I was working on my business ideas in a cafe. People at the next table were talking about the book “Harsh Realities” written by Harsh Mariwala, founder of Marico (FMCG Multinational). Being a shareholder of that company, I was keen on knowing more about what’s written in the book.
After reading that book and doing my own research, I came to learn about the succession planning strategy which was covered in the book, and the three things that attracted me the most as an entrepreneur:
- “What should I do?”
- “When should I step down?”
- “When should a successor come in?”
And the two challenges:
- Promoter succession
- Management succession
Mariwala’s son and daughter worked for only 2 to 3 years and they realized that it isn’t really their cup of tea. Not too many Indian business families would agree with that philosophy. Scions coming from business families routinely find their way into top executive roles at listed companies. Heirs of promoters are taking up meaty executive roles, even in companies like Infosys and Wipro.
As an entrepreneur, it isn’t a compulsion that only the family members can be your successors. If the family members resist succession, it is better to let any professional who’s had a highly positive impact on the company and has been working with the organization for a long duration step into your shoes. For instance, in this case of Marico, Saugata Gupta, who was working as an employee in the company since 2004, was appointed as a Managing Director for the company.
The main reason you should appoint a professional as your successor is that they are more dedicated to their work and will work for the organization, which can help them grow in their career as well as help you grow in yours.
A professional will also be able to take care of all the responsibilities that fall under their job description without any difficulty, and they’ll also have more experience than a family member would have in managing such an important task.
Organization interest should be the priority when selecting successors. It is always better to keep the stakeholders of the company happy rather than only focusing on the board. The position should always be allotted to someone who deserves it.
In the case of Marico, the main aim was to transform the company from promoter-managed to strategic investor driven, and this board plays a major role in driving growth, selecting the right talent, value, and purpose building.
The conclusion is to let people know that professionals inside the company can also play the role of successors because they work for the benefit of the company. If the companies grow in terms of revenue and profits it leads to the promotion of the employees.
Business succession is a never-ending process. It can be seen in big organizations like Marico and even in the smaller shops in our neighborhood. For it to continue, look for people who can run the show for you. The founder of our company, Mr Ravi Mamodiya, has written a book on this topic to guide new and old business minds through the world of succession.
If you’re the next successor of a business, all you require is absolute knowledge and professionalism. For this, we at Master insiders have created the framework that supports your goals of succession planning, feel free to contact us and have a discussion.