SUCCESSION PLANNING OF TATA

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CONTENT

Sr. No. PARTICULARS Page No.

CHAPTER I – INTRODUCTION

1.1 Introduction to HRM 3

1.2 Importance of HRM 3

1.3 Introduction to Succession Planning 5

CHAPTER II – SUCCESSION PLANNING

2.1 Definition 5

2.2 Enforcing the Succession Plan 6

2.3 Coverage 6

2.4 The Role of HR 7

2.5 Importance of Succession Planning 8

2.6 Succession Planning Process 10

2.7 Advantages of Succession Planning 14

2.8 Mistakes to be Avoided in Succession

Planning

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CHAPTER III – CASE STUDY OF TATA GROUP

3.1 Introduction 17

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3.2 Early Years of Mr. Ratan Tata 19

3.3 Building the TATA Corporate Brand 21

3.4 TATA Group – Today & Tomorrow 22

3.5 The Challenges Before the Successor 24

3.6 The Race for Succession 26

3.7 About Cyrus Pallonji Mistry 28

CHAPTER IV – CONCLUSION

4.1 Aftermath of the Decision 31

4.2 Conclusion on Succession Planning 33

CHAPTER V - APPENDIX

5.1 Bibliography 35

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INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

Human resources are the most valuable and unique assets of an organization. The successful

management of an organization's human resources is an exciting, dynamic and challenging task,

especially at a time when the world has become a global village and economies are in a state of

flux. The scarcity of talented resources and the growing expectations of the modern day worker

have further increased the complexity of the human resource function. Even though specific

human resource functions/activities are the responsibility of the human resource department, the

actual management of human resources is the responsibility of all the managers in an

organization. It is therefore necessary for all managers to understand and give due importance to

the different human resource policies and activities in the organization. Human Resource

Management outlines the importance of HRM and its different functions in an organization. It

examines the various HR processes that are concerned with attracting, managing, motivating and

developing employees for the benefit of the organization.

Importance of HRM:-

1. Recruitment and Training

This is one of the major responsibilities of the human resource team. The HR managers

come up with plans and strategies for hiring the right kind of people. They design the

criteria which is best suited for a specific job description. Their other tasks related to

recruitment include formulating the obligations of an employee and the scope of tasks

assigned to him or her. Based on these two factors, the contract of an employee with the

company is prepared. When needed, they also provide training to the employees

according to the requirements of the organization. Thus, the staff members get the

opportunity to sharpen their existing skills or develop specialized skills which in turn,

will help them to take up some new roles.

2. Performance Appraisals

HRM encourages the people working in an organization, to work according to their

potential and gives them suggestions that can help them to bring about improvement in it.

The team communicates with the staff individually from time to time and provides all the

necessary information regarding their performances and also defines their respective

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roles. This is beneficial as it enables them to form an outline of their anticipated goals in

much clearer terms and thereby, helps them execute the goals with best possible efforts.

Performance appraisals, when taken on a regular basis, motivate the employees.

3. Maintaining Work Atmosphere

This is a vital aspect of HRM because the performance of an individual in an

organization is largely driven by the work atmosphere or work culture that prevails at the

workplace. A good working condition is one of the benefits that the employees can

expect from an efficient human resource team. A safe, clean and healthy environment can

bring out the best in an employee. A friendly atmosphere gives the staff members‘ job

satisfaction as well.

4. Managing Disputes

In an organization, there are several issues on which disputes may arise between the

employees and the employers. You can say conflicts are almost inevitable. In such a

scenario, it is the human resource department which acts as a consultant and mediator to

sort out those issues in an effective manner. They first hear the grievances of the

employees. Then they come up with suitable solutions to sort them out. In other words,

they take timely action and prevent things from going out of hands.

5. Developing Public Relations

The responsibility of establishing good public relations lies with the HRM to a great

extent. They organize business meetings, seminars and various official gatherings on

behalf of the company in order to build up relationships with other business sectors.

Sometimes, the HR department plays an active role in preparing the business and

marketing plans for the organization too.

Any organization, without a proper setup for HRM is bound to suffer from serious problems

while managing its regular activities. For this reason, today, companies must put a lot of effort

and energy into setting up a strong and effective HRM.

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INTRODUCTION TO SUCCESSION PLANNING

Succession Planning ―Thinking About Tomorrow Today‖ In organizational development,

succession planning is the process of identifying and preparing suitable employees through

mentoring, training and job rotation, to replace key players — such as the chief executive officer

(CEO) — within an organization as their terms expire. From the risk management aspect,

provisions are made in case no suitable internal candidates are available to replace the loss of any

key person. It is usual for an organization to insure the key person so that funds are available if

she or he dies and these funds can be used by the business to cope with the problems before a

suitable replacement is found or developed. Succession Planning involves having senior

executives periodically review their top executives and those in the next-lower level to determine

several backups for each senior position. This is important because it often takes years of

grooming to develop effective senior managers. There is a critical shortage in companies of

middle and top leaders for the next five years. Organizations will need to create pools of

candidates with high leadership potential. Succession planning involves a careful balancing of

the concerns and needs of a firm‘s founding and senior managers, on the one hand, and its more

junior investment professionals and managers, on the other hand. The founding and senior

managers want to be properly rewarded for their efforts in building and growing the firm, and

this may include rights to continue to participate in fund economics after these managers have

begun to wind down their active involvement. These desires must be balanced against the need to

provide increased economic benefits and firm governance rights to junior managers and

investment professionals in order to develop the next generation of managers for the firm.

Definition

Succession planning can be broadly defined as identifying future potential leaders to fill key

positions. Wendy Hirsh1 defines succession planning as ‗a process by which one or more

successors are identified for key posts (or groups of similar key posts), and career moves and/or

development activities are planned for these successors. Successors may be fairly ready to do the

job (short-term successors) or seen as having longer-term potential (long-term successors).‘

According to Hirsh, succession planning sits inside a very much wider set of resourcing and

development processes called 'succession management', encompassing management resourcing

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strategy, aggregate analysis of demand/supply (human resource planning and auditing), skills

analysis, the job filling process, and management development (including graduate and high-

flyer programs).

Enforcing the succession plan:

A careful and considered plan of action ensures the least possible disruption to the person‘s

responsibilities and therefore the organization‘s effectiveness. Examples include such a person

who is:-

Suddenly and unexpectedly unable or unwilling to continue their role within the

organization;

Accepting an approach from another organization or external opportunity which will

terminate or lessen their value to the current organization;

Indicating the conclusion of a contract or time-limited project;

Moving to another position and different set of responsibilities within the organization.

Coverage

Organizations differ in size, scope and type, so it is difficult to point to any single model of

succession planning. However, it is most common for succession planning to cover only the most

senior jobs in the organization, plus short-term and longer-term successors for these posts. The

latter groups are in effect on a fast-track, and are developed through job moves within various

parts of the business. This focus on the most senior posts - perhaps the top two or three levels of

management - means that even in large organizations, only a few hundred people at any given

time will be subject to the succession planning process. It also makes the process more

manageable, because it is much easier to concentrate on a few hundred individuals rather than

(say) several thousand. That said, however, many large organizations attempt to operate

devolved models in divisions, sites or countries where the same or similar processes are applied

to a wider population.

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The Role of HR

Succession planning needs to be owned by line managers, and should be actively led by the chief

executive who has a key role in ensuring that it is given the importance it deserves by other

senior managers; ensuring that there is a healthy pipeline of potential leaders is about nothing

less than the future of the organization. But it is not realistic for CEOs and those around them to

have sole responsibility for this; they have neither the time nor the expertise. The HR function

therefore has a critical role in supporting and facilitating the process, not least in compiling all

the necessary information on potential candidates. Any career move at senior level is a process of

multiple dialogues, in which a senior representative from HR will collect views from senior line

managers in an iterative fashion, testing, challenging and amending them as the dialogue goes

on, making sure that all possibilities are covered, and maybe putting proposals for decision to a

succession development committee. HR departments are of course also heavily involved in

giving career advice and information to individuals, and assessing and advising on their

development needs. The HR function is also centrally concerned in the design and management

of assessment processes and information support, including the development and maintenance of

computerized databases.

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IMPORTANCE OF SUCCESSION PLANNING

Succession planning is an essential part of doing business, no matter how certain your future

appears. It's easy to put off planning when everything seems to be going so well, right? Wrong.

Now is the time to begin succession planning. Here are some reasons why it can't — and

shouldn't — wait:-

1. You Can't Plan for Disaster:- No matter how good you and your staff are at revenue

projections or economic predictions, no one can truly plan for disaster. Whether it's an

unforeseen illness, a natural disaster, or a CEO's decision to suddenly retire, the reasons

for having a succession plan in place before it is needed are endless. So while you can't

plan for disaster, you can put into place a series of contingencies that will help your

company stay afloat if, in fact, catastrophe occurs.

2. Succession Planning Benefits the Business Now:- Just as business practices have

evolved over the years, succession planning has also grown and changed. It's no longer a

plan that can only be accessed when leadership is going to change; a succession plan can

be used before its "real" intent is necessary. It can be used to build strong leadership, help

a business survive the daily changes in the marketplace, and force executives to review

and examine the company's current goals.

3. Succession Planning Gives Your Colleagues a Voice:- If you're running a family

business, the process of succession planning will give family members an opportunity to

express their needs and concerns. Giving them that voice will also help create a sense of

responsibility throughout the organization, which is critical for successful succession

planning. Resist the temptation to solely carry the entire weight of creating and then

sustaining a plan.

4. A Succession Plan can Help Sustain Income and Support Expenses:- Talking about

money should be a priority. People generally don't want to work for free and things don't

pay for themselves. A succession plan can provide answers as to what you — and your

staff — will need for future income, as well as what kinds of expenses you may incur

once you step out of the main leadership role. Ask yourself questions about your annual

income and other benefits including health and dental insurance for you and your

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dependents, life insurance premiums paid for by the company, your car, professional

memberships, and other business-related expenses.

5. Succession Planning Gives You a Big Picture:- Some companies mistakenly focus

solely on replacing high-level executives. A good succession plan can go further,

however, and force you to examine all levels of employees. The people who do the day-

to-day work are the ones keeping the business going. Neglecting to add them to the

succession planning mix could have dire consequences. As you develop your plan,

incorporate all layers of management and their direct reports.

6. Succession Planning Strengthens Departmental Relationships:- When regular

communication occurs between departments you are more likely to experience synergy,

which breeds a culture of strength. Make sure that you link your succession planning

activities with human resources. After all, HR is about people. By including HR in

succession planning, you can incorporate elements like the employee-evaluation process,

which can help when deciding whether to fill vacancies with internal candidates.

7. Succession Planning Keeps the Mood Buoyant:- Change - a major component of a

succession plan — is exciting and can bring a company unforeseen rewards. Still, change

can be a source of tremendous stress, especially when people's livelihoods are at stake.

As you put your succession plan together, consider its positive effects on the business.

Planning for the future is exciting and, if done correctly, can inspire your workers to stay

involved and maintain company loyalty. It's true that a plan is often put into place to avert

catastrophe, but it's also a company's way of embracing the future — a business strategy

that is essential for survival.

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SUCCESSION PLANNING PROCESS

Succession planning recognizes that some jobs are the lifeblood of the organization and too

critical to be left vacant or filled by any but the best qualified persons. Effectively done,

succession planning is critical to mission success and creates an effective process for

recognizing, developing, and retaining top leadership talent.

Success factors

There are several factors typically found in successful succession planning initiatives. For

example:-

Senior leaders are personally involved.

Senior leaders hold themselves accountable for growing leaders.

Employees are committed to their own self-development.

Success is based on a business case for long-term needs.

Succession is linked to strategic planning and investment in the future.

Workforce data and analysis inform the process.

Leadership competencies are identified and used for selection and development.

A pool of talent is identified and developed early for long-term needs.

Development is based on challenging and varied job-based experiences.

Senior leaders form a partnership with human resources.

Succession planning addresses challenges such as diversity, recruitment, and

retention.

Effective succession planning

The following information includes:-

A graphic representation of a six-step process for effective succession planning

A table with descriptions of each step in this process.

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Steps

Step 1: Link Strategic and Workforce Planning Decisions

This step involves:-

1. Identifying the long-term vision and direction.

2. Analyzing future requirements for products and services.

3. Using data already collected.

4. Connecting succession planning to the values of the organization.

5. Connecting succession planning to the needs and interests of senior leaders.

Step 2: Analyze Gaps

This step involves:-

1. Identifying core competencies and technical competency requirements.

2. Determining current supply and anticipated demand.

3. Determining talents needed for the long term.

4. Identifying ―real‖ continuity issues.

5. Developing a business plan based on long-term talent needs, not on position replacement.

Step 3: Identify Talent Pools

This step involves:-

1. Using pools of candidates V/s development of positions.

2. Identifying talent with critical competencies from multiple levels—early in careers and

often.

3. Assessing competency and skill levels of current workforce, using assessment

instrument(s).

4. Using 360° feedback for development purposes.

5. Analyzing external sources of talent.

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Step 4: Develop Succession Strategies

This step involves:-

1. Identifying recruitment strategies:-

Recruitment and relocation bonuses.

Special programs.

2. Identifying retention strategies:-

Retention bonuses.

Quality of work life programs.

3. Identifying development/learning strategies:-

Planned job assignments.

Formal development.

Coaching and mentoring.

Assessment and feedback.

Action learning projects.

Communities of practice.

Shadowing.

Step 5: Implement Succession Strategies

This step involves:-

1. Implementing recruitment strategies (e.g., recruitment and relocation bonuses).

2. Implementing retention strategies (e.g., retention bonuses, quality of work life programs).

3. Implementing development/learning strategies (e.g., planned job assignments, formal

development, Communities of Practice).

4. Communication planning.

5. Determining and applying measures of success.

6. Linking succession planning to HR processes.

Performance management.

Compensation.

Recognition.

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Recruitment and retention.

Workforce planning.

7. Implementing strategies for maintaining senior level commitment.

Step 6: Monitor and Evaluate

This step involves:-

1. Tracking selections from talent pools.

2. Listening to leader feedback on success of internal talent and internal hires.

3. Analyzing satisfaction surveys from customers, employees, and stakeholders.

4. Assessing response to changing requirements and needs.

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ADVANTAGES OF SUCCESSION PLANNING

Succession planning is an essential part of doing business, no matter how certain your future

appears. It's not easy to put off planning when everything seems to be going so well. Here are

some reasons why it can't - and shouldn't - wait:-

You can't plan for disaster.

Succession planning benefits the business now.

Succession planning gives your colleagues a voice.

A succession plan can help sustain income and support expenses.

Succession planning gives you a big picture.

Succession planning strengthens departmental relationships.

Succession planning keeps the mood buoyant.

Besides the obvious benefit of not leaving your company in the lurch of proper Succession

Planning will help your company in other ways, too. Here‘s a rundown of the benefits.

Remember, not all benefits will apply, depending on your specific situation. Succession Planning

can:-

1. Reduce Taxes, in some Situations with Family-Owned Businesses:- For example, if a

company gets new ownership after an owner's death, lack of planning can result in steep

estate taxes. Other tax issues, such as transferring ownership to a child, might apply.

2. Ensure Continuity:- Customers, clients, vendors, and employees all want and need to

know that a business will continue to function as they know it, even when there‘s a

leadership change. Choosing and grooming a successor who fits your mold will help this

happen.

3. Provide Training Plan for Possible Successors:- If you identify who you might choose

as a successor early, you‘ll know that that person needs more training and one-on-one

time with your current leader to gain as much knowledge for the position while it‘s still

possible.

4. Help you plan for the future direction of the company.

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MISTAKES TO BE AVOIDED IN SUCCESSION PLANNING

Many mistakes are commonly made in establishing succession planning programs. They are

worth enumerating. It is also worthwhile to describe some ways to avoid these common

mistakes:-

1. Assuming that Success at One Level Will Guarantee Success at Higher Levels:- An

individual‘s success at one level is no guarantee of success at higher levels of

responsibility. The reason is simple: the competencies required for success at each level

are different. Hence, it is important to separate thinking about how well someone does his

or her current job and how well he or she might do a job at a higher responsibility level.

2. Assuming that Bosses Are Always the Best Judges of Who Is Promotable:- A second

mistake is to assume that, for purposes of succession planning, bosses are always the best

judges of who is promotable. That is not always true. Bosses are self-interested players in

the succession game. They have a stake in what happens to people. Indeed, some bosses

do not want to see their best people promoted for fear of an inability to replace them.

Some bosses grade people by their own standards - with the result that some individuals

who are quite unlike the boss are not considered for promotion. While the support of a

boss is useful in developing individuals, more objective assessments, such as multi-rater

assessment are excellent in aiding the manager‘s assessment.

3. Assuming that Promotions Are Rewards:- Some employees have an entitlement

mentality in which they feel that long service with an organization should always be

rewarded with promotions. But business decisions must be based on who will do the best

job, not who is ―owed‖ a promotion because of greatest seniority. Workers must

continually be reminded that doing jobs at each level requires different competencies, and

the best way for them to compete is to prepare for future challenges rather than expect

promotions for past performance at a different level of responsibility.

4. Trying to Do Too Much Too Fast:- The strong results-orientation of many

organizations today emphasizes quick results. Senior leaders expect to see all the

components of a comprehensive succession system in place immediately. That is not

always realistic. It is advisable to think of implementing systematic succession in a

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phased way - either from the top down or else starting in specific divisions or locations

with greatest need.

5. Giving No Thought to What to Call It:- A fifth mistake is to devote no time to

considering what to call the succession program. As any marketer knows, product names

do matter. It is not necessary to call a spade a spade. Many organizations choose

alternative names–such as ―leadership development program,‖ ―human capital

management program,‖ or even ―talent program.‖

6. Assuming that Everyone Wants a Promotion:- A sixth mistake is to assume that

everyone wants a promotion. That is not always true today. In many downsized

organizations, workers have seen what pressures their bosses have to deal with. Some say

―leave me out of that.‖ Hence, it is unwise to assume that everyone wants a promotion–or

even to assume that money will convince everyone. It will not. Check first. Find out what

people want to do. For that reason, many organizations launch both a top-down

succession planning program and a bottom-up career planning program to galvanize

development.

7. Lack of understanding how it works and how it benefits the organization.

8. Lack of a formal written plan for the person or position(s).

9. Lack of availability of human and financial resources; lack of budgetary commitment.

10. Superficial approach; lack of real understanding of the procedures, processes and

requirements of each area the individual is exposed to during the process.

11. The requirements of the Managers/Executives are not fulfilled in providing dedicated

instructions, guidance regarding skills, knowledge and abilities needed for the candidates

to be successful.

12. Failure to identify key employees who may have concerns with your succession plan.

13. Failure to plan for disability.

14. A rigid, inflexible plan NOT tailored to the needs and abilities of the personnel involved.

15. Too long a wait for real movement/promotion, disillusionment, may result in some

people leaving due to apparent inertia in the system.

16. Selection of unqualified or unmotivated people for inclusion in the Succession Plan.

Quality of the individuals selected is paramount to the success of the process.

17. Complex program, requiring considerable paper work, follow-up, reporting.

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Case Study of TATA Group

The Tata case is interesting. From what is publicly known, succession planning was not a strong

point until the late 1980s. In the late 1970s, the unsuccessful succession planning attempt by

Voltas is etched in the public mind.

The Tata‘s have gone down this road before. In 1981, group company Voltas hired a search firm

to find a CEO. ―There was a worldwide search,‖ said P.N. Singh, who was in charge of HR at

Voltas when the exercise took place. ―A global agency was employed. There were ads in global

media and people were asked to apply for the job of CEO. Chairman Tobaccowala initiated a

high visibility, open search which resulted in the recruitment of Ramesh Sarin of ITC as the CEO

and finally, Sarin from tobacco-to-hotels major ITC was chosen as MD.‖ The experiment

worked for only a few years. Subsequent events proved that Tobaccowala had no intention of

giving up his executive power and authority. Inevitable clashes followed and Sarin fell out and

moved on. ―It was a question of culture and control,‖ says Singh, who is now chairman of Grid

Consultants, which conducts Blake & Mouton grid seminars. ―ITC had a different culture and

Tobaccowala had a different idea of control. He was unwilling to let go. Tobaccowala was an

‗entrepreneur‘ and Sarin was a manager. So the two should actually have worked well together.‖

But something positive by way of process must have happened during the last 20 years under

Ratan Tata. It is known that Ratan Tata set up a group HR function as part of his re-organization

plan in the 1990s. The intent was to introduce good practices within the companies with respect

to talent management and succession planning. While there is not much outside information

about how much progress the companies have made, something right must be going on. The

succession transitions are impressive from an outsider's perspective. Further, the board directors

seem to be involved and to drive the leadership changes in the companies.

In Tata Steel, Jamshed Irani became CEO in 1991 amidst tumultuous circumstances of the Russi

Mody departure. In earlier interviews, Irani had mentioned that by the late 1990s, he presented to

Ratan Tata a comprehensive review of possible successors; together, they zeroed in on a few

possibilities. From this list, B. Muthuraman emerged as the CEO in 2001. Muthuraman, it is

learnt, did a similar exercise and discussed it quite early on with Ratan Tata and the board while

choosing his successor in 2009. He too accomplished a successful transition.

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In Tata Consultancy, S. Ramadorai took over from the legendary F.C. Kohli in 1996. He was

filling big shoes. He grew the business dramatically over the next decade and a half, including

the IPO of the company. By mid 2000s, he is reported to have made a short list of potential

successors for discussion with Ratan Tata and the board. From this list emerged N.

Chandrasekharan. Ramadorai walked out of his TCS office on the date of his retirement so that

his successor would have a free hand.

In Tata Chemicals, change was sought in 2001. Outsider Prasad Menon was recruited to succeed

Manu Seth. Perhaps because of what he had learnt at ICI, his earlier company, Prasad Menon

started to think about succession early on. Apart from pacing potential, solid internal leaders, the

leadership brought in a young TAS officer into the company and tested him through hugely

challenging assignments. All the identified candidates were watched, coached, talked about and

nominated to Advanced Management Programmes. Finally a choice was made by selecting R.

Mukundan, with a short bridging role by veteran Homi Khusrokhan.

The successful transitions completed in the listed Tata companies during the last two decades are

impressive: Titan (where Xerxes Desai gave way to Bhaskar Bhat), Voltas, Rallis, and Indian

Hotels. The conclusion is that whatever the process, the Tata group seems to have got succession

about right - not perfect, but it seems to be effective and deliver positive results.

In 2011, Tata was in the midst of the mother of all successions, finding a successor to Ratan

Tata. Instead of focusing on the possible candidates, it is purposeful to reflect on the streamlined

and effective process of succession they had announced.

Firstly, a search committee was appointed with its composition and membership placed in the

public domain. The choice of candidate was kept wide open: man or woman, Indian or foreigner,

internal or external. Secondly, the search committee provided brief public updates of the status; it

wasn‘t surprising that the details or candidates were not revealed. Thirdly, the search committee

set itself approximate time targets so that their work inadvertently did not become desultory.

Lastly, they internally adopted relevant criteria and a methodology, taking the assistance of a

specialist firm. There seemingly wasn‘t much else to do by way of a process. Based on the recent

track record of successful transitions and the transparent process for the chairman succession, the

Tata group did have a good chance of getting the succession right. People had no choice but to

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wait for the search committee to complete its job rather than to keep speculating on names and

individuals.

EARLY YEARS OF MR. RATAN TATA & THE EXIT OF THE SATRAPS

Ratan Tata was a surprise choice to head the group after JRD (as J.R.D. Tata was popularly

known).

He studied at Cornell University, specialized in architecture, and had an offer from International

Business Machines Corp., but returned to India because his grandmother was unwell, and joined

Tata Steel Ltd (then known as Tata Iron and Steel Co., or Tisco) as an apprentice on the shop

floor of its Jamshedpur plant. The year was 1962.

In 1971, he was appointed director-in-charge of the ailing National Radio and Electronics Co.

While Tata managed to turn around the firm‘s fortunes, it was to be a temporary success.

In 1977, he was asked to turn around another troubled company, the Mumbai-based Empress

Mills. Tata managed to do so, but was refused an investment he thought was required. The

Mumbai textile workers‘ strike led by Datta Samant also hurt the company, which eventually

closed down in 1986.

Maybe because of these failures, few people understood why he was chosen as the person who

would replace JRD in 1991. At the time, Tata was still perceived as an outsider in Bombay

House, the group‘s headquarters.

Several group companies were also led by individuals who had been given considerable

autonomy by JRD and were, sometimes, more closely associated with their companies than the

group‘s chairman himself.

Among these executives were Russi Mody at Tata Steel; Darbari Seth at Tata Tea and Tata

Chemicals; Ajit Kerkar, who transformed the Taj group (Indian Hotels) into a major hospitality

chain; and Nani Palkhivala, a director on the boards of several Tata companies and chairman of

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the erstwhile Associated Cement Companies (ACC Ltd), in which the Tata group was one of the

original promoters.

It had been widely expected that one of these individuals would succeed JRD, and Tata‘s

appointment resulted in some bitterness—and not all of it remained unvoiced. Mody sparred

openly with Tata. Kerkar and the new chairman had different views on the management of the

chain.

―J.R.D. Tata had around him a team of senior managers, all of them people of substantial

understanding in their respective spheres,‖ Tata said in an interview posted on the Tata group

website on 6 December for some time before being inexplicably taken down. ―While they may

have acceded to his wish that I take over the chairmanship—and this happened suddenly—I must

confess that I did not feel any sense of joyousness on their part, because some of them had

aspirations to have the job themselves.‖

In 1993, Mody was sacked after a messy scrap involving the appointment of senior executives.

In 1997, Palkhivala quit, citing ill health. And Seth retired in 1995 and Kerkar in 1997, after Tata

brought in a new policy that set the retirement age for directors at 70 and senior executives at 65.

―In my personal view, when JRD saw this scramble among the company chiefs to succeed him

and the unpleasant innuendos that surfaced, he may have appointed someone who understood the

Tata ethos, which was always very important to him; and, perhaps, he thought Ratan Tata was

someone who could uphold this ethos,‖ Piramal said.

She added that the concept of succession planning was nascent in JRD‘s time. It‘s only in the last

five years that large business groups have realized the need for this, she said. Indeed, perhaps

because of the rocky start that he had, Tata appointed a five-member selection committee,

comprising N.A. Soonawala, Shirin Bharucha, R.K. Krishna Kumar, Cyrus Mistry and Lord

Kumar Bhattacharya, to identify his successor.

In hindsight, Tata‘s ascension in 1991 was the best thing that could have happened to the Tata

group, according to a business historian and writer.

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―Tata, like every Indian company, was suddenly in a new environment. It could not keep

operating under the old market rules, the old certainties,‖ said Morgen Witzel, a UK-based

management writer and author of Tata: The Evolution of a Corporate Brand.

―Ratan Tata‘s strategy was to change Tata to help it keep pace with a changing India,‖ he said.

And, after spending nearly five years quelling the challenge of the satraps, that‘s just what Tata

did.

BUILDING THE TATA CORPORATE BRAND – A GROUP IDENTITY

Once the dust over the succession issue settled, the conglomerate‘s new chief Mr. Ratan Tata

came into his own. His primary focus was the improvement of the operational efficiencies of

several of the group‘s manufacturing companies and reiterating the very conglomerate nature of

the entity.

The main beneficiaries of the focus on operations were Tisco and Telco (Tata Engineering and

Locomotive Co.). The former soon emerged as one of the lowest-cost steel makers in the world.

The two companies were also renamed—Tisco as Tata Steel and Telco as Tata Motors.

Simultaneously, Tata convinced group companies to pay royalty to Tata Sons for the direct or

indirect use of the Tata brand name. He also moved towards increasing the promoters‘

shareholding in key group firms. Until then, the promoting firms held minority stakes in most

group companies, making them vulnerable to takeovers.

The group also exited businesses such as cement, textiles and cosmetics even as it increased its

focus on others such as software, and entered telecommunications, finance and retail.

These divestments and investments helped the Tata group ―shake off the slightly fusty image it

had built up in the 1980s and make it fit for purpose in the modern world‖, according to Witzel.

Indeed, today, the Tata group‘s most profitable company is information technology firm Tata

Consultancy Services Ltd (TCS), which boasts around $10 billion (around Rs.54,700 crore) in

revenue and serves customers around the world.

22

―I think the creation of the corporate brand was quite important. The Tata corporate brand is one

of the world‘s most valuable global brands because it harnesses the power of the whole group

and creates a strong image in the minds of the stakeholders,‖ Witzel added.

Tata himself sees the re-establishment of the group identity as one of his achievements. In the

interview that was posted on the group‘s website, he said one of his most satisfying moments as

chairman was the welding of ―the organization together in a more cohesive way than it had been

in the past that it was able to identify itself more as a group‖.

And, even as some of these efforts to establish himself, improve the operational effectiveness of

some companies, and reiterate a group identity were bearing fruit, Tata went out and made a big-

ticket global acquisition—the Tetley group in 2000.

THE TATA GROUP – TODAY AND TOMORROW

Mr. Jamsetji N. Tata was the founder of the group. In 1904, he handed over the baton to Sir

Dorab Tata, who was at the helm of affairs till 1932, followed by Sir Nowroji Saklatvala who

was there till 1938. The group was then steered by Mr. J. R. D. Tata till 1991, when the charge

passed on to Mr. Ratan Tata. It was on March 23, 1991, that Mr. Ratan Tata was told by his

uncle that he intended to handover the baton of the group to him. Coinciding with the economic

reforms unleashed by Dr. Manmohan Singh, the group has had a remarkable journey since then!

Mr. Ratan Tata took over the reins of the group at a time when it was an empire made up of

several independent fiefdoms, run by stalwarts like Mr. Darbari Seth, Mr. Russi Mody, Mr. Ajit

Kerkar and Mr. Nani Palkhivala. Mr. Ratan Tata was barely 54 when he assumed control of the

Tata Group in 1991. His successor was searched for, keeping in line with a whole lot of other

Tata company managing directors who were then in their 40s. The group had brought people in

their 40s and 50s to run some key companies. Observers said that the next leaders will be from

among them. They included Tata Power MD Anil Sardana, TCS MD Natarajan Chandrasekaran,

Tata Chemicals MD R Mukundan, Tata Teleservices MD N Srinath, Tata Global Beverages head

Peter Unsworth, Tata Motors MD Carl-Peters Forster, India Hotels chief Raymond Bickson and

Tata International MD Noel Tata.

23

The activities of the group were and are overseen by two bodies. The Executive Office reviews

business activities of all group companies. Besides Ratan Tata, it had R Gopalakrishnan, Ishaat

Hussain, Kishor Chaukar and Arunkumar Gandhi. Then there is the Group Corporate Centre,

which reviewed policy issues related to growth and took decisions on entering new areas. It also

promoted the Tata brand and provided advisory services to group companies in human resources,

finance and legal affairs. It comprised Ratan Tata, JJ Irani, R K Krishna Kumar, R

Gopalakrishnan, Ishaat Hussain, Kishor Chaukar and Arunkumar Gandhi. The members of both

these groups were then in their 60s and 70s. Tata Steel's acquisition of Corus, Tata Motors

buying Jaguar Land Rover and TCS going public were some of the significant milestones after

Mr. Ratan Tata took over from JRD as Chairman of the group. The Tata Group comprises over

100 operating companies in seven business sectors: communications and information

technology, engineering, materials, services, energy, consumer products and chemicals. The

group has operations in more than 80 countries across six continents, and its companies export

products and services to 85 countries. The total revenue of Tata companies, taken together, was

$83.3 billion (around 379,675 Cr INR) in 2010-11, with 58 per cent of this coming from business

outside India. Tata companies employ over 425,000 people worldwide. The Tata name has been

respected in India for 140 years for its adherence to strong values and business ethics. Every Tata

company or enterprise operates independently. Each of these companies has its own board of

directors and shareholders, to whom it is answerable. There are 31 publicly listed Tata

enterprises and they have a combined market capitalization of about $77.44 billion (as on

November 17, 2011), and a shareholder base of 4.3 million. The major Tata companies are Tata

Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Global

Beverages, Indian Hotels, Tata Communications, Tata Teleservices and Titan. ―Mr. Tata has

taken the group to great heights and we hope the new Chairman will take it to greater heights,‖

said an official closely associated with the selection committee. The five-member committee

held 18 meetings over the last on-and-a-half years and interviewed a large number of candidates,

both Indian and expatriates.

―Mr. Tata had a tougher clean-up exercise where there were many powerful individuals who

were running their own fiefdoms. He managed to do this while carving out a new global agenda

for the Group. The new Chairman will have a relatively easier job on his hands,‖ an industry

veteran said. Much like the few erstwhile Kings who chose a successor based on merit alone, the

24

group had invariably followed the principle of meritocracy when choosing a successor in the

past. What the new Chairman would have had to take over from Mr. Ratan Tata was a much

more well-knit and cohesive group, united by a shared philosophy, vision and identity.

THE CHALLENGES THAT WERE BEFORE THE MAN-TO-BE

There is always a lot of hoopla surrounding the succession planning of leaders. Whenever a

visible leadership change occurs, the image of the incoming leader appears to be much less than

the exiting leader. The fallacy lies in our tendency to make an unfair comparison between the

embellished profile of the outgoing leader and the unclear profile of the incoming leader. That is

why Lal Bahadur Shastri initially looked inadequate as a replacement for Jawaharlal Nehru,

Homi Sethna looked inadequate compared to Homi Bhabha and Vikram Sarabhai, and Ratan

Tata was thought to be less than J.R.D. Tata. But all of these turned out to be successful

transitions. There were many challenges ahead for the young Chairman-to-be.

STEEL

Weak demand and decline in global steel prices were the key challenges faced by Tata Steel's

European operations. This was even as the prices of raw materials such as coking coal and iron

ore ruled high as compared to 2010. Tata Steel had reduced its capacity utilization marginally in

line with weakening demand and may have had to resort to production cuts if demand did not

improve in Europe. Even in India, the company was up against weaker demand from sectors

such as construction and automotive, but expected volumes to grow by eight per cent for the year

2011.

AUTOMOTIVE

The big disappointment was the Nano which was clocking modest numbers. The car business

needs to rev up though commercial vehicles had been doing well. The Tatas were and are the

market leader in trucks and buses but a lot depended then on the state of the economy over the

next few months.

25

TELECOM

In the telecom sector, the Tatas had their hands full with major challenges for both Tata

Teleservices and Tata Communications. Tata Tele was now the fifth largest telecom player in a

crowded market with as many as 14 in the arena. But the overall telecom sector was witnessing

disturbing trends over the past year. All the operators' revenues, including Tata Teleservices,

were stagnating, profitability was declining, and investments were slowing and costs were rising.

Tata Teleservices undertook a major restructuring exercise in bid to cut costs and rationalize

operations. The Successor had to ensure that this paid off in the long term.

Apart from the tough market conditions, there were a whole host of regulatory issues especially

those related to spectrum. Tata Teleservices still did not have GSM spectrum in key markets like

Delhi. The company's 3G roll out was also under a cloud with the Government raising questions

over roaming agreements.

On the Tata Communications front, the worry was to bring the company back into profitability.

The company, which once had a monopoly over the international long distance segment, had to

reposition its strategy with more focus on foreign markets. While this paid off to some extent, the

then ongoing dispute with the Government over funding and land sale put the company's

expansion plans on hold.

Another immediate challenge for the new Chairman was to be able to steer the company away

from all that happened with Ms. Niira Radia and the 2G scam. Although there were no business

implications, the Tatas had taken a major hit on its image, which the new Chairman would have

had to build.

IT SERVICES

The offshore IT/BPO players were grappling with macro uncertainties in key overseas markets

such as the US and Europe, and, at the same time, coping with currency volatility back home.

For TCS, the largest Indian IT Services Company, the challenge was also to sustain its pole

position in a market that had already started seeing a reshuffle in the pecking order of Tier-1

vendors, said Mr. Sanjeev Hota, Associate Vice-President - Institutional Equities at Sharekhan.

26

Also given its over two lakh employee base, TCS had to chase, perhaps even more aggressively,

the non-linear growth strategy (beyond adding employees). ―Deals such as the recent $2.2-billion

contract from Friends Life (a British financial services firm) will be critical in this regard…If

TCS wants to scale up further, it will be important that the revenue growth outstrips the

employee growth,‖ noted Mr. Harit Shah, Senior Research Analyst at Nirmal Bang Institutional

Equities.

Though the company had been growing at a scorching pace in the last few quarters, the euro

zone crisis and the rupee volatility were the key challenges. Mr. Tata's acumen when it came to

the business of technology was well known. Would the new Chairman's lack of expertise in the

technology space be a deterrent going forward? – was a key question to be considered. ―I do not

think so…at the top level people settle into their roles pretty quickly. Sometimes a complete

outsider can bring a completely new perspective to the business of technology,‖ TCS sources had

said.

THE RACE FOR SUCCESSION

The committee set up to find a successor to Tata group Chairman Ratan Tata had shortlisted

around 11 candidates. Out of them, four-five were group employees.

The frontrunner in the Tata race appeared to be Noel Tata, Ratan Tata‘s half-brother who was

then promoted to overseeing the group‘s international operations. Some 65% of the

conglomerate‘s US$70.8 billion revenue (April-

March 2008-2009) came from outside India, so this was a significant responsibility.

Additionally, Noel Tata was the son-in-law of Pallonji Mistry, who owned 18.4% in Tata Sons,

which made him the single largest individual shareholder (most of the equity being held by

charitable trusts).

But others were in the race, too. The Economic Times speculated that the internal candidates

include Tata Sons executive directors Ishaat Hussain and R. Gopalakrishnan; and B.

Muthuraman, Ravi Kant and S. Ramadorai, vice chairmen of Tata Steel, Tata Motors and Tata

Consultancy Services (TCS), respectively. The younger group included the CEOs of TCS (N.

27

Chandrasekaran) and Titan (Bhaskar Bhat). But they were long shots at best, observers had

reported.

There was also a speculation that, given the group‘s increasing global focus, the choice need not

be an Indian. The Times of India said that the candidates could include Indra Nooyi of PepsiCo,

former Vodafone head Arun Sarin and Renault Nissan chief Carlos Ghosn. ―The selection

process would consider suitable persons from within the Tata companies, other professionals in

India as well as persons overseas with global experience,‖ said a Tata Sons press release.

Ratan Tata had also clarified that the new chief need not have to be either a Parsi or a Tata. (The

Parsis are a wealthy business community in India, and the Tata chief has traditionally been a

Parsi.) The Parsis are a shrinking community. Birth rates are very low and women who marry

outside the community are excommunicated. There are now less than 60,000 Parsis left in India,

and it is inevitable that the Tata baton will pass on to a non-Parsi sooner or later.

It was evident that it would have to pass on to a non-Tata, too. The Tatas are a small clan. Apart

from Ratan, there was his 80-year-old French stepmother, Simone, who was obviously not in the

running for his job. His brother, Jimmy, who was close to 70 and had retired from Tata Power.

Aloo Tata (who was by birth a Mistry) wouldn‘t have got precedence over her husband, Noel.

And their three children — Liya, Maya and Neville — were still studying. So, Noel was the only

Tata who was eligible.

The composition of the selection panel had some critics speculating that the choice of Noel was

pre-decided. It consisted of Tata Sons directors R.K. Krishna Kumar and Cyrus Mistry (who was

Noel Tata‘s brother-in-law), Tata veteran N.S. Soonawala, group legal advisor Shirin Barucha

and independent member Lord

Kumar Bhattacharya of the Warwick Manufacturing Group of the U.K. ―There was only one

external member,‖ said Pradeep Mukerjee, founder-director of Confluence Coaching and

Consulting. Mukerjee, who had worked for several years in the HR area with Citigroup in the

U.S., says that in the West, such selection panels have many more external members. ―What

good is a panel stuffed with internal members? I wonder what the true purpose is.‖ Thus, the

panel did have to face some criticism but it was worthwhile to keep a panel that was in keeping

28

with the core values of the Tata Group for such a strategic decision-making which would bear

fruit in the long run.

CYRUS PALLONJI MISTRY

Cyrus Mistry, then 43, is the son of construction tycoon Pallonji Shapoorji Mistry. Valued at

$8.8 billion, Pallonji held an 18.5 per cent stake in Tata Sons, making him the single largest

shareholder.

Mr. Mistry is the younger son of Pallonji and is married to Rohika Chagla, the daughter of

lawyer Iqbal Chagla. He has an elder brother - Shapoor Mistry and one of his sisters is married to

Noel Tata, Ratan Tata's half-brother.

He had been a director of Tata Sons since September 1, 2006. He served as a Director of Tata

Elxsi Limited, from September 24, 1990 to October 26, 2009 and was a Director of Tata Power

Co. Ltd until September 18, 2006.

Mr. Mistry served as Chairman of the Board of Shapoorji Pallonji Group and Afcons

Infrastructure Limited before he became the Chairman of the Tata Group.

Mr. Mistry also served as Director of various companies including - Forvol International

Services Ltd, Shapoorji Pallonji & Co. Ltd, Cyrus Investments Ltd, Shapoorji Pallonji Power Co.

Ltd, Buildbazaar Technologies (India) Pvt Ltd, Sterling Investment Corporation Pvt. Ltd,

Samalpatti Power Co. Pvt. Ltd, Shapoorji Pallonji & Co. (Rajkot) Pvt. Ltd, Shapoorji Pallonji

Finance Ltd, Shapoorji Pallonji Infrastructure Capital Co. Ltd, Oman Shapoorji Construction Co.

Ltd and Muscat Pallonji Shapoorji & Co. Pvt. Ltd.

Mr. Mistry had been a Non-executive Director of Forbes Gokak Limited since June 23, 2003.

Mr. Mistry is Fellow of the Institute of Civil Engineers. He holds a BE in Civil Engineering from

Imperial College, London and a Master of Science in Management from London Business

School. He holds a Bachelor of Commerce from Mumbai University.

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An avid golfer, Mr. Mistry is also a founder member of the Construction Federation of India. He

is a trustee of the Breach Candy Hospital Trust, Mumbai. He is also on the board of Imperial

College India Foundation.

Cyrus Pallonji Mistry succeeded Ratan Tata at the helm of Tata Sons. He was appointed as

Deputy Chairman and worked with Mr. Tata for one year as per the plan chalked out for him as a

successor, before taking over in December 2012.

43-year-old Mistry was a director of Tata Sons and Tata Elxsi (India). Ratan Tata retired in 2012

when he turned 75. He joined the Tata group in 1962 and was the Chairman since 1991. Mr.

Cyrus Mistry took over from a man who over the last two decades transformed the Tata Group

into a global enterprise.

Endorsing the appointment then, Mr. Tata had said, "The appointment of Mr. Cyrus P. Mistry as

Deputy Chairman of Tata Sons is a good and far-sighted choice." (Courtesy: Press release from

Tata Sons)

"I will be committed to working with him over the next year to give him the exposure, the

involvement and the operating experience to equip him to undertake the full responsibility of the

Group on my retirement," Mr. Tata had added.

Mr. Mistry had said that he was deeply honoured by his appointment. "I am aware that an

enormous responsibility, with a great legacy, has been entrusted to me," he had reported in a

statement.

He announced that he will legally dissociate himself from the management of his family

businesses to avoid any issue of conflict of interest. Shapoorji Pallonji Mistry, the father of the

new deputy chairman, was owner of 18 per cent stake in Tata Sons. The Shapoorji Pallonji

Group is into construction, textile, water treatment and other businesses. Cyrus Mistry was the

managing director of the two billion dollar SP Group.

Apart from the Tata Group, he also serves as a director on the board of several other companies,

including Shapoorji Pallonji & Co, Forbes Gokak, Afcons Infrastructure and United Motors

(India).

30

Mr. Mistry was also a part of a search panel appointed last year to find Mr. Tata's successor. He

withdrew himself when his name was suggested. He then entered the process as a candidate.

The 5-member panel also comprised of N A Soonawala, vice-chairman, Tata Sons; R K Krishna

Kumar, non-executive director, Tata Sons; Lord Bhattacharya, a businessman based in the UK

who runs Warwick Manufacturing; and Shirin Bharucha, a lawyer for the group. The committee

is said to have met 18 times before announcing the succession plan.

31

CONCLUSION

Aftermath of the Decision

If there is any class on succession planning scheduled, Ratan Tata will surely be the one who

rightfully deserves to give tutorials. For the man who took the Tata group worth US$ 5 bn to

US$ 70 bn, the decision to relinquish the control must not have come easy, followed by a tough

job to search the right candidate who could step in his large shoes.

The same retirement rule that saw some of JRD‘s satraps leave the group mandated Tata‘s

retirement as well. ―Some people have suggested that the retirement policy should not apply to

the chairman,‖ Tata said in his interview on the website. ―I have always believed that you don‘t

make exceptions for yourself. So I took the view that the rule should apply to me too. I realize

that I have to live by the rules that I have set and step down when the time comes. And that time

has come.‖

Cyrus Mistry had been working with Tata for a year before he stepped down, and Tata had said

the Tata Sons chairman-designate has the analytical skills to steer the business forward and the

integrity to uphold the Tata ethos. Later, Tata Sons formally announced that Mistry would take

over on 28 December 2012 and Ratan Tata would become Chairman Emeritus.

Some of the challenges that lay ahead of Mistry were akin to those Tata faced when he ascended

to the top job. The succession this time round was not as acrimonious as it was during Tata‘s

time, but with many of Tata‘s chieftains nearing retirement, Mistry has had to scout for young

talent from within the group and outside to fill the void. He had already started doing that.

Madhu Kannan, a former chief executive officer of BSE, was his first hire.

―You can live in a house, drive a car, make a phone call, season your food, insure yourself, wear

a watch, walk in shoes, cool yourself with air-conditioning, and stay in a hotel all courtesy of

Tata firms,‖ said an article dated 1 December 2012 in The Economist. The dilemma is that the

group may not necessarily be making money doing all of this. Tata‘s telecom business, for

instance, was under severe strain following the upheaval in the sector in the wake of the 2G

scam, and its future was uncertain. Elsewhere, though Taj was still one of the most respected

names in the Indian hospitality industry, Indian Hotels wasn‘t too profitable, with acquisitions

32

weighing on the firm. Problems with Tata Steel‘s European operations persisted and the current

dynamics of the steel business at home weren‘t too exciting either.

Tata Sons, a holding company (which is the only unlisted from among the group), needed not

just a professional executive but a smart fund manager as well at the helm of affairs. Mistry had

to manage to do both. While a year of working and learning closely with Mr. Tata before taking

the full responsibility of the group in December 2012 did help, the responsibility was enormous.

But to begin with, he had showed good intentions by announcing a legal dissociation from the

management of his family businesses (Mistry was MD of SP Group which was into construction,

textile and water treatment etc.) to avoid any conflict of interest.

His selection was important in the sense it sent some important signals - Tata Group will choose

the one it considered responsible and worthy enough to run the group, even if it were a non-Tata

(Mistry had been chosen over Noel Tata, Ratan Tata's half-brother who had served as the

managing director of the retailing company- Trent and is now serving as non-executive chairman

- to merge some Tata Group retailing operations). Especially then when Tata Group holdings

were high enough to be insulated from takeover threats. While Cyrus doesn't bear the name Tata,

he was no outsider to the group. He had served as a Director of Tata sons and was expected to

have a strong hold over the group values.

Besides, roping in someone who belongs to a family that has significant holdings in Tata sons

(Cyrus being son of Mr. Pallonjee Mistry, who has largest 18% stake in Tatasons) made good

strategic sense as shareholding is the key to control for the group like Tata which is more global

than ever.

Thus, Mistry didn‘t just have big shoes to fill, he also needed to hit the ground running.

Did Tata have his timing right? Says Cappelli: ―I‘m not a big fan of picking a successor way in

advance. I think the better approach is to develop candidates, several of whom could step in.

Then very near retirement — if that‘s the change event — the successor gets named in time for

people to get comfortable. But the downside of naming a successor is that if it turns out that

things change and that person is not appointed, then their career is really damaged.‖

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Singh of Bain agrees that succession planning is a process, not an event. ―The ideal succession

planning is evergreen,‖ he said. The formal announcement of a successor depends on factors

such as size and scale of the business. For a group of Tatas‘ scale and diversity, a long transition

is required. For most companies, a six- to 12-month overlap and transition would be appropriate.

Announcing anything earlier than this simply invites trouble for both the incumbent and the

designee and may lead to the unintended and costly departure of one or both, besides resulting in

dysfunctional organizational behavior.‖

In practice, though, there are often disasters. Why? Raghunath of IIMB said, ―Failure of

succession planning has its roots in the mindset that all termination is an unpleasant act — if not

death — and the ritual leading up to it is painful.‖

However, Mr. Ratan Tata, having handed over the reins in the able hands of Mr. Mistry, we

conclude that the future of the Tata Group stands bright and is moving on, on a high pedestal.

Conclusion on Succession Planning

At the end of the day, the crux of the issue lies in the fact that it is the shareholders‗

representatives who should own the succession planning process. Corporate India is placed at a

critical juncture where the massive inflow of funds will reflect in the gradual change from

concentrated ownership (Government, Promoter families) to a more diffused and diverse

ownership pattern. Regardless of the ownership structure of a company, the shareholders‗

representatives (company Board or the (cabinet of ministers or patriarchs of Promoter families)

will need to create mechanisms and processes to constantly groom a leadership pipeline and to

identify the best candidate – internal or external – for leading the company into the future and

creating shareholder value. So Indian companies have finally taken their first step of

understanding the importance of succession planning and taking necessary steps to put it into

action for the welfare of the company and its shareholders against the age old practice followed

in India of handing the heir the reigns of the company.

There are a number of areas to keep our eye on as part of our succession planning activities. Top

of the list has to be that as we formulate our ideas to get those people organized to be top class

34

performers, we need to know how they are doing, right now. The most important priority, above

all, is that we keep our eye on overall performance of the business. Then, it‗s all about those who

work for we, because from them, and them alone, will our business success come now, and into

the future.

We need to carefully use our performance management skills for all of our people, to make sure

that we are clear about their current performance, as well as – for our succession planning needs

– that we know what their potential is too. So it is certainly something that we have to keep a

close eye on as a manager. And if we do not have any kind of performance management

measures then we will struggle to manage our business adequately now, let alone later on.

The performance management part of succession planning is important because it gives we

insights into individuals and their actual performance as well. If we are closely observing them

and prepared to challenge in uncharted waters, their potential for the mid-to-long term, will start

to fill the spaces that we will need as our team gradually moves along and we need great

replacements.

Succession planning for the future evolution of our key players is a vital step, that will prepare

we for keeping balance as changes happen when our people leave we – however good we are at

managing them. There are several ways for us to make sure performance management successful

to help us with our succession planning.

Succession planning is challenging to start with, but if we have the right performance

management tools to get we through it then we are going to make everything work.

If we are having trouble with performance management during succession then we should

remember that it is our responsibility to drive it – no hiding places here! Gradually, as we

introduce new measures for our people, equitably and consistently, we will find performance

management will lift the overall outputs of the business. The great opportunity then is to ensure

that we use this information to tease extra performance from all our people and notice, just

notice, who starts to show up as capable of more, much more.

Then we really are starting to build real value into the succession planning tactics we are

adopting as part of the bigger strategy to sustainable business success.

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