Analysing Succession Planning Strategies of Companies

Management quality is a key parameter to consider while evaluating any software company, or for that matter any company. The ability to foresee future trends and lead the company forward are major factors that determine the company’s future in a highly competitive industry.

For seamless transfer of management quality from one leader to other leader, the company needs proper succession planning. The smooth continuation of a business depends on effective succession planning. It is a proactive approach to create a talent pool of candidates with the required potential and competencies to take the high positions in future and help in the growth of the organization. In fact, it determines how business will be run once the leader or key person leaves.

General Electronics (GE):

Succession planning is an ongoing, rigorous and challenging process at GE.

GE adopted succession planning right from the mid-1900s. At GE, succession planning was not confined to only the top management, but was applied across all tiers of management.

The managers of GE’s various businesses were encouraged to identify potential candidates and fulfill their development needs, and transform them into efficient leaders ready to take up top jobs at the company.

As part of CEO succession planning, GE shifted its key candidates from one business to another to enable them to gain experience across all its businesses.

The company used mainly annual performance reviews for identifying potential candidates, until the early 1980s.

However, after Welch took over as the CEO, the succession planning process at GE became a more systematic process, with the use of various analytical tools and the involvement of the top management in leadership development and succession planning.

Since early 1980s, the annual Human Resource Reviews (popularly called Session C) had been at the heart of succession planning at GE.

The Session C process was reportedly given as much importance as financial monitoring in GE.

The CEO succession planning (GE):

The succession planning by Welch for his post had started way back in 1994, when Welch, with help of

Bill Conaty and Chuck Okosky both vice-presidents, HR and Executive Development, created a list of essential qualities, skill and characteristics an “ideal CEO” should posses.

The list mainly included elements such as :

Integrity and values.

Vision.

Leadership.

Experience.

Edge.

Stature.

Fairness.

Energy.

Balance.

Insatiable appetite for enhancing knowledge.

Courageous advocacy.

Most importantly, stomach to play for high stakes and being comfortable operating under a microscope.

Ranbaxy:

The CEO succession planning, Ranbaxy Laboratories Limited (Ranbaxy), India’s largest pharmaceutical company.

It describes the concept of succession planning and its importance in managing large companies (especially family owned businesses).

Parvinder Singh (Ranbaxy’s promoter, also CEO) believed in running the business professionally and handed over the company’s management to

D S Brar, a professional (and a non-family member), amidst stiff opposition from family members.

Then Brar transformed Ranbaxy from a small Indian pharmaceutical company into a research based global pharmaceutical major.

The reasons for Brar’s decision to step down as the CEO and comments on his succession plan.

The case concludes with a discussion of whether Ranbaxy’s promoters would takeover the company’s management or continue to allow professionals to manage their business.

One company which seems to have taken succession planning seriously is Lucent Technologies. Lucent has divided succession planning into two phases: identifying leadership requirements and the talent available and in the next phase talent development. Most senior leaders develop their own succession planning process. Each senior executive typically identifies three possible successors.

Lucent evaluates possible successors on two primary criteria: Performance and the ability to develop and adopt. Some of the important attributes, the company looks for in future leaders Include:

Ability to think globally

Ability to focus on results

Ability to perform tasks and projects with speed

Customer orientation

Concern for people

Respect for people

Ability to inspire trust in employees.

A dedicated department at Lucent assumes responsibility for succession planning. This department develops strategies, collects feedback and makes ongoing improvements in the system. Senior executives spend more time on identifying and developing potential successors. High potential managers are given stock options.

Succession Planning In It Sector

Let us analyze how IT majors are doing their succession planning to maintain leadership position in the future.

Wipro:

One major IT company is Wipro, which has developed leaders through a well planned process.

The succession planning programme is called Talent Review and Planning (TRP).

At Wipro, the succession planning starts with identification of suitable candidate through regular quarterly talent engagement and development (TED) reviews, and action plans of each business unit and vertical.

Then feedbacks about these candidates are gathered. Wipro has developed “Life Cycle Stage Development Program”.

Here the employees who are identified to have high leadership talent are giventraining according to their level in the organization. There are different kinds of programmers targeted towards different levels.

Wipro has programs like “entry level program”, “New leaders program”, “Wipro leader’s program”, “Business leaders program” and “Strategic leaders program”.

Tata Consultancy Services (TCS):

TCS has a systematic process for succession planning. TCS leadership programsare focused around ‘practices’ (industry verticals or services) and ‘geographies’ (for marketing).

The top management is involved in selecting the leadership teams at each ‘practice’ and ‘geography’.

High performers are identified at the time of appraisals and their progress is monitored.

Then these high performing employees are constantly moved across projects,practices and geographies to ensure that a high performing individual does notonly move in a narrow hierarchical structure.

The company also has a ‘Think Tank’, made up of people both at the senior management and one level below, these people are carefully selected for their strategic view and technology and domain competence.

This ‘Think Tank’ plays a vital role in succession planning. In fact, this is another mechanism for creating and nurturing leaders.

INFOSYS

Introduction:

Infosys is an information technology services company headquartered in Bangalore, India. Infosys is one of the larget IT companies in India with 114,822 employees (including subsidiaries) as of 2010.

Infosys was founded on 2 July 1981 by seven entrepreneurs, N.R. Narayana Mruthy, Nandan Nilekani, Kris Gopalakrishnan, S. D. Shibulal, K Dinesh and N. S. Raghavn.

Pro-active approach

A succession plan has long been put in place and the smooth transition of authority and leadership ensured. S Gopalakrishnan, S D Shibulal, and K Dinesh look after the affairs. N S Raghavan retired in 1999, while Ashok Arora had quit the firm much earlier, in 1989, to settle down in the United States. The IT major has already identified a pool of 400 leaders who will steer it in the future.

Process of Grooming future Leaders

The process is long-drawn, meticulous, and in consonance with the company’s stated vision: ‘To be a globally respected corporation that provides best-of-breed business solutions, leveraging technology, delivered by best-in-class people.

This is where the Infosys Leadership Institute at the company’s Mysore campus comes into the picture. The 162,000 square feet structure, built at the cost of Rs 41.1 crore (Rs 411 million), is where the next generation of Infosys leaders is being primed.

“The company has identified 400 ‘leaders’ on the basis of several parameters: their performance throughout their tenure with the company being a prime criterion for selection.”

The pool of 400 leaders,” says Gopalakrishnan, “that Infosys has identified is from across the globe and does not comprise Indians alone. It is in keeping with the company’s multi-national, multi-cultural image where excellence is the most important condition.”

Three-tier mentoring process at Infosys

Tier-1 mentors Tier-2 leaders

Tier-1: Members of the Infosys Management Council, which consists of the company’s board of directors. There are 45 members.

Tier-2: leaders in turn guide the Tier-3 group.

Each of the leaders undergoes exhaustive and sustained training through the company’s personal development program – PDP

Nine pillars for leadership development in Infosys

1. 360 degree feedback- This is the mechanism through which the company gathers data about an individual’s performance and abilities. Personal development plans are prepared on the basis of this feedback.

2. Development assignments- Identified high potential Infoscions are trained at various functions of the company through job rotations and cross-functional assignments. This helps employees to acquire new leadership skills outside their own areas of expertise and experience.

3. Infosys Culture workshops- These workshops are designed to fortify the Infosys culture amongst the participants, help instill better communication skills through sustained interaction amongst themselves, and identify with the values and processes involved in leadership development.

4. Development relationships- This includes one-on-one interaction in actual on-the-job work climate and leads to better sharing of knowledge and camaraderie amongst individuals. Mentoring forms an integral part of this exercise.

5. Leadership skills training- The ‘Leaders Teach Series’ are workshops that the company’s Tier-1 members, including Narayana Murthy and Nandan Nilekani (CEO and MD), hold to acclimatise the next rung with leadership roles and to groom them through their own rich experience.

6. Feedback intensive programs- These are akin to 360 degree feedback, but based on formal and informal feedback from employees that an individual interacts with

7. Systemic process learning- This helps individuals to gain an overall view of the company and its diverse and complex systems, business, operations and processes. It is a continuous process and helps improve the individual and also the systems.

8. Action learning- This exercise constitutes solving real problems in real-time conditions, but as a team.

9. Community empathy- The Company stresses the need to give back to society through involvement in various developmental, educational and social causes. This programme helps nurture a social conscience amongst its leaders.

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