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Sikka saga: Institutions need to outlive founders, feel experts

Monday, August 21, 2017

Leadership pipeline is critical for bluechip corporates to evolve into institutions that outlive their founders, feel HR experts, as the sudden exit of Infosys CEO Vishal Sikka raises questions over succession planning at India Inc.

While succession planning as a concept does exist in India, experts are of the opinion that some large corporations seem to be "struggling" when it comes to putting their act together. Sikka's resignation from IT major Infosys is the second high profile exit of an 'outsider' from a big corporate after Cyrus Mistry was removed as chairman of Tata Sons in November last year.

According to experts, few companies in sectors like Banking, Financial services and Insurance (BFSI) are at par with organisations globally when it comes to succession planning. "Building a deep leadership pipeline is a priority for any progressive and growth driven organisation as it is a critical element towards building a lasting institution which outlives its founders," staffing services firm TeamLease Services Co-Founder and Executive Vice President Rituparna Chakraborty told PTI.

Experts also opined that it is generally seen that problems emerge when a non-promoter takes charge of the top job, as happened in the case of Sikka.

"That's clearly emerging as an issue here and in the long run we need to watch out for same... It is important for promoters to clearly define their roles as executives, board members and that of a shareholder. If the transition between each roles is either too sudden or too late, it is likely to affect the future sustainability and growth of the organisation," Chakraborty said.

Experts noted that Indian companies' succession planning rates poorly as against their global peers, who often start months in advance to find a proper replacement. "It is absolutely necessary for corporates to adopt succession planning; having said that it does exist in India although many of the new large corporates may seem to be struggling," global executive recruitment firm Antal International India Managing Director Joseph Devasia said.

Moreover, vis-a-vis their global peers, Indian bluechip companies' succession planning is "pretty non-existent", he noted.

While succession planning at corporates has always been a matter of discussion, the issue is again at the fore following the abrupt stepping down of Sikka on Friday amid acrimony between the board and founders of Infosys.

"It has been seen in the past that the COO has been promoted to CEO in cases of retirement or a transit from existing role to another organisation. The people at the CXO's level have been identified doing secondment job in absence of CEO and they have also been promoted," leading executive search firm GlobalHunt's MD Sunil Goel said.

However, he noted it is important that the person selected to lead the firm should be accepted across the organisation, by most of the board members and peer groups.

Murthy's shadow to loom large over search for Infy CEO
Infosys' search for a new CEO may not be an easy one as the pressure of being under the constant scrutiny of the firm's high-profile founders could see many candidates shying away, said industry leaders and experts.

Vishal Sikka, Infosys' first non-founder CEO, quit on Friday citing slander by founders. The board, which has blamed co-founder N R Narayana Murthy for the CEO's resignation, has said it will find a replacement by March 31, 2018.

The search would include both internal and external candidates. "Any potential candidate will be concerned about being watched and publicly criticised – an idea that cannot be pleasing to anyone on the outside," Institutional Investor Advisory Services said.

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