Passing On The Torch

Imagine a situation in an organisation where the CEO or
another senior executive suddenly announces plans to retire or to change
careers. Or imagine that a senior executive suddenly dies or becomes disabled.
Does your organization have a plan in place to fill that vacancy in a quick and
orderly manner?

Unfortunately, few IT organizations handle succession
planning so well, if they do it at all. In many channel organizations,
succession planning is as pleasant a topic to discuss as bad breath. Often,
succession planning begins and ends with a chat between the few people that the
CEO is comfortable with.

Strange but true. Most of the top people in organisations
simply do not think that they have to worry about succession planning because
they have young leaders. And in some cases, succession planning is a secret
ritual, performed by an inner 'power group'.

But times are changing. Within the past year, succession
planning has become an increasingly important strategic priority for many IT
organizations. Some organisations see succession planning as an ongoing process
that is simply part of daily business, however there are organisations and
people who have not given proper thought to this

issue.

Vinay Dugar of Kolkata's Supreme Technologies is one such
individual who has not given thought on who would take over the reins after him.
He has two daughters and the eldest is academically-inclined. At the moment,
Vinay ventures that she would like to be a professional, rather than a
businesswoman, after completing her higher studies. However he adds that it is
too early to comment, as she is barely in the fourth standard! And his younger
daughter is just six years old.

"For the next 15 odd years, I am quite capable to drive
this company forward. However, in case of any requirement the company might be
handled by any of our capable employees or a relative," he added.

Incidentally, his brother- in-law, Dinesh, is also an active
member of the business and he has two sons. There is a good chance that they
might inherit Vinay's business in future. At the same time, he clarifies, that
if any of his daughters wish to take over the business from him, he would be
more than glad.

With RS Shanbhag of Value Point Systems, Bangalore too, the
succession plan is not defined in black and white. But, he has already started
thinking of having it outlined in a documented form. "We are a private
limited company and have a strong family culture in the existing team. We have
been projecting to the key contributors of the company as future directors. We
would like to nourish our internal team to higher growth within the company. So,
there are set of upper management executives are gummed to the company for more
than a decade," he explains. At the same time, he is confident that these
higher up management people will continue to associate themselves with Value
Point just not for money, "but for the passion and 'value to life' we
bring in," he adds.

When the stakes are high

As more early entrepreneurs reach their retirement age, a significant
shortage of executive talent is emerging. This shortage means that unplanned
vacancies can result in slow transitions-something organizations cannot afford
in today's highly competitive market. Keeping this in mind, it is the
responsibility of the CEO to make sure that a proper second line of command is
being developed for the

company.

VK Bhandari of Supertron Electronics has young school going
children. Moreover, he is confident that he will be able to run his company for
some more years. "The activities are not centralized to me but it has been
delegated to professionals and their responsibilities have been clearly
demarcated. There's nothing specific planning as such," he adds. He has
done this as he would not like to impose any obligation on his children to join
the family business.

Even though, there are many organisations which do not have a
proper succession plan in place, promoters are increasingly understanding the
importance of ensuring a professional environment within the organisation.
Binary Systems from Bangalore is one of them.

"Organizations are generally built on the personal
strength of the main promoter. As the company grows it is important for the
promoter to bring in professionalism in the organization. There has to be proper
organization structure with delegated functional responsibilities. Unless this
foundation is built no succession plan can work successfully," explains,
Harish Kumar Shetty, Chairman at Bangalore-based Binary Systems.

NAME: Anil Gupta COMPANY: Artek Enterprises TOPLINE OF THE COMPANY: Rs 52 crore AREAS OF BUSINESS: Distribution and offering of complete turnkey solutions. NEXT HEIR: Anil is training his son Anubhav to take over the reins eventually. Anubhav joined Artek in August 2005, as a management trainee and will work his way up through different positions and departments. This will help him have a thorough and complete knowledge of the business and all its aspects by the time he reaches the top

NAME: VK Bhandari COMPANY: Supertron Electronics TOPLINE OF THE COMPANY: Rs 139 crore AREAS OF BUSINESS: Manufacturing and sales of self-owned brands as well as distribution NEXT HEIR: Not planned as Bhandari has young school going children. He is confident that he can run his company for some more years and has already taken steps to decentralize most duties to his team. He would not like to force his children to join the family business.

NAME: KL Lalani COMPANY: Lalani Infotech TOPLINE OF THE COMPANY: Rs 75 crore AREAS OF BUSINESS: A distribution house, focusing largely on the eastern market. NEXT HEIR: He is already grooming his daughter and son to handle the business and will clearly demarcate the areas among them. His older daughter might join him after she completes her electronics engineering for a couple of years. After her marriage, she can decide whether she would like to continue with her father or will prefer to join her husband.

NAME: Vinay Dugar COMPANY: Supreme Technologies TOPLINE OF THE COMPANY: Rs 71 crore AREAS OF BUSINESS: Sub-distributor for several brands. NEXT HEIR: Not yet finalized. It could be his daughters-the eldest is in fourth standard and the younger is six years old-or his brother in law Dinesh who also has two other sons. As of now, Vinay is confident of running the business for the next 15-odd years.

NAME: RK Malhotra COMPANY: OA Compserve TOPLINE OF THE COMPANY: Rs 78 crore AREAS OF BUSINESS: The company has three business divisions. OA Compserve handles storage and security solutions, Silicon Comnet targets turnkey projects and industry verticals while the third business division, Renovision, is into consumables. NEXT HEIR: He is grooming a set of 'second in line' employees to make sure that business continuity is achieved even when he is not there to run the show. He has two daughters, of which one is married and settled in the US.

It can happen to you!

CEOs or the top bosses may leave because they are getting older or because a
life event has caused them to re-evaluate their career. Executives may become
disabled or die. At times, organizations want to engage in discussions of
succession planning to allow an incumbent to make a graceful exit. Additionally,
there could be an internal candidate

whom the board or the CEO wants to groom.

There are organisations where internal grooming is happening
to make sure that no vacuum is created at the time of exit of the top brass.
Here the onus of running the business as usual and the question of continuity is
adressed by grooming capable employees within the organisation.

"I have no intention of involving my children, aged 17
and 19 respectively, in this business. I have absolutely no problem in handing
over the charge of the company to the most competent person under me. However it
is not just my intention that can ensure a smooth transition. It is essential
that the successor should have a good stake in the returns from the
company," Harish adds.

Similarly RK Malhotra, CEO at New Delhi based OA Compserve is
also grooming a set of 'second in line' employees to make sure that business
continuity is achieved even when he is not there to run the show. "I have
two daughters — one is already married and settled in the US. We don't have
a proper succession plan in place. But being a professional organization, we are
making sure that proper leadership is in place at the time when it is needed the
most," Malhotra adds on.

On the other hand there are organisations like New Delhi
based Artek Enterprises where second line of top brass is set to come from
within the

family itself. "I am training my son Anubhav, to eventually lead my
organization. He joined Artek Entereprises in August 2005, as a management
trainee and will work his way up

through different positions and departments so that he can have a thorough and
complete knowledge of the business and all its aspects by the time he reaches
the top," proudly claims Anil Gupta, Director, Artek Enterprises.

Pavan Duggal A Lawyer with Supreme Court The Hindu Succession Act does not recognize an oral 'will' but it does recognize 'will' written on any piece of paper duly signed by the person and two witnesses simultaneously. A 'will' can be registered in a court of law. However it is not necessary for someone to register a will. The law perceives a registered will and a non—registered will with equality - if both the wills are signed and witnessed by two persons simultaneously. Role of the Executor: A person can appoint anyone close to him or her as the executor for the will. The role of the executor is to make sure that the will gets executed as per the wishes of the deceased. An executor can be anybody who is close to the person writing his will and needs not be from inside the family only. Wills are often challenged — in this case the challenging parties go to the court of law to settle the matter. Registering a will: Once the person has properly and clearly written a will and two witnesses have been taken into account, the person can register the will at the office of sub-registrar of the concerned area of jurisdiction. A minimum processing fee is charged for this. At the time of going for registration, both the witnesses should be there in front of the sub-registrar. Most of the time the sub-registrar asks them to sign the will in front of him so that there is nothing left for ambiguity. Once the will is registered — people can also go for probating the will. It is the legal recognition of the fact that the will is registered under the law.

Tips for successful plan development

An effective plan begins with a clear statement of goals. Why are you
putting together a succession plan? What do you want to achieve? Different goals
will drive different plans. The more time you spend on the front end sorting
through the goals, the better your plan will be in the long run. Once the plan
is developed, make sure that it focuses on those goals.

If you have never developed a succession plan, keep it
simple. Develop a written document to memorialize the decision points and the
action steps needed to achieve your objective.

Develop a list of questions that need to be addressed. Ensure
that there is a champion for the process. Consider using an outside party whose
job will primarily be coordinating and facilitating the succession planning
process, as well as serving as a neutral commentator.

Succession planning is a sign of good governance and good
management. It creates confidence within the environment. It demystifies the
succession process. Engaging in succession planning discussions can actually
help the executive evaluation process, whether at the CEO level or at another
executive level. A well-developed succession plan can eliminate, or at least
minimize, the posturing of other executives as a planned departure draws near.

KL Lalani of Kolkata's Lalani Infotech has realized the
importance of having a well planned succession, after the Reliance imbroglio. He
feels that clear demarcations should be there in any succession plan and
everyone concerned should be aware of it so that any discontent could be solved
then and there. A proper plan and clarity of the same is very much required.

"I will clearly demarcate the areas among the concerned
people. I do have certain plans in my mind and as the appropriate time will come
I will reveal it. I have two daughters-one younger to my son- and they will
also probably join my business group. My elder daughter might join me after she
completes her electronics engineering for a couple of years and after her
marriage it will be her choice whether she would like to continue with me or
will prefer to join her husband," he informs.

Succession planning pitfalls

A thoughtful approach to succession planning will help avoid a number of
significant potential pitfalls. Lack of knowledge of the succesion plan could
hamstring the leaders who are not in the know. And if the plan addresses the
succession of executives under the CEO, a new CEO may not be supportive of the
plan's outlined approach.

Succession planning is an integral part of what binds and
brings balance to business, politics, and personal lives. Like most disciplines,
it's not as easy as it sounds. Nevertheless, like death and government taxes,
it is unavoidable and will occur in many organizations — taking its own sweet
time.

Organizations that are prepared often are the ones that
distinguish themselves as truly great. Strategic planning is an important
component of such preparation and chance always favors the prepared minds!

ZIA ASKARI in New Delhi

with inputs from Piyali Guha in Kolkata and Subbalakshmi
BM in Bangalore