Post-Covid disruption: India Inc shifts focus to keeping a successor ready

The post-Covid disruption and heightened risk perception are prompting Indian boards and investors to push companies to put a greater focus on succession planning — much more than ever before — not just for the CEO and the C-suite, but even a level below.

Leadership succession is extending to top executives in key roles such as the heads of sales, strategy and M&A, products and designs, and a level beyond the C-suite, according to board members of top companies and CXO search consultants ET spoke to.

“Leadership succession is no longer limited to the CEO and the C-suite but is increasingly extending to the level below, in order to institutionalise it,” said Pankaj Arora, managing director of management consulting firm Russell Reynolds Associates. “Before Covid, any CEO succession conversation would usually start with a hypothetical scenario of ‘what if your CEO was hit by a bus?’ It was more of a remote likelihood. Post Covid, mortality of life got far more accentuated, prompting companies across sizes to identify leadership successors on top priority.”

While the bench would often have names from within the company, there is also an accentuated focus to have placeholders from competitors or adjacent industries. Search consultants are being increasingly mandated to have a list of “designated successors” and mapping at least 5-6 external candidates for each role, as the loss of human capital is seen as one of the greatest business risks.

Naina Lal Kidwai, a senior adviser at Rothschild & Co and non-executive director on several boards, said: “The need to focus on emergency succession planning — due to abrupt exit or absence of leadership — has increased in significance as the pandemic has shown the world that mortality can stare you at the face at any moment and planning is crucial for any such exigency.”

While most large well-managed companies have a disciplined process of succession in place, those that did not have a proper plan are increasingly focusing on having a structure for leadership succession and hence it is becoming more widespread than it was before in India, she added.

“The purpose of talent management is to develop bench strength, especially for critical and hard-to-fill roles, including the identification of people outside the company that could potentially fill those roles, if internal candidates are not ready,” said Vinita Bali, former MD of Britannia and an independent director on several global and Indian boards.

Experts say the biggest barrier in CXO succession is the overconfidence that an external successor could be hired at short notice. Many boards and company managements are trying to address that by regular talent mapping.

“Covid created a lot of uncertainty. Some decided to quit working, while some fell ill … an increasing number of companies from the board and executive side are reaching out to us for mapping the market for external talent,” said Suresh Raina, partner at global leadership advisory firm Heidrick & Struggles.

“The pipeline of designated successors gets refreshed every six months,” said Raina.

Shailesh Haribhakti, chairman of audit and accounting firm Haribhakti & Co and an independent director at several Indian companies, said: “Succession planning is becoming increasingly important given the fact that ESG (environmental, social, and governance factors) as a composite needs more attention and is the topmost priority for most CEOs and boards. NRC (nomination and remuneration committee) and board meetings are getting longer these days and succession planning is seen as one of the most serious issues, especially with the recognition of risk and disruption getting highlighted post pandemic.”

That apart, a historically sticky CEO/CXO may also quit abruptly, which has been well established in the last two years, with the great resignation driving an all-time high CXO attrition, making succession planning a top focus area for organisations, said Arora.