Covid has made corporate succession planning even more critical
The Mint article, “Covid has made corporate succession planning even more critical” was written by Russell Reynolds Associates Consultants Sanjay Kapoor and Pankaj Arora on COVID-19's effects on succession planning. The article is excerpted below.
Sanjay Kapoor, Pankaj Arora
The pandemic has thrown into sharp relief the importance of an institutionalized process for succession planning so that the risk of leadership disruption is kept minimal at all times.
The coronavirus pandemic has touched every aspect of our lives. A less discussed but tragic outcome of it has been the long indisposition and, in some instances, the sad and untimely demise of employees. Despite these losses, and even as affected employees take some time out to grieve, businesses must continue to function and serve stakeholders. C-suite leaders, board members and managerial personnel are ever more critical for business continuity. The pandemic has brought to the fore a pressing need for risk mitigation and leadership preservation, thereby placing a spotlight on succession planning.
Even in the absence of a pandemic, succession planning is an unavoidable duty. It is essential for those stewarding (the board) and leading a company (its management) to ensure that sufficient and suitable human capital is always available to lead it.
The Indian landscape: It has been observed that Indian companies are more relaxed in comparison with their global counterparts on structured succession planning. The process is more institutionalized in the West and goes beyond the chief executive officer and other C-suite executives. In contrast, the abundance of family-owned businesses in India, coupled with societal expectations of family members to join the business, leave little room for institutionalizing the process.
However, the domestic regulatory environment is tightening around succession planning, and the broader governance ecosystem of proxy advisors, credit rating agencies, etc, has a keen eye on this matter.
To access the article, click here.