India Inc: Succession pangs point to weak planning

The year 2011 could end up being the mother of all years as far as corporate succession is concerned.

Search panels constituted by Infosys and Tata Sons will name replacements for two of India's biggest companies and even bigger corporate icons - Narayana Murthy and Ratan Tata.

For years, the big buzz in corporate circles has been about who would take over from these charismatic gentlemen. Continued uncertainty and media speculation bring into question succession planning in corporate India. Could all the speculation have been avoided?

Or, is some of this part of brand- and image-building? The moot point is that succession need not be like 20:20 cricket, in which the fate of the match is decided in the last over. Consider the Tata Group.

Eight months after the search committee was set up, one of the senior-most members of the committee said last week in an interview to the group's internal magazine that it is almost impossible to find a replacement for Mr Tata.

He added that the committee may have to "change and rearrange" some of the selection norms. This led to speculation that the search hit a wall.

 The message that goes out is that all is not well with the succession process. Or, consider the Tata Son board's move last week to reduce the retirement age of all non-executive directors by five years, from 75 to 70, effectively cutting short the tenure of some of the top executives of group companies.

There was no explanation what necessitated this sudden change - the third in a decade, again giving rise to talk that this has been done to make sure that Mr Tata's successor has a relatively free hand and help avoid a situation that the chairman faced when he was chosen by J R D Tata.

In 2002, when Ratan Tata was to retire at 65, the board promptly re-designated him non-executive chairman, which empowered him to continue for another five years.

Three years later, the board ratcheted up the retirement age of the group's non-executive directors to 75, again to retain Mr Tata. The law does not provide any explanation for these moves, but it was not expected from a group that prides itself on the highest standards of corporate governance.

The story at Infosys has not been markedly better, largely owing to the continued speculation about changes at the top. An impression has been created that one man matters so much to such a large organisation, however pioneering his role and visionary his leadership are.

The legendary Jack Welch at General Electric identified his talent pipeline by meeting with potential successors individually and asking them: if we were on a plane and it crashed, who do you think should lead the company?

Not only did this have a sobering influence on prima donnas and help deflate egos, it also made them nominate other individuals from their peer group as potential leaders.

It was an effective way to gauge what individuals felt about the company's senior leadership and also establish a balance between the organisation and the individual. India Inc still has a long way to go, it seems.