromandel, Parry Agro,
EID Parry, CIFCO and the only private company, Arnbadi Estates, holder
of some of the plantations. TlI now has four significant lines: bicycles,
chains, industrial tubes and roll forming.
CUMI is a full line, vertically integrated abrasives company and
Coromandel is a very profitable fertiliser business. With Arnbadi and
Parry Agro, the Group remains active in rubber, tea and coffee
plantations. EID Parry includes an assortment of businesses including
fertilisers, sugar mills, pesticides and sanitary ware. The Group is in the
food industry with Parrys Confectionery Ltd. CIFCO is in the financial
services of brokerage, vehicle finance, insurance and mutual funds.
The Murugappa Group and family also continue to build on the example
ofphilanthropy initiated by Dewan Bahadur. His decision to set aside a
major portion ofhis wealth for charitable causes, starting in 1924 when he
built a hospital in his home village, commenced a tradition of helping,
guiding and supporting others in communities in which the companies do

53
business. The family's trust, the AMM Foundation, is sustained by a fixed
percentage of annual business profits and family contributions. To date it
has built and nurtured four high schools of 8000 students, a polytechnic
institute of 1000 students, four no-fee hospitals and a rural research
centre. The rural research centre focuses its activities on developing such
things as protein-efficient algae, natural dyes, organic farming and
technologies for the rural and urban poor. Although by custom, the sisters
and wives of the Murugappa men donot work in the businesses, they are
the major sources of leadership and guidance in the family's foundation
and the institutions it supports.
Family ties
While success seems to overflow for the Murugappas, the family and
business havealso been shaped by trauma and loss. Tragedy first struck in
late 1945 at the end ofWWII. Middle son, Vellayan, age 40, was
assassinated while in Burma as part of a formal delegation gauging the
safety of Indian civilians returning to the newly communist country. From
then on, his two brothers functioned in the business roles as 'Mr Outside'
(Murugappa) and 'Mr Inside' (AMM), under the overall leadership of the
elder - their father until his death in 1949, Murugappa until his death in
1965 and AMM until his death in 1999.
Beginning in the late 1950s, the third generation sons entered the
business. They successfully avoided a common family business trap of an
enterprise slumping after the founder's generation. This was due to their
elders' concerted focus on developing the talents of the younger members
as professionals through academic training, international experience, at
least two years of work outside of the family business and finally
employment at a mid-level in the Group's companies, rising one step at a

54
time. Up through the mid- 1990s, each of the six male family members in
the third generation rose to become managing director of one or more of
the business units: MV, first son of Vellayan and the oldest of his
generation, set the pace with higher education at a college. While working
at businesses within the Group, MV was encouraged by his uncle AMM,
the chairman, to play roles in the business world beyond the family,
including positions on boards, associations and delegations. He held
Managing Director or Joint Managing Director positions at Carborundum,
later CUMI, III and Coromandel until his death in 1996.
Muthiah, second son of Vellayan, was adopted as a teen by his uncle
Murugappa who had no male heirs. He held several positions with the
family firms, including Ambadi Estates where he became a leading
authority on planting in southern India. He worked at Coromandel
Engineering and was the Managing Director of CUMI when he died
suddenly in 1979 at age 49.
Murugappan, the third son of Vellayan trained as a civil engineer in
England and used his expertise to successfully scout unique new lines of
industrial products to manufacture and sell in India. He took over the
Managing Director position of CUM I when Muthiah died and continues
as Chairman of CUMI to this day. Since 1999, he has been the family
elder, but decided against the leadership of the business, deferring to his
younger brother, Subbiah. Subbiah, the youngest son of Vellayan, has his
college degree from the University ofAston in England. He is credited
with a major role in turning ailing EID Parry into a successful business in
the 1980s, serving as Vice-Chairman and Managing Director.
He also had leadership positions at TI Cycles, as the Chairman of the
Murugappa Group and the Executive Chairman of ElD Parry. In 1996 he

55
was appointed Group CEO.
Muru, the oldest son of AMM, studied mechanical engineering in
England, followed by on-the-job training at Tube Investments Group UK.
He worked at, then headed upCoromandel Engineering, the family's
construction business. He died in 1995 at age 55.
Algy is the second son of AMM. After schooling in Lawrence at Ooty and
gaining his degree in commerce in India, he went to Britain as a
Management Trainee with TI.
He started his work experience at TI Cycles and subsequently moved up
to No. 2 to Muthiah in the plantation business. He was instrumental in
starting up the Cholamandalam financial services business. Currently he
is
Vice Chairman of the Murugappa Group and Chairman of
Cholamandalam.
Since the late 1970s, six of seven sons in the fourth generation have also
joined the Group, making contributions in the business units at all levels
including managing director. All men of the same generation and age who
work in the family business receive equal compensation and perks,
regardless of title, position, contribution or level of responsibility within
the organisation. To enhance individual and Group success, informal
mentoring among the family members takes place with older, more
experienced and/or accomp1ished members guiding, assisting and
supporting younger, less experienced members. As for inheritance, equal
thirds of the family's business shares - following the three branches of the
family emanating from the three sons of Dewan Bahadur - are divided and
entrusted to the males in each generation, whether they work in the
business or not.

56
Transitions
An important transition in organisation occurred in 1985 when the Group
hired for the first time a management consultant, AD Little, to look at
issues of structure and succession. This effort resulted in a leadership
succession plan in which senior members of the family of the 3rd
generation filled the positions of Business Unit Managing Directors, COO
and CEO until each retired at 65, with the selection process based on
merit as well as seniority.
After India signed the World Trade Organization agreement around 1995,
the family saw opportunities, including new export-oriented activities.
Because of this, they realised the necessity of making speedier business
portfolio decisions than was presently possible due to individual family
members being emotionally involved in separate business units. In this
environment, even when everyone wanted to make a positive business
decision for the Group as a whole, it could not be made with the speed
and nimbleness necessary in the faster pace of the new global economy.
Despite this realisation, nothing changed until 1996 when Muru and MV
both died at early ages. These tragic events acted as a wake-up call. The
family elder, AMM, urged a restructuring to improve the future of the
business by relying less on family members for the day-to-day
management of the business units as managing directors. Leadership of
this task fell to AMM until his death in 1999, then to his nephew
Murugappan who continues as family elder today, and to Subbiah,
appointedGroup CEO in 1996.
The goal of the restructuring was to introduce change without
disrupting performance in an atmosphere of openness and support. The
family leaders sought the help of an esteemed Indian colleague to help

57
facilitate discussions of change among family members. Several insights
about the Murugappa Group's reorganization surfaced which included the
need:
1) To be more of a Group rather than a collection of separate entities;
2) To be more flexible in the make-up of the portfolio of businesses;
3) To have less emotional attachment by individuals to their businesses;
4) To shift away from family-led units to non-family-led units; and
5) To mentor the non-family managing directors for the long-term view.
Facilitating change
To facilitate the change process, the family members on the board
committed one to two days a month for almost two years. This resulted in
establishing a holding company - like board with the intention of
becoming an actual holding company in the future. In 1999, the
Murugappa Group created the new governance structure.
They changed the leadership of the individual business units from family
members to professional managers and the family members moved to
board positions on the newly formed nine-member Murugappa Corporate
Board (MCB). This holding company-like board includes as directors five
family members (two from the third generation and three from the fourth
generation), three independent members and the Group CFO. The
independent board members recognised the importance of their
participation in the transition of the company and wanted to work with the
Murugappa family members because of their exceptional experience,
humility and a willingness to listen. They also wanted to demonstrate the
success of the holding company model for family business and to ensure
the family business as an important force in the economy of India.
The new structure was innovative for the business and for India. At once,

58
it allowed family members on the board to focus on strategic areas across
businesses for the benefit of the entire organisation. Each family member
on the MCB serves as a fulltime director with three assigned
responsibilities. One is for a function across all business units, another is
to serve as mentor/overseer for one or more businesses he has typically
never led before, and the third is to guide younger family members for
future governance roles.
One of the benefits of this arrangement has been the creation of
knowledge transfer and technology synergies among the Group's
businesses. The move harnessed the substantial business experience and
resourcefulness of the family members for the good of the overall
company, not just a business unit, and also brought a new perspective
from the independent board members.
The family members on the board have noticed great value in the
restructuring, although it is not without personal challenges because they
are being stretched to perform in areas new to them with different people,
operations and situations.The changes made in management and
leadership of the business were also noticed by workers, family and
community. The family board members are aware that they are serving as
role models of the structural change, especially in bringing along other
constituent groups that need to make adjustments to the new arrangement.
The new governing structures caused a shift in decision-making to one
that is more collaborative - a counter to Indian norms and values of the
traditional leadership role of elders in the family.
Future focus
As the business moves from family-operated to family-governed,
formalising the family's business approach is being discussed within the

59
family and among the MCB members. The family has taken steps towards
articulating what they stand for by developing their Corporate Values and
Beliefs. These are listed prominently on their corporate materials, website,
and Bill of Rights and Responsibilities for Family Member Owners, all of
which can be amended by family consensus but not by vote.
The development of a Family Constitution is seen as the next important
step, but the form the Family Constitution takes - whether it should be a
formal written document or an understanding by custom and practice - is
under discussion. Independent directors are trying to get the family to
formalise procedures because the businesses' complexity demands it.
Family and independent directors of the board realise that the future role
of family members in the business is evolving. They are aware that family
members in future generations will have more choices in terms of
profession than in the past and may opt out of the business. Those who
enter the business need education, development and training to be future
leaders in the family business at the governing level, although they will
not be managing directors of units. Up until April 2001, the MCB was
headed by a family member, Subbiah. At that time, he stepped aside and
independent board member NS Raghavan took over as the MCB's first
independent non-family executive chairman on an interim basis. The
reasons for this change were to create an environment that encourages
creativity and fuels growth and to make decision-making even more
rational and less personal.The board is proceeding slowly to find a
permanent non-family MCB chairman, preferring to wait for a person
who is just right for the position.
In the last decade, the Group has looked at its portfolio of businesses with
an eye towards future growth. Although many of the Group's long-term

60
companies are inlow margin, old economy manufacturing, there has been
a continued focus oninvesting in and maximising research for the good of
the business. Several of the business units have launched products
developed as a direct result of its proprietary research investments that
could have global markets. The value of supporting research for product
innovation is a priority.
The company also seeks to balance and reduce its portfolio of companies
to the six business areas it knows well and in which it holds leadership
positions. The Group plans to shift reliance away from low but steady
growth manufacturing to opportunities in the high growth financial
services sector through its business unit, CIFCO, where it has managerial
and financial capability. The Group is increasing exports and is exploring
entirely new opportunities in industries that are global employing the
highly talented, yet cost-effective Indian workforce. One such endeavour
under development is information technology enabled products.
For the Murugappa Group family business leaders, the last three years
have been times of great structural changes, shifts in thinking and
adaptation, all the while managing a major spectrum of successful
businesses and opportunities in a marketplace that is increasingly
fastpaced
and global. Sustaining them throughthese substantial efforts in
meeting success in the future have been the valuable lessons of their
family's heritage. Throughout the generations, family members in the
business have used situations presented to them as springboards from
which to creatively adjust, flex and move forward for the good of family
and community. They have anticipated change, shown a willingness to
adapt and to take risks. As fourth generation Murugu reflected when he

61
accepted, on behalf of his family, the IMD Distinguished Family Business
Award in October 2001 in Rome, "We consider ourselves custodians to a
heritage and trustees to a tradition, both built on togetherness, trust,
mutual respect, ethical values and above all dignity,independence and
discipline. As the scope and magnitude of the family and business
leadership changes, we are preparing ourselves for the great challenges
ahead.
Best Practices of the Murugappa Group
• Family Development: The older generations focus on developing the
talents of the younger members, as professionals, through academic
training, international experience, at least two years of work outside of the
family business, family mentors, and a career path that provides broad
experience
• Transitions and Re-organization: They strive to introduce change
without disrupting performance through an atmosphere of openness and
support. They draw strength during change from their heritage and values.
• Succession: Leadership roles change in a clear and unselfish way

A STUDY ON INFOSYS
SUCCESSION PLANNING
The Leadership Factory
In the next five years, the four remaining founders of this
iconic company will walk away. So, Infosys is putting in place

62
a succession pyramid for the ages that runs three levels
deep and is 750 people wide, reports Pankaj Mishra
MATTHEW FRANK BARNEY HAD A PERSONAL connection with
India that goes back to 1997. The 41-yearold American met his Bengali
wife, Shreya, in a “romantic semi-conductor factory” in Orlando. Last
year, Barney also sealed a professional connection with India. He, Shreya
and their two young kids moved to Mysore, where Barney joined Infosys
Technologies for an assignment that will have a great bearing on how this
iconic Indian software company is run and perceived for generations to
come.
Barney is the head of leadership development at Infosys Leadership
Institute. Never in the storied 29-year history of Infosys has so much
hinged on this responsibility. The seven founders, each of them pillars in
their own right, have built and run a company that is solid in its business
construct and has values that are unimpeachable.
But they are leaving, one by one. Ashok Arora left in 1989 and NS
Raghavan in 2000. Last year, Nandan Nilekani went to work for the
government. In the next five years, the remaining four — NR Narayana
Murthy, S ‘Kris’ Gopalakrishnan, SD Shibulal and K Dinesh — will also
walk away from Infosys, in deference to Murthy’s decree that all founders
retire from operational roles by the age of 60 and from the board by 65.
Says Barney: “It’s an inflexion point for Infosys, and we need to prepare
for it.”
In his earlier assignments, Barney helped some of the world’s top
companies, including Motorola, AT&T and Lucent Technologies, to
identify their next set of leaders. But, with Infosys, he’s working for the
first time with founders seeking to pass on the baton.

63
In July, Barney kicked off a hunt to identify 750 leaders, across levels, in
Infosys — the largest such exercise the company has ever undertaken. It’s
not a random, one-time exercise to meet a pressing need. It’s a formal,
structured response that is intended to become an integral part of the
company. It will, continuously, identify the sparks in the company and
groom them to become leaders.
Infosys has plenty of leaders, says Tv Mohandas Pai, who heads HR in
Infosys and who brought in Barney.
“We believe we have around 100 leaders who can be CEOs of companies
of different sizes,” says Pai. “That doesn’t mean, though, all of them can
become the CEO of Infosys.” What Infosys lacked all these years was a
system that could efficiently identify, organise and hone that leadership,
especially in the lower ranks. Which is what Barney and his seven-
member team are putting in place.
TO EXPLAIN THAT SYSTEM, ONE NEEDS to start at the top. At the
top, there is a 13-member board. Five of its members are ‘executive
members’, which means they also hold operational roles in Infosys. CEO
Kris Gopalakrishnan and COO SD Shibulal are both members of the
board.
Below the board is a four-member executive council: Subhash B Dhar,
Chandra Shekar Kakal, BG Srinivas, and Ashok Vemuri. The highest
decision-making body below the board, the executive council is the
grooming place for the next CEO, CFO and COO.
But the beehive of activity is below the executive council. Out here,
Barney has created a three-tiered pyramid
that is intended to identify leaders at all levels from the 115,000
employees in Infosys.

64
At the first level, or tier-I, Infosys is looking to identify 50 Infoscians who
can join the board in three to fiveyears. “We want each leader to be
outrageously successful before they even come to my process,” says
Barney of this set. At this leadership level, people typically have about 15
years of experience, and are geographical
heads or business unit heads. “We need to make sure that the person is
passionate about business,” says CEO Kris, of this elite pool. “Also,
the person should know Infosys well. That’s why we have always been
saying that the leaders should come from inside and they should have a
successful track-record.”
At the second level, the hunt is for leaders capable of graduating to tier-I
or running a business unit in three to five years. The target number is 150.
The candidates here are vice-presidents and those reporting to unit heads,
and have about 10 years of experience.
At the last level, the search is for leaders capable of graduating to tier-II
position. This pool, which is intended to be 550-strong, is chosen from
business and technology managers who are associate vice-presidents or
below.
They have about 5-7 years of experience. They are like the Suresh Rainas
of the Indian cricket team.
BEFORE BARNEY AND THIS THREE tiered structure, Infosys was
identifying and grooming leaders, but it was more unstructured and the
leadership pool was smaller. But as the company grew and its operations
became more complex, as it went beyond its founders, the imperative for
a leadership system increased.
“They are the first among major Indian companies to go through this
transition,” says John McCarthy, senior vice-president and principal

65
analyst, Forrester Research. “It’s always a challenge when you move the
original management out. So far, they have done it in a transparent and
orderly manner.” But a CEO of a leading rival says
the founders will be missed. “Infy is surely ahead in terms of planning its
transition, but it will miss Murthy’s vision and Nandan’s ability to win
and retain large accounts like BT,” he says.
Professor David V Day, who is helping Infosys as an external consultant
to identify sustainable leadership models, advises against benchmarking
to the past. “First of all, you can never replace such visionary founders
like Mr Murthy and others — they are really one of a kind. You first have
to let go of the assumption that they are going to be fully replaced,” he
says. “The challenge then is how are we going to develop leaders we are
going to need not just now, but also in the future.”
Barney has some answers. “Beginning this year, we will have the ‘tier
top-off’ process every year,” he says. The ‘tier top-off’ is essentially a
routine measurement of the numerical deficiency in the company’s
leadership pools.
The last time, Infosys did such an exercise, it was 2007 and its leadership
pool was about 50.
Barney and his seven-member team are now looking to do this annually,
with a target size of 750. At every level, currently, Infosys is short.
Against its earmarked number of 50 leaders in tier-I, Infosys has
identified 37. Down the ranks, the vacuum increases. In tier-II, the
number sought is 150 and it has identified 120. In tier-III,
against 550, it has identified only 200. At each level, the method of
identifying talent is different. Tier-I is self-nominated. Infoscians who
think they are up to it can apply. Their candidature is decided after an

66
interview with the board. For tier-II, it’s the tier-I leaders who work with
the members of the Infosys Leadership Institute and the heads of business
units to identify potential leaders. Tier-III is through a computer-adapted
assessment tool. “The tier-I leaders are fewer and relatively easier to
find,” says Barney, who speaks fluent Bangla. “But when I get to tier-III,
there are nearly 10,000 people who can apply. With the tool, I can do it in
less than half the time we did the same process.”
NEXT COMES THE GROOMING. INFOSYS draws on several
resources to groom leaders. These include
mentoring, leadership workshops and simulation exercises. Mentoring is a
big part of the initiation, and it runs
through Infosys. Murthy mentors the board. The board members,
including other founders, mentor 6-8 leaders at
any point of time from the tier-I pool, which includes the four members of
the executive council.
“We normally mentor different people every year,” says Shibulal. “That’s
because what I can mentor, say, Kris cannot, and vice versa.” So, Shibulal
mentors on operations and execution, Kris on innovation and technology,
Murthy on leadership, Dinesh on quality. Nilekani, when he mentored,
was doing strategy. When Pai mentors, he will focus on entrepreneurship.
Adds Shibulal: “It’s more about experience sharing and passing on the
belief, and also how you would have dealt with a particular problem.”
For future leaders like Jamuna Ravi, who is currently vice-president and
head of Infosys’ European business for banking and capital markets,
mentoring by board members is a huge bonus. Ravi was selected as a tier-
I leader about three years ago and is currently being mentored by
Shibulal. “When I was the delivery head for banking and

67
capital markets, I used to share my ambitions with him (Shibulal) and also
ask about the new competencies I wanted to acquire,” she recalls. “He
told me to make my competencies visible to other people, in terms of
positioning for the next role.”
Barney and his seven-member team also put the 750 potential leaders
through exercises that simulate business challenges such as coping with
an unprecedented economic crisis or renegotiating contracts with
customers. Day, the Woodside Professor of Leadership and Management
at the University of Western Australia Business School, compliments
Infosys on how it is going about it. “I don’t think anyone, with the
exception of perhaps the US Army, is doing a little bit around simulation,
or is doing this in any way with regards to leadership
development,” he says.
KRIS SAYS THE FOUNDERS WANT TO BE around to see the big
transition through. Part of that handover is passing on the values that
Infosys was built on. “We have created a platform with certain values, and
we would like it to command respect, says Kris. “That’s very, very
important for the founders.”
Yet, some things will change as Infosys ceases to be a founder-run
company. Manish Tandon, head of the independent validation and testing
business, says some tier-I leaders like him are bringing a new perspective
on operating in a rapidly changing environment. “It’s a win-win because
I’m seeing more fresh ideas in discussions,” he says. “People like us are
also asking the right questions, challenging the status quo and forcing a
rethink.”

68
Ritesh Idnani, COO of Infosys’ back-office business, says there is room to
challenge old practices. “When people have credibility in the system, they
can challenge,” he says. “Also, it helps that I’m willing to go and stick
my neck out.” For Infosys, because of their risk-taking abilities, such
leaders are important to lead transformational initiatives. Idnani, for
example, scaled up the company’s BPO business from $43 million in
2005 to $316 million by 2009. He also set up its Brazil unit.
Subhash Dhar, one of the four executive council members, says a
company like Infosys that is aspiring to get out of the founders’ paradigm
has to look outside for examples. But the next leadership, he adds, has to
come from within. “Since we are a knowledge services company, there
are over 100,000 aspirants for the top roles.
That’s a very high aspiration quotient,” says Dhar. “It’s a good problem to
have.”
What’s encouraging for the next set of leaders is that the founders have
ruled out their children taking over. “As one of the aspirants, I feel
empowered that one day a professional will take over,” says Dhar, who
started his career at Tata Unisys and joined Infosys around 13 years ago.
“That it’s not going to be run like a family business is a huge, huge
thing,” he says. But to match, leave alone emulate, the work of the
founders, Barney’s 750 leaders, and all those who follow them, will have
to step up.

The Infosys Leadership Tree


BOARD OF DIRECTORS
Executive members
Srinath Batni K Dinesh S Gopalakrishnan TV Mohandas Pai SD Shibulal

69
EXECUTIVE COUNCIL
Members
Subhash B Dhar Chandra Shekar Kakal BG Srinivas Ashok Vemuri
The idea Formed around 3 years ago, it's the decision-making body
below the board. Its members are leaders who can become the next CEO,
COO and CFO, take on other topexecutive roles, even join the board.
TIER-I
50 Target Number
37 Current Number
The idea Leaders who can join the board in 3-5 years
Typical profile
Running a profit and loss account, geographical heads, business unit
heads
Typical experience
About 15 years
TIER-II
150 Target Number
120 Current Number
The idea Leaders who can graduate to tier-1, run a business unit in 3-5
years
Typical profile
Vice-presidents and those reporting to unit heads
Typical experience
About 10 years
TIER-III
550 Target Number
200 Current Number

70
The idea Potential leaders reporting to tier-II and capable of taking their
position
Typical profile
Business & technology managers reporting to tier-II, associate
vicepresidents and below
Typical experience
5-7 years

We want each leader to be outrageously successful before they even come


to my process. MATTHEW FRANK BARNEY Head Of Leadership
Development, Infosys Leadership Institute

71
We (the board) normally mentor different people every year. What I can
mentor, say, Kris cannot, and vice versa.
SD SHIBULAL Chief Operating Officer, Infosys

You first have to let go the assumption that they (visionary founders like
Mr Murthy) are going to be fully replaced.
PROFESSOR DAVID V DAY External Consultant To Infosys

72
73
CONCLUSION
At the end of the day, the crux of the issue lies in the fact that it is the
shareholders‘ representatives who should own the succession planning
process. Corporate India is placed at a critical juncture where the massive
inflow of funds will reflect in the gradual change from concentrated
ownership (Government, Promoter families) to a more diffused and
diverse ownership pattern. Regardless of the ownership structure of a
company, the shareholders‘ representatives (company Board or the
(cabinet of ministers or patriarchs of Promoter families) will need to
create mechanisms and processes to constantly groom a leadership
pipeline and to identify the best candidate – internal or external – for
leading the company into the future and creating shareholder value.
So Indian companies have finally taken their first step of understanding
the importance of succession planning and taking necessary steps to put it
into action for the welfare of the company and its shareholders against the
age old practice followed in India of handing the heir the reigns of the
company.
There are a number of areas to keep our eye on as part of our succession
planning activities.
Top of the list has to be that as we formulate our ideas to get those people
organized to be top class performers, we need to know how they are
doing, right now.
The most important priority, above all, is that we keep our eye on overall
performance of the business.
Then, it‘s all about those who work for we, because from them, and them
alone, will our business success come now, and into the future.

74
Managing Performance Of All Is Vital:
We need to carefully use our performance management skills for all of
our people, to make sure that we are clear about their current
performance, as well as – for our succession planning needs – that we
know what their potential is too.
So it is certainly something that we have to keep a close eye on as a
manager. And if we do not have any kind of performance management
measures then we will struggle to manage our business adequately now,
let alone later on.
Performance Management Matters in Succession Planning:
The performance management part of succession planning is important
because it gives we insights into individuals and their actual performance
as well.
If we are closely observing them and prepared to challenge in uncharted
waters, their potential for the mid-to-long term, will start to fill the spaces
that we will need as our team gradually moves along and we need great
replacements.
Succession planning for the future evolution of our key players is a vital
step, that will prepare we for keeping balance as changes happen when
our people leave we – however good we are at managing them!
There are several ways for us to make sure performance management
successful to help us with our succession planning.
The Link To Successful Succession:
Succession planning is challenging to start with, but if we have the right
performance management tools to get we through it then we are going to
make everything work.
If we are having trouble with performance management during succession

75
then we should remember that it is our responsibility to drive it – no
hiding places here!
Gradually, as we introduce new measures for our people, equitably and
consistently, we will find performance management will lift the overall
outputs of the business.
The great opportunity then is to ensure that we use this information to
tease extra performance from all our people and notice, just notice, who
starts to show up as capable of more, much more.
Then we really are starting to build real value into the succession planning
tactics we are adopting as part of the bigger strategy to sustainable
business success.

76
BIBLIOGRAPHY
www.google.com
www.scribd.com
www.economictimes.com
www.managementparadise.com
www.infosys.com
www.murugappa.com
www.mumbaispace.com

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