“There is a race to win before being selected as a successor and there is a race to win after being selected as a successor”.
2nd letter to Timothy by St. Paul from Holy Bible
Succession planning is an ongoing and perpetual process designed to uphold and perpetuate the legacy that an individual or a business enterprise has fostered due to their esteemed reputation throughout its existence. Succession planning entails the identification and preparation of prospective leaders to assume a position in the event of their predecessor's demise or departure. Proactively strategising for succession ensures a seamless transition, allowing the legacy to continue in the direction envisioned by the leader.
Three discrete categories of succession planning encompass 1. Family legacy succession planning, 2. Corporate continuity succession planning, and 3. Professional practice succession planning.
We all know that the practising professional fraternity lost a lot of experts during the COVID-19 pandemic. Many never had succession planning, and their practice collapsed like a shipwreck. Indeed, the lack of succession planning created a maelstrom of chaos and uncertainty, leading to adverse operational and financial outcomes not just for the professionals involved but also inflicting hardships upon their families. Western India Regional Council of ICSI organised a webinar in Mumbai centred around the topic of "Corporate Governance through Succession Planning and ICAI SICASA took a proactive step by organising a dedicated webinar to empower practising professionals, making them future-ready to safeguard their legacy and ensure the uninterrupted continuation of their operations even in their absence.
Indeed, succession planning for a professional holds paramount significance compared to business succession planning. Professionals invest their entire lifetime emotionally into their chosen vocation, often making sacrifices in various other dimensions of human existence that the average person may take for granted. Ensuring a smooth transition and continuity in their professional legacy becomes vital due to the deep personal commitment they have dedicated to their profession.
The predecessor should not allow himself or herself to be manipulated by an aspiring successor who seeks control, asserting entitlement to every opportunity, leading to harm to the reputation of a genuine organisation and team. A female professional entrepreneur should exercise caution and discernment when selecting her successor. Because she might have transcended many glass ceilings through immense hard work and sacrifices to reach that level. In certain situations, an unqualified individual with vested interests might attempt to infiltrate a professional firm with the intention of hijacking it, even competing against a qualified leadership team. Such scenarios pose a significant threat to the firm's overall health and stability.
In the recent past corporate India witnessed a major succession planning failure in the Tata group. It was almost like replacing a tire with an unmatching tire in an automobile. That is why the functions of the corporate have gone orderless, necessitating the removal of such unmatching tires by orchestrating an event after failing in all possible legal battles. The lesson from this failure shows light on the requirement of a perfectly matching successor to run a corporate in the direction the visionary had visualised.
In the corporate context, achieving perpetual succession becomes feasible only through effective succession planning. It is crucial to identify and nurture potential successors who can aptly fill various roles held by their predecessors, ensuring uninterrupted and integrated corporate operations. Unforeseen events may arise, introducing uncertainty that must be anticipated and addressed. This preparedness should extend to potential orchestrated accidents or any other sudden disappearance of a key corporate figure. The person who expired also is a key person of his family and extended family, which is though emotionally irreplaceable, emphasizing individual family succession planning is vital to ensure the continuous "flow" of the family's growth and its positive contributions to society. To attain true perpetual succession, succession planning is an unavoidable necessity.
Matters to be considered in identifying the successor:
As we are well aware, the purpose of succession planning is to uphold the legacy and carry forward the Visionary's vision. To identify a suitable successor, it is essential to analyse their personal and professional traits, ensuring a match with the desired qualities. Whether in a corporate, family, or professional setting, senior management should consistently keep an eye on potential candidates who can be nurtured into leadership roles for succession. However, it is important to acknowledge that this process is more challenging to execute than it may seem at first glance.
Indeed, entities, professionals, and families often contemplate and dream of finding the right successor. However, it is not enough to have the idea in mind; concrete steps must be taken to actualise the process. Succession planning necessitates trial and error, as it involves thorough assessment and selection to identify the ideal candidate for the appropriate position. Experts and Management Consultants are of the opinion that action must be taken, and a deliberate approach should be followed to ensure the successful transfer of leadership. Only through formal and active implementation can one find the right individual to occupy the right chair.
Absolutely, a successor is indeed a valuable asset precisely because of their intangible qualities. These intangible qualities, such as wisdom, experience, leadership skills, and a growth mindset, cannot be developed overnight. They are the result of years of dedicated learning, consistent practice, and a commitment to ongoing research and self-development. It is the combination of these intangible qualities that make a successor capable of effectively carrying on the legacy, vision, and values of their predecessors. As these setups evolve over time, they develop their own unique ecosystem with their distinct culture, history, and heritage. An ecosystem is a self-sufficient space where all elements interact while adhering to the established cultural norms of the ecosystem. The behaviour of individuals within the ecosystem should align with its culture, fostering the growth and prosperity of the entire system. Conversely, behaviours conflicting with the established culture can gradually deteriorate the ecosystem.
In the globalised new era, as cultural stability is generally vanishing and lifestyle changes and cross-cultural ecosystems are emerging, the present leaders also need to have the flexibility to understand and adapt to the inevitable changes that are beyond their control to stop. Hence, when identifying potential successors, it becomes essential to consider the cultural match. A candidate's flexibility and adaptability play a crucial role in this regard. These subtle and invisible factors require careful analysis before deciding a candidate's potential. Even if a candidate possesses all the necessary skills and traits, if they do not fit well within the ecosystem, both the individual and the ecosystem will struggle to thrive. In essence, the cultural alignment between a potential successor and the existing ecosystem is a paramount factor in ensuring a successful and flawless shift of leadership.
In some cases, a person from the new generation may possess greater flexibility and adaptability to meet changing needs, which the existing leadership might view with scepticism. Senior members may perceive these changes as encroachments upon the organisation's or family's traditional values, considering their external influences. Both generations must comprehend the enduring values while embracing evolving changes, striking a delicate balance between these potentially conflicting ideologies. The key lies in preserving the values without being resistant to change, driven by prejudices. Given these considerations, the succession planning process should be formal and organised rather than discreet and secretive.
System for Identifying Potential Candidates.
The potential candidate must possess the talent to comprehend the "how aspect" of various functional areas within operational activities, including HR, Finance, Marketing, Operations, Legal Compliance, Information Technology, Logistics, and R&D. Once such a talented individual is identified, they should be given formal exposure to all these functional areas to build the capacity required for a leadership role within the organisation. This exposure should include participation in leadership discussions and meetings, allowing the candidate to enhance their macro observation skills and gain a holistic understanding of the organisation's operations.
The predecessor's initial approach involves considering candidates from within the organisation, encompassing family members and key potential employees. These internal candidates are evaluated based on exceptional performance, leadership potential, and a proven track record of accomplishments. Additionally, the assessment includes the candidates' potential and willingness to embrace greater responsibilities and challenges, along with their commitment to personal growth and career advancement.
If, after thorough evaluation, a suitable candidate meeting the desired criteria is not found among the internal candidates, the search broadens to the external source. This entails exploring candidates from outside the organisation to identify individuals who possess the required skills, qualifications, and attributes for the role in question. This involves conducting interviews and assessing their suitability through morale checks and other relevant evaluations. The process aims to ensure that the best candidate is chosen to fulfil the responsibilities of the position effectively.
In practical scenarios, a wise predecessor often adopts a proactive approach by seeking potential successors both internally and externally simultaneously. This dual strategy aims to prevent the risk of losing an ideal candidate due to unforeseen circumstances. By conducting a comprehensive search within the organisation, the predecessor can identify promising talents already familiar with the company's culture and operations. At the same time, exploring the external talent pool widens the scope for finding fresh perspectives and diverse skill sets that may bring valuable contributions to the organisation.
By pursuing this simultaneous internal and external search, the predecessor ensures a robust succession planning process. It also allows for flexibility in case the internal candidates are not fully ready to take on the role or if external candidates prove to be exceptionally well-suited for the position. Ultimately, this approach increases the chances of securing the most suitable successor for the organisation, thereby adding value to its long-term success and sustainability.
Mentoring the candidate to the leadership.
Identified candidates, whether selected through internal or external sources, will undergo mentoring by the senior team to develop their leadership skills. The chosen candidates will be assigned to a specific Job, say, for example, JOB A, while the senior management will observe and mentor the person to develop him or her comprehensively to uplift him to a calibre to handle the affairs of the enterprise. The mentors will create formal as well as informal dashboards to get a 360-degree view of the development process of the selected candidates.
Through dashboard monitoring, the candidate’s performance in all functional areas is evaluated. It is important to note that proficiency in one area does not guarantee proficiency in another. Ultimately, the candidate who demonstrates efficiency in all areas while aligning well with the organization's cultural ecosystem will be considered for leadership. Each candidate's growth rate and pattern varies - some grow rapidly, while others progress slowly, and some may not seem to make significant progress at all. Additionally, some candidates may attempt to outpace their peers. To ensure the development of each candidate, a well-tailored mentoring process is essential. This process aims to identify and address the specific obstacles hindering their growth, thereby enabling them to perform at their fullest potential.
It's important to recognise that one candidate's suitability for a particular task does not necessarily determine their competence in other areas. Each person possesses unique strengths and weaknesses, and the mentoring process should be designed to leverage their strengths and overcome their limitations. The mentoring approach should provide support and guidance to remove the barriers that hinder growth, allowing candidates to flourish in their respective roles and contribute effectively to the organisation's success. By acknowledging individual differences and nurturing talent, the organisation can create an environment where each candidate can thrive and reach their full potential.
Indeed, while not everyone can be selected as the ultimate successor, there may be one or two other candidates who can serve as effective associate supporters for the chosen successor. These individuals can play a crucial role in implementing the visionary ideas of the predecessor. While the chosen successor takes on the primary leadership role, the associate supporters can provide valuable assistance, guidance, and collaboration. They can complement the strengths of the successor and help bridge any skill gaps. This collaborative approach ensures a smooth continuity of the predecessor's vision and initiatives. We saw this in the case of Infosys. Having capable associate supporters enables the organization to benefit from a diverse range of perspectives and skills, fostering a dynamic and well-rounded leadership team. It also ensures the successor has a strong support system to lean on when facing challenges or making important decisions.
Having one of the associate supporters identified as a potential replacement for the chosen successor is a prudent strategy to ensure continuity in the event of unforeseen circumstances, such as the sudden demise or unexpected retirement of the chosen leader. By designating a backup successor from within the associate supporters, the organization can create a clear and reliable succession plan. This ensures that there is a passage of leadership in critical situations, minimizing disruptions to the entity's operations and strategic direction. The identified potential replacement should be groomed and mentored accordingly, with opportunities for skill development and exposure to leadership responsibilities. This preparation allows them to step into the role with confidence and effectiveness if the need arises.
The Final Selection
The long-term process begins with carefully selecting mentors who will guide and nurture the candidates. As time progresses, the candidate's growth and development become evident, akin to the gradual growth of fruits on a tree. Throughout this journey, the dashboard monitors and observes their progress closely. Over time, some candidates demonstrate remarkable growth in all dimensions of their abilities, skills, and character. Their growth is balanced and proportionate, indicating their suitability to assume high-level leadership roles as potential successors. This thorough and patient process ensures that the best candidates are identified and prepared to take on important leadership positions within the organisation. The emphasis on balanced growth and proper development helps in creating a strong pool of qualified successors who can carry the organisation forward successfully in the long run.
In this competitive scenario, the goal is to generate tight competition between finally selected candidates and closely evaluate their performance. The process involves a dashboard that minutely tracks and assesses their abilities and accomplishments. It is akin to a photo finish in a race, where every detail is analysed to determine the winner. The finalised candidates are encouraged to run their race well, meaning they must demonstrate their full potential and give their best effort. The evaluation process is thorough and meticulous, measuring even the smallest differences in performance. The ultimate objective is to identify the candidate who stands out, even if it is by a mere 1 inch of difference, indicating the smallest margin of superiority over the others. This meticulous assessment helps in making an informed decision and selecting the candidate who is truly the best fit for the position or opportunity at hand.
Apart from the above finalization process, the non-measurable parameters should not be skipped in the process of selecting the successor. The non-measurable parameters are crucial and should not be overlooked in the process of selecting a successor. While quantifiable metrics and measurable criteria play a significant role in evaluating candidates, certain intangible qualities and attributes are equally important. These non-measurable parameters to consider include adaptability, resilience, innovation, creativity, integrity, ethics, decision-making skills, collaboration with teamwork, communication skills, strategic thinking, long-term vision, conflict resolution capacity, and continuous learning tendency. These non-measurable parameters can significantly impact a candidate's effectiveness as a successor and their ability to lead the organization successfully.
The one who excels in measurable parameters may possess non-measurable traits that hint at a deficiency, potentially leading to losing the successor chair. On the other hand, a person who excels in non-measurable parameters, despite a slight deficit in measurable parameters, could be appointed to the chair with the belief that with additional training and guidance, they will undoubtedly excel in measurable parameters as well. All the above-discussed points of the succession planning process pertain to corporate succession planning. However, it is worth noting that these steps can also be applied in both family succession planning and professional succession planning scenarios. The principles and strategies involved in corporate succession planning can be adapted and utilized effectively in different contexts, ensuring a smooth and successful transition of responsibilities and leadership in family-owned businesses and various professional settings.
Passing the baton to the successor inevitably involves several formal procedures, and in some cases, these may even encompass legal processes. Elaborate discussions and analyses of the legal aspects of succession planning were not the primary focus of this article. However, we shall delve into the intricacies of legal procedures in the next article, where we will address their significance and implications in the context of successful succession planning.
Company Secretary Licentiate