Succession planning: failing to plan is planning to fail
-Anushka Vohra | Manager | anushka@vinodkothari.com
| The article was also published in the CRA E-Bulletin and can be viewed here |
Background
Passing the torch, lighting the way – an expression that can be used to refer to succession planning. Be it a household, business organization or institution, succession planning is needed everywhere. In a household, as the family possessions and culture are passed on, it is simply termed as continuing the legacy. In an HUF, according to HUF laws, after the Karta (head of the HUF) dies, the senior most coparcener becomes the head of the HUF. In corporates, the larger the scale and complexity of business, the need for succession planning becomes much more important. Unlike in the case of a household, corporates involve the livelihood and interests of thousands of people, i.e., the shareholders, vendors, customers and other stakeholders. The intent of succession planning is not to oust the leader from his / her position but to prepare the next generation to become the future leaders. Succession planning is required to ensure smooth running of business. The torch bearer (leader here), has to groom his / her successor to take over his role.
In an organization, succession planning is an important element of corporate governance. In this write-up, the author has tried to emphasize on the need and importance of succession planning.
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