Tamil Nadu Chief Minister J Jayalalithaa would be as pleased as punch after the recent Global Investors Meet ended with companies promising investments worth ₹2.4 lakh crore; this was more than twice the target the AIADMK leader had set.
First: will Jayalalithaa return to form the government after next year’s elections to the Legislative Assembly? If the main opposition party, the DMK, makes a comeback, how many of the incentives that the present Chief Minister has announced, including clearing proposals within 30 days, will be followed?
Legacy issues
Now, let’s say the AIADMK does win the next elections — what about the party after Jayalalithaa? Does it have a second line of leaders who, even if not as charismatic as the present Chief Minister, can be sure of continuing with her policies? In fact, has the party planned anything at all for a time after Jayalalithaa?
Jayalalithaa’s supporters may consider these questions sacrilegious, but it will do them good to take the issue seriously if they want to preserve her legacy.
Such thoughts might, however, have crossed many an industry captain’s mind as he/she attended the two-day meet. And this is not just in the case of Tamil Nadu, but many other States, such as Odisha. The State is also led by a charismatic leader (Naveen Patnaik), who, like his Tamil Nadu counterpart, is unmatched in his party, the Biju Janata Dal.
When Odisha recently announced a slew of new incentives for investors, a friend quipped, “All this is fine. But what happens after Naveen? Will BJD survive the infighting? What will happen to these promises then?”
Good governance
Succession planning has now become a part of good governance. N Vaghul, former Chairman of ICICI Bank, had identified his successor in KV Kamath, even when his protégé left for a stint in Asian Development Bank. When the time came, Kamath was back in ICICI to take over at the helm.
“As companies move through various stages in their life cycle and build growth and strategies to deal with changing business environments, the issue of leadership becomes critical and, with it, the related issue of succession,” says Vaghul in a report by SpencerStuart, an executive search consulting firm.
“And while the dynamics may differ across companies, a succession strategy essentially needs to look ahead and plan appropriately to ensure that there is continuity and the right kind of leadership in the business, both at executive and board levels,” adds Vaghul.
Ratan Tata must have had that in mind when he constituted a committee to select his successor to head Tata Sons, the holding company of the empire.
But these are rare instances of good governance in India Inc. Many Indian companies, mostly owned by families, have suffered for a lack of succession planning. The biggest Indian companies have split and lost shareholder confidence because of the uncertainty clouding the demise of a company/family patriarch. Taking cognisance of this, market regulator SEBI included succession planning as a must in corporate governance. A report by Business Standard says: “The stock market regulator has encouraged boards to put a succession plan in place so that there is a clear second line of leadership, should the top one fall vacant.”
Political vacuum
Sadly, Indian politics doesn’t have a regulator. And almost every political party is saddled with a leader at the top who doesn’t want to look beyond himself/herself. While Congress seems to be too scared to look beyond the Gandhi family for its leader, even the BJP has not been on smooth ground. Everyone knows how LK Advani tried to limit the emergence of Narendra Modi. The veteran’s sulking face, even after the thumping results of the 2014 Elections, was telling.
At present, there are many political parties that haven’t defined a second line of leadership. Can anyone think beyond Sharad Pawar, Mamata Banerjee, Mayawati and Nitish Kumar (well, he did, and almost faced the consequences) and their respective parties? It is called the TINA factor — there is no alternative.
As a report in BusinessLine said: “The incumbents continue indefinitely, often under sufferance, even after they have outlived their purpose or utility, or after everybody is fed up with them, because of the supposed TINA (There Is No Alternative) factor. Actually, TINA itself is a mythical argument. The real problem is the ostrich-like unwillingness to face up to the circumstances that are bound to emerge some time or other, which will make finding a successor a compelling necessity.”
If Jayalalithaa is able to do that, the rise in investor confidence will show in the next investors meet.