Heir-raising decisions

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Strategy issues seen through cartoons.

It was an exceptionally low-key recruitment, but was also exceptionally talked-about. When Rishan Premji, the eldest son of Wipro Chairman Azim Premji, joined the company as a business manager some weeks ago, the company took pains to explain to whoever would listen that he was just another employee and would be treated as such.

For industry watchers, though, Premji Junior's entry into the company his grandfather started ended years of speculation about succession at the IT and consumer goods group.

The jury's still out on what will be Rishad's ultimate role at Wipro, but it's brought back an old debate plaguing industry leaders and HR managers: how do you introduce the next generation into a family-run business?

We've all heard the stories of CEOs who started their careers in the mail room or as delivery boys but there is a school of thought that considers the "work your way up" approach to be a sheer waste of time "" who's actually going to ask the CEO-in-training to prepare reports and Excel sheets?

But the other end of the spectrum is equally dicey: bringing in the heir apparent at a high position is likely to create conflict within the senior management team. "A person's capability, his image and the company's position will have to be considered before a plan is made," says Purvi Sheth, vice president at HR consulting firm Shilputsi Consultants. "There is no one answer."

Still, there is consensus that assigning a senior role to a raw newcomer is a very bad idea. "It is important that the successors work on the shop floor so that they value the position they will receive. Also, before they move on to becoming the owners, it is important that they are exposed to points of view that are different from those of an owner," says Visty Banaji, director, corporate HR, Godrej Industries.

He believes succession planning should be based on the military. Officer cadets are trained and put through their paces by experienced rank soldiers "" cadets are judged on their performance, not on what their designations will be when they graduate. "Second-generation leaders, too, should be brought in as management trainees so they understand the organisation better," says Banaji.

Anita Belani, country head, Watson Wyatt India, agrees. "Training at ground zero is necessary. Otherwise, there is a huge gap between senior management and the successor," she points out.

Belani was witness to such a conflict on a recent project. A large, Canadian family-owned business sent its senior management team along with its anointed successor to India for a restructuring project. The young man was fresh and impulsive, easily swayed.

Reaching consensus and following a direction was not just tough, it was impossible: ultimately, the company shelved the project and returned home. "He hadn't been groomed for the job. There was a huge gap between the thought processes," Belani recalls.

That incident was probably a one-off. Typically, most companies ensure the new entrant has a certain level of exposure "" at least a year or so "" before he is given any real responsibility.

But consultants believe rotational work experience, where the successor tries his hand at most major functions, would be more effective. "Exposure to functions like R&D, finance, HR and so on through specific projects would help," believes Belani.

Nadia Chauhan, marketing director, Parle Agro, and Prakash Chauhan's daughter, agrees that exposure across levels and functions is vital and helps in imbibing the company's culture.

"On my father's insistence, we attended office from a very early age. Even later, when I joined the company formally, I did so without any designation and worked in different fields. This helped me understand both how the company performs and my father's vision," she says.

Consultants agree that experience is indispensable, but add that ideally, it should be gained outside the family business. It helps the successors gain perspective and, at the same time, avoid any charges of bias or preferential treatment. "In many foreign companies, the next generation works in outside firms to accelerate learning. Indian companies, too, can adopt this," says Belani.

But what happens when the leader-to-be does finally join the business? There's scope for plenty of conflict and high drama, especially if senior managers resent the newcomer's arrival. "It is important to clearly define the rules at the time of entry, especially the decision-making role and accountability of the new leader," says Sheth.

Chauhan agrees. "I knew where I needed to contribute and where I didn't. That helped everybody, including me," she recalls. It's also a good idea if the CEO-in-the-making spends some time with the incumbent. "Working under the owner exposes the individual to everything that he will soon need to do. It is un- rivalled to any other method," declares Banaji.