Who Should Be Your Next CEO? The Role Of HR In Succession Management

Are you still of the opinion that Human Resources deals with the soft side of the business? Do you think that an HR is responsible for blowing balloons on special occasions in the organisation? Then let me help you understand what happens when HR policies in an organisation do not keep up with the pace of the industry.

To drive my point home, let me take the help of the happenings at Infosys. On 25th August 2017, Nandan Nilekani was brought back to Infosys as the CEO, replacing Vishal Sikka. This is a classic example of control being shifted from an ‘outsider’ to an ‘insider’. A good understanding of the importance of succession management can be obtained if one has followed the issue closely.

Infosys has been treading the downward slope of the “bell” curve in terms of market share since a decade and has tried experimenting with a change in leadership quite a few times. It is important to understand that Infosys was led by its founding members for a long time and it operated under a typical style of management which became traditional in the long run. Meanwhile, the IT industry was scaling new heights and competitors started investing in new and relevant technologies of Artificial intelligence (AI) and robotics, automating routine tasks and generating more revenue. Infosys also needed to dive into this space but who would make the call?

A bold move was taken by the board when Dr.Vishal Sikka took over as the CEO and MD from S.D. Shibulal in 2014. This promising move was well received by the stakeholders and perhaps an ‘outsider’ leading them from the front was the answer to their problems of decisiveness. The number of acquisitions made by Dr. Sikka and investments made in the field of automation, an information management consulting and innovation is proof of his audacious decision-making. However, the traditional leaders of the company did not look very comfortable with Dr. Sikka’s approach. This clearly indicates a misalignment of goals on behalf of the top management of the organisation. All this boiled down to Dr. Sikka resigning from his position, making way for Nandan Nilekani to hold the post since then.

The lessons from this episode are many, however, the prime learning is that Infosys should have built a proper succession planning mechanism, which would have bred leaders who would have been better aligned with the culture of the organisation. An insider who has seen the growth of the company and is aware of the rapid development of the industry would have been more trustworthy for the top management to rely upon. Quick changes in the position of the CEO only added to negative sentiments amongst the stakeholders of the company. The HR comes into the picture here to propose the succession management mechanism with details of relevant candidates for the coveted responsibility.

This is not just the story of Infosys. A similar incident happened a few months ago with the Tata Group of companies when Cyrus Mistry resigned from the post of Chairman. Lack of proper succession management mechanism is a reality in most of the Indian businesses. Companies in the west focus heavily on succession planning mechanisms, identifying talent at early stages and grooming them to become better leaders of tomorrow. Succession planning at companies like GE are cases of high importance in this regard.

It is high time HR professionals in India step in with their expertise and provide a better structure to their organisations.

Aroon Koshy

Aroon Koshy is a Human Resource Management student at XLRI from the batch of 2017-19. He enjoys writing and is a sports enthusiast. The views expressed in this story are personal.