The Indian corporates is predominantly characterised by family-owned businesses. Of the top 500 listed entities, over two thirds are family-owned. From small enterprises to massive conglomerates, the influence of these dynasties can hardly be underestimated. Yet, beneath the glittering façade of these conglomerates, there lies a potentially catastrophic oversight—the absence of robust succession planning.
That’s why the lack of succession planning is like the Voldemort character. The Harry Potter series often referred to him as the Dark Lord, "You-Know-Who," or even "He Who Must Not Be Named". The industry just does not want to speak about succession planning.
"Stupidity, and lack of succession planning, is never felt by the person. It is much to the suffering of those around that person."
This paradox is glaring; in a nation where wisdom, age, and experience are held in high regard, it is baffling to witness the myopia surrounding succession planning, a matter of utmost importance for the corporate world. Prominent business owners extol the virtues of preparation for the future, but when the spotlight shifts to their own companies, the message is lost in the clamour of vested interests. In many of these family-owned enterprises, it is not uncommon for leadership transitions to be clouded by familial rivalries, personal biases, and a lack of meritocracy. The baton often passes from one generation to the next, not based on qualifications or competence, but merely by virtue of bloodline.
In the context of the prevailing issues in many Indian family-owned enterprises, it becomes evident that a crucial lesson must be learned—the imperative separation of ownership from management. The perpetuation of leadership based solely on familial lineage is a practice that needs to be reexamined. It is vital to understand that birthright alone should not be the determining factor for executive leadership positions. Instead, businesses should prioritise meritocracy, competence, and a rigorous assessment of qualifications when appointing successors to key roles. The tragic irony is that, while many families have the resources to hire the best talent for their businesses, they often fail to implement the same high standards when it comes to succession planning.
The absence of a well-structured succession plan in business families presents a myriad of challenges that can have far-reaching consequences. One significant challenge is the potential for internal conflicts and rivalries among family members, as the lack of a clear succession strategy can lead to power struggles and discord. This not only disrupts the harmony within the family but also jeopardises the stability of the business.
Additionally, without a well-defined successor, there is a risk of key leadership positions remaining vacant, which can hinder decision-making and strategic planning. Moreover, lack of transparency in the succession process can erode trust among employees, investors, and stakeholders, as they are left uncertain about the company's future direction. The absence of a competent successor can also expose the business to external competition and market volatility.
Many Indian promoters often claim to be the stewards of corporate governance, and profess running their entities with utmost professionalism. Yet, when it comes to having their own successor planned in advance, they fail.
In the profound teachings of Indian scriptures, we find an enduring truth that speaks of this dichotomy between mere perception and the transformative power of thoughtful action. The Bhagavad Gita emphasises the importance of discernment and decisive action. In its verses, Lord Krishna imparts to Arjuna the wisdom that seeing is distinct from truly perceiving, and true wisdom lies not in the ability to witness the world but in the capacity to process that knowledge into purposeful, outcome-driven conduct. To merely acknowledge the need for succession planning is akin to having sight without vision, as wisdom lies in the translation of that understanding into a tangible, forward-looking strategy; a message that the promoters should heed with great urgency.
Succession planning should be more than a tokenistic acknowledgment of the need for change; it should be a proactive, deliberate, and thoughtful process that ensures continuity and growth. While we acknowledge the contributions of these family-owned businesses to the Indian economy, it is imperative that they do not become stagnant ponds, but rather, continue to evolve and adapt to the ever-changing business landscape.
Promoters often wield immense power and influence in the corporate world, steering the fate of their enterprises. Yet, it's vital to remind them that they are not 'Markendaya', the immortal sage of Indian mythology. Just as no one is immortal, so too must promoters acknowledge the impermanence of their roles.
Embracing succession planning and nurturing the growth of the next generation is not a concession to mortality; it's a prudent recognition of the evolving nature of business and leadership. By cultivating a legacy that extends beyond their own tenure, promoters can ensure that their influence endures. In the absence of genuine succession planning, we risk consigning the corporate future of India to a precipice, and it is the nation and its people who will bear the brunt of this collective failure.
Srinath Sridharan is author, policy researcher and corporate advisor.
The views expressed here are those of the author, and do not necessarily represent the views of BQ Prime or its editorial team.
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