Experts warn of imminent disruption to business continuity unless addressed institutionally, attributing the risk to multifaceted business challenges.
So, is India Inc merely checking the boxes when it comes to succession planning?
Data from Deloitte shared exclusively with ET shows that the process works at just one of four organisations, although seven out of 10 do have a framework in place for succession planning.
“While succession planning is witnessed as an established process across organisations (72%), merely (having) its presence doesn’t often translate into effective outcomes,” said Neelesh Gupta, director, Deloitte India. “Our analysis indicates that only 27% of the companies surveyed out of about 160 say it is effective. Progressive organisations are pivoting to coaching, immersions and job rotations as effective talent development levers.”
About 29% of companies said that candidates chosen for the CEO position through succession planning are successful while 32% said that the process works for CXO-1 level candidates. Still, at the CXO level, only 18% of companies found succession planning effective.
Measuring the implementation of succession planning, the survey showed that only 4% of organisations rate it as highly effective, while 7% found it very effective, 14% moderately effective and 14% somewhat effective.
As many as 61% of the firms surveyed said succession planning is not effective. The survey covered companies in the manufacturing, services and life sciences sectors. The success rate was defined on the basis of the retention rate of promoted employees, performance evaluation, and feedback from stakeholders involved in the process.
Though some large, traditional groups test a number of candidates with exposure across multiple businesses and geographies, many other Indian firms aren’t as exacting about it.
“Succession planning boils down to the culture of an organisation and the quality of internal grooming,” said Marico chairman Harsh Mariwala. “There should be job rotation for grooming talent and exposure of talent to multiple profit centres to be able to judge their leadership skills in challenging roles and situations.”
Biocon chairperson Kiran Mazumdar Shaw said most boards are seriously addressing succession planning along with managements. “However, I do believe there has to be a fine balance in succession planning, factoring in aspiration,” Shaw said. “It is imperative to have depth of leadership to fill a gap.
Also, succession planning needs to be a continuous process.
“The biggest challenge with succession planning in India is we link it to an event — be it retirement or an upcoming planned exit of a senior professional unlike in the developed countries such as the US where it is an institutionalised process,” said Monica Agrawal, Asia Pacific and India lead, CEO succession and board services, Korn Ferry. “The planning process should start right when a new CEO/CXO joins a role, not when the person is about to exit. Importantly, succession planning needs to be owned by the boards not the management and then only success is possible.”
