No easy going: India Inc training next gen for top job

Industrialists passing on the baton to their children may be a common practice in India, but the next generation is not getting the crown on a platter anymore and is rather being 'trained' for the top job.

Experts say that the succession planning has come a long way from the earlier days, when the children of business heads of family-run businesses used to be directly appointed as CEOs or deputy CEOs.

Nowadays, the son or daughter of a business head generally joins the company run by his family at a relatively younger age and at a lower position and the moves up the ladder over a period of time, they added.

. . .

Realty giant DLF has become the latest major corporate to reveal that a new next generation member from its founding family has joined the group, but Rahul Talwar -- a grandson of chairman K P Singh -- would begin his journey as a 'trainee'.

While announcing a separate corporate entity for his businesses carved out of 190-year old RPG group, industrialist Sanjiv Goenka was also seen last week sitting beside his 21-year-old son Shashwat Goenka.

Sanjiv said that his son would soon join the business after graduating from Wharton.

. . .

Earlier this year, Mukesh Ambani had his son Akash for company in London, when Reliance Industries signed one of its biggest business transaction -- the $7.2-billion deal with global energy giant BP Plc.

The presence of 19-year-old Akash Ambani at the occasion sparked strong rumours about him being groomed as the heir-apparent for the chief of India's most valued company.

Prior to this, he was seen alongside mother Nita Ambani when Mumbai Indians IPL team was bidding for players last year.

. . .

However, there is no word yet from Reliance Industries Ltd about Akash joining the group and the group has previously said that it has put in place a proper framework for grooming leadership talent and was focussing on creating a leadership pipeline.

A host of other companies in recent past have, however, announced appointment of sons and daughters of their chiefs in various positions within the group.

But, the companies are not only looking at people from the family and the next-generation members are also joining companies outside their family-run businesses, experts say.

. . .

"They are not looking people from within the family only. A lot of people are looking for people from outside only," said Rajan Wadhawan, executive director, financial advisory services at consultancy major PriceWaterhouseCoopers.

"It depends from group to group, like Tatas they are ready for external candidate as well, they are trying to distinguish between the ownership and the management, they are not looking at people who may or may not belong to the promoter group to run the organisation," he added.

While Tata Group has set up a search panel to find a successor to Ratan Tata, who is scheduled to retire in December 2012, sons and daughters of chief of a host of other companies have joined the business in recent past.

. . .

IT major Wipro chief Azim Premji's son Rishad joined the business at a lower level about four years ago and became chief strategy officer this year. Azim Premji has, however, said that his sons would have to earn their positions.

Last year, retail-to-telecom behemoth Bharti group chief Sunil Mittal's son Shravin also joined as a manager in a group company, after previously having worked outside the group.

A host of other groups, such as Vijay Mallya-led UB Group, Shiv Nadar-promoted HCL, Kishore Biyani-led Future Group, Godrej, Piramal and TVS groups have recently seen sons or daughters of their chiefs joining their businesses.

. . .

On the other hand, groups like Infosys, HDFC, Axis Bank and ICICI Bank have seen new successors being put in place from outside the family of their previous chiefs, but from within the organisation in many cases.

Wadhawan said that more and more groups are now focussing on getting right candidates, irrespective of them being from the family and many companies also opening up to the idea of bringing expatriate CEOs in their globalization drive.

"Indian companies' succession planning is evolving in a particular way. People have started to think about it in the last few years, when the economy opened up and globalization happened, whereas in the West it developed much earlier."

. . .

"Besides, the percentage of ownership in a company in the West is much less than in India. But now, more and more Indian companies are doing it in line with western peers," he added.

HR consultancy major Ma Foi Randstad's president, staffing, Aditya Narayan Mishra agreed: "More and more organistions are looking for qualified talent to take over the mantle rather than thinking about having family members as successors."

"It may so happen that many organisation find family members to be better choices, but the outlook for succession planning is slowly undergoing a change in India as well as the world over," he added.

. . .

Mishra said that "earlier perception was to keep the wealth generated within the family... In the 90s it was almost like given that the successor will be from in-house."

"In the last decade the thinking of the top boss of the company has changed," he added.

PwC's Wadhawan also said that "over the years Corporate India has realised the need for succession planning and more and more of them are focusing on this."

"While passing the baton to the next generation, they are not necessarily looking in-house only, they are looking at external talent also. They have realised that they need to distinguish between the owners and professional managers," he added.