September 7, 2009

Succession planning in India – Corporate and Political

Since the era of LPG (Liberalization, Privatization and Globalization) has set in India and the Indian masses both in its hinter and heartlands have been exposed to the Western world, a direct or indirect comparison has ran between the West and the East spanning a plethora of issues ranging from day to day life (like why doesn’t India use dishwashers) to more long ranging ones (could brain drain be reversed). Among these, the issue of succession planning in Indian organizations has got most prominence from time to time, the issue has again become media’s darling with the sudden and tragic death of Y. S. R. Reddy and the talks of Y. S. J. Reddy to be his heir apparent. At this stage, let us try and trace the roots of what differs in terms of succession planning between these two parts of the world.
Cultural Ethos and way of life
Let us compare an average life of an Indian with a Western male, an Indian more or less shall follow the four ashrams of the Vedas - till about 25 he shall pursue his education, till about 45 or 50 (in case of lower and middle classes this age spans at times up to 60) he shall spend his life working, then till about 70 he shall worry about getting his off springs married and settled and then he shall live his remaining retired life.
While a westerner will be on his own by 16 or 18, would have completed his high school by then. He will then separate from his parents to find and mark his own identity. By the time he turns 30, he would have more or less scripted his coming life.
The common thing between these two lives is a search for a home to stay in. For an Indian it is a 2 bedroom flat for a westerner an apartment.
Note the stark difference - getting a child settled (i.e. to make sure he gets a job and a spouse) is more or less a responsibility of an Indian parent but in US that is not the case. These are primarily individual’s decision with a little influence of his family. – This is the root cause of why we see a son as an heir apparent to his father unlike in the west.
Add to this the caste system, the joint families, a society that does not freely permit (forget about encourage) innovation and free style and we have – ‘like father like son’. Viola!
Put in other words, taking a parent’s role is an ‘option’ for a child in west and an ‘implication’ for a child in east.
But then what about meritocracy and professionalism
An often quoted criticism regarding Indian style of succession planning is that it forsakes meritocracy and professionalism. Let us examine this argument and see if it has got merits.
On the face of it, we see that many a bright professional managers see a glass ceiling in their organization because they cannot reach beyond a certain point in the organization, same applies to Indian politics, a congress leader as talented as Priyaranjandas Munshi or Shashi Tharoor or Jyotiraditya Scindia cannot fathom getting a top job at Congress.
Also, it is not the case that the professionally ran Western business has always prospered, not all the companies which formed a part of S & P 500 in 1975 are a part of S & P 500 in 2009. Reason – the multi dimensional nature of environment in which activities like politics and business are carried out, in which succession planning and leadership are but just one dimension of the environment.
Though I have not researched, but it may also turn out that professional management is no better at running an enterprise as family management.
Now, look at a few examples of Indian polity and business where professionalism and grooming through the cadre is considered a big advantage against a family back drop.
Sudhir Maheshwari (Chief of Staff at Arcelor Mittal) plays as critical a role as Laksmi Mittal himself, Bikham Agarwal (Executive Vice President (Finance)) who joined Laksmi Mittal back in his first plant at Indonesia is as good and as important as Aditya Mittal. All of ADAG and RIL’s ventures are manned by professional managers (often poached from competitors) and not family kins.
Narendra Modi was a General Secretary with BJP before becoming the Chief Minister of Gujarat (without a family back drop) Manmohan Singh is an academician first and a PM later (and is nowhere near to a politician)!


  1. I agree to your view and would like to cite a few more points to the valuable article;-
    1. Its not the case of only India having no plans for succession, Apple Inc. did not find a successor to Steve Jobs too
    2. The "professionally managed" GM had to file for bankruptcy
    3. The case of Tata is even more intriguing, what next after Ratan Tata retires and same seems to be the case for Bharti
    4. Even in sports, India does not seem to have a bench strong enuf to replace sehwag,yuvraj and zaheer

    So all in all succession planning is a big issue and should be taken care of by all the companies' honchos irrespective of their egoes

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