India Inc’s neglect succession planning, risking their future

In the realm of Indian corporates, where professionalism and credibility are often touted, there exists a disheartening truth: the alarming failure of succession planning. Behind the carefully crafted facade of competence lies a stark reality of nepotism, hindering the progress and growth of the very organisations that claim to be leaders. This lack of foresight and resistance to relinquish power paints a grim picture of corporate leadership in our country.

It is an unfortunate reality that nepotism continues to prevail as a steadfast norm in many Indian corporates. Succession planning, a critical aspect of corporate governance, often takes a backseat to the interests of influential families and individuals. Despite claims of professionalism, these organisations prioritize blood ties and personal relationships over meritocracy, undermining the very principles they should uphold. This systemic nepotism stifles innovation and growth while marginalising deserving talent.

The reluctance to pass on leadership positions and make way for new leaders is a deeply ingrained problem within Indian corporate boards. Driven by a sense of entitlement and a fear of losing control, incumbents hold tightly to their positions, often at the expense of the company's long-term interests. The lack of proper succession planning breeds stagnation, denying fresh perspectives and diverse skill sets the opportunity to shape the organisation’s future. This vicious cycle perpetuates mediocrity and hampers innovation and adaptability.

The failure of succession planning in Indian corporates has far-reaching implications for corporate governance as a whole. Boards that overlook this vital aspect undermine their own credibility and risk compromising the integrity and transparency of their decision-making processes. The absence of robust succession plans erodes investor confidence and raises questions about the effectiveness of regulatory frameworks designed to ensure fair and equitable practices. Companies must address this critical flaw and prioritise merit-based appointments and transparent succession planning mechanisms.

Indian corporates must urgently embrace the need for change. To break free from the clutches of nepotism and ensure long-term sustainability, organisations should adopt a proactive approach to succession planning. This entails identifying and nurturing a diverse pool of talent, providing ample opportunities for professional development, and implementing transparent processes that prioritise merit over personal connections. Boards themselves must recognise the importance of gracefully stepping aside and facilitating the smooth transition of power, fostering an environment conducive to innovation and growth.

Despite native intelligence, global insights, traditional wisdom, wise counsel and even regulatory ask, Corporate India simply does not shine well in proactive succession planning. Probably the increased investor awareness and engagement will exert pressure on Indian corporates to prioritise succession planning. If the Institutional investors and shareholders actively raise questions about the existing succession strategies during annual general meetings and seek accountability from the boards, it might get discussed. It is high time for Indian corporates to acknowledge the bitter reality of their failure in succession planning. Only then can we hope to witness a transformation in the corporate landscape that reflects the true potential of India Inc.