Column : The search for an heir

A A

KRISHNAMURTHY V SUBRAMANIAN : Aug 19 2011, 21:18 IST

If one leaves out the smooth CEO succession at ICICI a couple of years ago, we notice that family-run businesses are being more proactive in planning CEO successions when compared to the professionally managed ones. Take the biggest professionally managed companies such as L&T and ITC. CEOs in both companies have been quite indifferent to succession planning and have continued to latch on to their positions for a long time. ITC CEO YC Deveshwar has sought another five year term for himself, while AM Naik of L&T has yet to make any substantial noise on the issue. In contrast, Infosys has undergone a successful transition. Also, the Tata group has demonstrated serious intent in this regard by setting up a committee to appoint a successor to Ratan Tata. These observations raise the important question: How important is succession planning? Why are family-owned businesses paying the necessary attention to succession planning while the professionally managed ones aren’t?

Internationally, each one of the top 25 global companies has a clear succession plan in place. In contrast, only 72% of the other companies have a clear succession plan in place. If we dig a little deeper with respect to the processes involved in succession planning, of the global top companies, 94% have been able to uniquely identify and distinguish a leader’s current performance vis-à-vis his or her future potential. In contrast, only 64% of the other companies have completed this task. Second, 88% of the global top 25 companies elicit 360° feedback on the

... contd.

Ads by Google

Single Page Format

1 | 2 | 3 | Next