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CORPORATE HEALTH
Succession planning must be an evolving process
Every family owned business, big or small, will reach a point where it has to choose someone to succeed the present leader or CEO. Choosing a successor can be as simple as picking the heir apparent and asking him or her to take over the reins. But the flip side to this is the possibility that the son or daughter may not be qualified enough to take over the business or understand its finer aspects or simply not be interested.
When the family heir may not be fit for the post, then the company has to scout for someone in the company who has the right credentials to run the business. The choice is now between the heir apparent and an employee of the organisation who knows the ropes exceedingly well. In the past it was but natural to choose the son or daughter and even if they were not qualified it was presumed that they would learn on the way. Today the situation has done a turnaround, succession planning does not mean picking on the next in the lineage but looking for someone with the right qualities.
A successor should be chosen based on his skills and abilities to run the business efficiently. In fact those chosen from the family lineage should also possess these qualities if they aspire to head the business. Choosing a successor is an important responsibility of the head because the decision will be detrimental to the future success of the company. In today’s competitive business environment, the choice of the right successor is important. The person should have the right amount of experience, ability and management skills. He should be fully aware of the organisational goals and its employees’ needs. The head of the company should choose a successor carefully and rather than think of family ties or emotional connections must have an unbiased and practical approach when making a choice.
Heading a business comes with its own set of challenges and the person should be competent enough to meet them. Generally, the natural heirs when made the head tend to take things for granted and they can always go back to their parent/s for advice. On the contrary if a person from outside the family has to head the business, he has a lot to prove to others. He will be loyal and make efforts to fulfil his responsibilities and retain the faith the management has on him which made him the head in the first place. He will put in extra efforts to excel in his job. If someone from within the company is chosen as head, he will have a deeper understanding of the company’s objectives, policies and functioning than someone chosen from within the family. This is because the employee would obviously have a longer tenure in the organisation than the young heir apparent.
Companies have to be very careful when they choose a successor and look for someone who is a good manager, can handle the pressures of the job and act quickly in emergency situations. If the right person is not found in the family lineage or in employees within the organisation, there is always the option of bringing in someone from outside. Such a person will bring his own expertise, experience and skills that he learnt in his previous jobs to the company. This experience will help him in improving the systems and procedures in the organisation. His cumulative knowledge will also help steer the company in a new direction.
Companies need to be more proactive in their approach and constantly scout for people who have the calibre to take on the job. The key qualities they need to look for are:
• Willingness to learn more about the business if he is from outside the company and passion and initiative to take the business to new levels
• Ability to handle ruffled feelings and hostile emotions from those unhappy with the choice of successor
• Ability to forge strong relations with the management, employees and key stakeholders that will help achieve the company’s goals
• Quick and efficient in executing the company’s strategies using his network of formal and informal connections in the organisation
• His value system should be in tandem with the company culture, which will help him develop better relations with the top management
A person with these qualities should be chosen to succeed; it does not matter whether he is part of the family lineage or from the organisation or picked from outside.
The point here is he should be the right fit for the job. Companies cannot make this choice in one day; succession planning should be a constantly evolving process. It is one of the most important decisions and the management just cannot afford to make a mistake here.
HEMA SWAMINATHAN
faqs@cnkonline.com
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