Sikka's abrupt exit puts the company in a state of disarray. The Indian system of succession planning within corporates differs largely from their global counterparts, which begin to hunt for a successor quite a few months in advance. Second, there seems to be a lack of clarity on the role that different stakeholders play in a company.
Promoters in companies need to define their roles as executives, board members and shareholders. Problems like the one in Infosys arise when promoters overstep their roles and assume different responsibilities at different points of time. The founders at Infosys seem to be having a tough time letting go of their control over the company and often cross-jurisdiction is the result.
Murthy's vocal interference in the company's workings and Nandan Nilekani's return following Sikka's exit points to an utter unwillingness of handing over control to an 'outsider'. Founders assuming control anytime they feel uncomfortable with operations undermines decisive leadership and puts the stability of the company under threat. Third, corporate governance seems to be quite problematic among Indian firms. The fact that the issue has arisen in a firm that made the concept popular in India is especially concerning.
When the acquisition of Israeli solutions provider Panaya was questioned by Murthy, a shareholder in the company, it behoved the board to address the concerns to the satisfaction of its shareholders. A trend which has emerged in India is the inclusion of daughters and spouses in family-owned businesses to take up leadership roles , which is more prevalent in South India, BAF Consultants said in a statement.
In a lot of cases, conflicts arise in family members due to lack of succession planning or when elders of the family are not willing to give up their positions for the younger generation to take on, he added. In such a scenario, Sainani said "family business consultants have a crucial role to play in turning the wheels of Indian enterprise".
He further said a new trend which has emerged is the inclusion of daughters and spouses in family-owned businesses to take up leadership roles. ETPrime stories of the day Under the lens NFRA member under lens for audit gaps in fraud-hit firm; cloud over selection process for regulatory posts.
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Fill in your details: Will be displayed Will not be displayed Will be displayed. Share this Comment: Post to Twitter. Managing a CEO succession planning exercise presents a number of challenges and complexities. A successful outcome is when the new CEO not only has a positive impact on the financial performance, but also on the culture, people and values of the company, and is surrounded by a capable and aligned senior management team. A well-run succession process is key to the long-term sustainability and growth of any company.
The board of directors, as fiduciaries of company stakeholders, must own and drive the succession process. Embracing the critical elements of a timely, structured and thoughtful process and avoiding the pitfalls improve the probability of a successful outcome. Corporate governance in India is seeing winds of change blowing in the right direction, and in the coming years, more boards will oversee enlightened and effective succession processes that produce exceptional CEOs and senior management teams.
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We as a company have identified people from within the organization as three sets of alternatives for this very circumstance. This will lead to more formality in the process in the near term. More than just the written role descriptions, you as the chairperson need clarity of mind — to give the CEO his space to operate and step away from issues that fall within his purview.
Public sector companies though fair poorly when it comes to a succession roadmap, a fact highlighted by the number of top posts lying vacant at several staterun companies and banks. Companies adopt different approaches for selection of the candidates. While family-run businesses usually prefer someone from within the family to take over the reins, multinational companies adopt a more broadbased approach where internal as well as external candidates are considered for the key job.
Succession planning could become complex or fail in its purpose if there is a lack of consensus or shortage of talent. Generation gap between the outgoing and incoming chiefs is another challenge that could result in differences in vision, values and approach.
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