Wednesday, May 23, 2018
drop dead succession plan
Sometimes it is happened that the big organizations miss their leaders or their higher authorities instantly due to a very common unpredictable reason like death occurred due to severe heart attack, major accident, depression and others. This is a very critical situation which is faced by many big and small organizations and the sudden death of their employees acquiring higher positions like CEO can create a vacuum at the top level , leaving the organization scurrying around for a replacement.
In order to remove this problem and to ensure business continuity in a smooth and effective way, some corporate entities like Aditya Birla Group, Godrej Group and RPG Enterprises have put in place a "drop dead succession plan".
As its name suggests, a drop dead succession plan is one where an interim successor is ready to step in the situation of sudden demise, death or departure of a leader. There are various situations by which these causes can happen with anyone and thus left companies in a very bad and stressful situation. Over the past five years, the deaths occurred of the major and top leaders of the companies of India affected India Inc. very badly. The names are Karl Slym of Tata Motors, Raghu Pillai of Future Retail, Ved Prakash Arya of Milestone Capital and Ranjan Das of SAP India. Beyond the human tragedy, such events catch companies off guard, training the spotlight on the need for an effective succession plan.
The plan states that its second-level succession is created in such a way that if such situation of vacuum arise, there is always someone who will take charge with immediate effect. The successors or people who are chosen for the vital positions and who ensure smooth running of the business will be dedicated and responsible to such posts till the final successor is identified and selected from among the high-potential talent within the business.
Sumit Mitra, head, group HR and corporate services, Godrej Industries and associate companies said, "It's business-critical to have an emergency succession plan for every critical position in an organization. You cannot be caught off guard by any kind of emergency which can leave a position vacant."
In the situation of emergency, company such as RPG Enterprises is 70 percent ready at all critical levels with a succession plan. Arvind Agrawal, president, corporate development and HR, said, "Our endeavour is to take our readiness to 100 percent eventually".
There are some companies who are having a contingency plan for such eventualities and some of the companies are struggling to find a successor. There is a company Milestone Capital who has a very young head and is entirely responsible and dedicated to the whole company got expired in a very major accident occurred few years back in 2011. As this incident happens very suddenly and his organization is not at all prepared for this, the firm found itself in the midst of a vortex. "Most companies are highly unprepared. Given that most Indian companies are family-controlled or first generation-led, their preparedness to handle leadership succession is highly unsatisfactory," said professor Kavil Ramachandran of ISB.
SAP India’s head death suddenly arise few years back in 2009 and then he announced an interim president and subsequently appointed a new MD from within the SAP network. Recently, Tata Motors also lost its Managing Director (MD) suddenly but they have not announced their successor yet, they are under the process of identification and chosen a new capable and talented candidate from their top level management candidates.
If there is a death arise on sudden basis of high profile employees like CEO in certain sectors like private equity and mutual funds, then it triggers the 'key man' clause and the loss of his services which can lay direct impact on the business, earnings and financial condition.
According to Gurpreet Singh, director & head, YSC India, said, it is very difficult to have a drop-dead successor for the positions like CEO for a boutique consulting firm.
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