Thursday, December 29, 2011

A look at major corporate succession stories of 2011


The 43-year-old son of construction magnate Pallonji Mistry, among one of the selectors himself and also the largest shareholder in Tata Sons with an 18 per cent stake would now take over the reins of the 80 billion dollar salt to software conglomerate.

2011 was a year when whispers of succession and change strongly resonated across Indian corporate boardrooms where old hands and industry veterans stepped aside to usher in the new and young to steer ahead some of India's best known companies.

Much in the limelight for its succession planning was Tata Sons as after two decades at the forefront, Ratan Tata decided to hang up his boots for a life of retirement post 2012.

After 15 months of searching everywhere in a closely guarded process a specially appointed five member selection team unravelled the mystery called Cyrus Mistry.

The 43-year-old son of construction magnate Pallonji Mistry, among one of the selectors himself and also the largest shareholder in Tata Sons with an 18 per cent stake would now take over the reins of the 80 billion dollar salt to software conglomerate.

His calm demeanor and 'Profit with principles' approach won him the job say experts as Mistry got a unanimous nod of approval from almost every quarter.

“I have always found him to be very open, very correct and he's not biased. He's quite capable of taking fair and objective decisions. Always keeping the corporate interest in mind and nothing else,” said JJ Irani, former director of Tata Sons.

Ratan Tata himself seemed pleased with the choice saying he has found a worthwhile successor in Mistry to start the process of a seamless transition.

"Finding a worthwhile successor has been an important milestone. I look forward to my retirement while I am still active. I'm very pleased and committed to achieve a smooth and seamless transition to my successor. Cyrus is a very good choice for the job," Ratan Tata had said.

And allegations of nepotism in the selection of an insider were promptly rubbished.

“The only thing that had a little bit of a question mark was that he went from being a member of the committee to a candidate. Now, was there a little bit of awkwardness?” had asked NDTV.

“I will ask you a question in turn. If you found a most suitable person in your community, would you omit him because he was in the community? I think the qualities, qualifications of the candidate must be paramount and excluding him just because happened to be a part of the community, is not a reason disqualify him,” said Shirin Bharucha, member of Selection Committee.

But if keeping dynasties completely out of succession planning seemed too unorthodox for some there were exceptions.

As NR Narayana Murthy, chairman and chief mentor at Infosys Technologys stepped down from the company's board on August 20th to pave the way for veteran banker KV Kamath to fill in his shoes.

Despite holding family stock worth nearly $2 billion in the company Murthy's son publicly declared he had no intention of joining Infosys.

But this transition wasn't without its share of hiccups as outgoing Infosys director Mohandas Pai hit the headlines when he criticized the selection process of CEOs at the company highlighting the growing discord between him and the Infosys top management.

“My request to the board has been that when you choose the CEO, have a very transparent process and choose the best person for the job. But it is the board's prerogative and consensus. Infosys' unique position has declined due to conservatism. Last three years we have seen competition overtake us,” said Mohandas Pai, Ex Board Member, Infosys.

The new Chairman though reiterated that the company has a very clear vision when it came to succession planning.

“There has been over the years a stepping out of people who founded this company and I think that process continues. Clearly the company is preparing itself for a time when you have professionals who're not part of the founding team,” said K V Kamath, chairman of Infosys.

As 2011 closes, it is clear that India Inc hasn't managed to completely shrug off the dominance family dynasties in corporate boardrooms.

Yet with the level of professionalism and planning that was involved in the two key transitions perhaps this year was a watershed for India Inc in succession planning.

And as Indian businesses go global the hope is many more will embrace similar practices as they pass on the baton.