By Akshay Manwani & Amisha Shah
15/02/2010
Change in leadership, either in the normal course of events or through the process of attrition, is inevitable in all organizations. Yet very few companies prepare themselves for it. What the future might hold in store is anybody’s guess, but having the best person or the best set of people in place to confront that unknown variable is clearly within the control of most organizations.
Preparing for a change in leadership accordingly gains relevance. In a sense, it is a marriage between the long-term objectives of the company and the person who is most suited to help it attain these objectives. The process is complex to say the least and throws up several questions, such as the dilemma between looking inward or outward, while preparing for the change. There is no one right way to go about it, for if this were the case either all organizations would depend entirely on executive search firms to take care of their requirements or there would be an absolute dependence on creating robust leadership programs within the company itself.
Where to start?
The fundamental place to begin while preparing for a change in leadership is to define the role of the leader. These should emerge typically from the strategic priorities of an organization and the key success factors it is driving towards. Nevertheless, Anil Sachdev, Founder – School of Inspired Leadership (SOIL), gives the ideal attributes for a good leader:
1. Visions Vs Goals - the number one parameter to choose a candidate is his vision for the company as against short-term goals. A visionary has the ability and the right perspective to lead the company. He is motivated and can guide the company towards the right direction. A leader’s vision is constituted by his core-values, his ability to articulate these and translate them to create a broader outlook for the company.
2. Value-system – It is important to know the kind of values in the leader’s heart. An extraordinary contender would ever compromise on her morals and ethics under any pressure and would stand her ground in any circumstance.
3. Grasping Complexities – A good leader knows can deal with the cause-effect parameter well. He knows that decisions taken today have reverberations across space and timelines. The Buzz Factor - A leader has an ability to create a buzz within the company, enthuse people, develop plans for the company and create a movement.
4. Driving Out Fear – A great leader has a unique ability to remove fear from the system. She can encourage the company to take risks, innovate and create an organization where people are free to communicate their ideas.
5. Creating the right team - The perfect team is all about matching strengths, complimenting qualities and competencies to help focus on vital parameters. The right team is also reinforced consequent by a worthy review process. A good leader can thus create a system where there is a synergy within his team and the right matrix and review process in place to back the team up.
6. Coach Vs Manager - A good leader is more of a coach than a manager. A manager only controls you but a coach knows how best to work on your strengths and develop them.
7. Resilience – A good elder has the ability to accept negative feedback. He can learn from his mistakes and deal with difficult situations.
8. Courage to think big - This is a leader’s ability to think out of the box, create direction for the organization, to work out a plan and then lead the company there.
Other personal attributes – according to Anil – are situational. For example, Anil believes leadership is more to do with competencies than geographies. “But unless you have uniform global talent rotation or are starting a completely new industry within a geography - where it makes sense to hire specialists from the outside – it would be best to stick with leaders familiar with the region”, he says.
He also thinks good support systems encourage leadership among women. These include the Internet, work-from-home options and other policies. But he is quick to add that women dominate particular industries like FMCG, software, IT and banking and are yet to explore industries like heavy engineering.
Role of the HR in selecting a leader:
Says Ambica Saxena, Senior Associate at Mercer Consulting, “HR works as a facilitator of this process. This is the truly strategic part of HR, where HR needs to help define the leadership requirements and identify the ‘build vs. buy decisions’. HR also needs to execute the process of grooming the right people for the right roles and need to be a custodian of the process and of the people resources in the organization.”
Anil goes on to add, “Rarely is the HR directly involved in the selection of the CEO. This is because they are going to report to the CEO in the future. They instead help co-ordinate the processes that involve selecting the candidate”.
According to Anil, the time frame to select a senior leader on the board usually takes around 3-6 months. This can extend up to one year for the selection of the CEO.
“Many companies look for a shortcut and try to speed up the process, but it doesn’t work that way”, he adds. The actual selection of a CEO usually involves multiple processes beginning with the board appointing a sub-committee for this process. “Search firms maybe roped in to create a description of the ideal candidate based on the company’s strategic future. The committee will then short-list the eligible candidates based on this description. These candidates are evaluated and assessed and put through a thorough reference check. Multiple stakeholders are then consulted and then the right winner is chosen. After this, the selected candidate may often take months to decide on the offer. So the entire process is very detailed and needs time”, says Anil.
Internal grooming vs external search:
Nisheeth Jankar, Associate, Hewitt Associates, offers the following insight, “While the traditional method has been to look outside for a suitable profile in the industry or competition, today, we see more and more organizations focusing inwardly to manage this change. There are a multitude of reasons behind this shift. One, internally developed employees are more aligned to the culture and values of the organization, are proven high performers with promising potential, and are a 'better fit'; two, bottom-line pressures have forced organizations and HR departments to produce better results with optimal costs.
Developing employees internally for leadership positions is far more cost effective than hiring the outside talent and grooming the same. Studies conducted in North America have shown in multiple cases that internal talent is more effective in handling challenges and tough situations, where best names hired from the industry have failed.”
Nisheeth adds that the process of grooming employees within the company should cover diverse areas such as:
• Cross border assignments
• Cross-functional projects
• Directed coaching
• Mentoring
Ambica gives an interesting example of contrasting approaches to change in leadership in two prominent banking companies in India. Ambica said, “Some key organizations that come to mind that have managed change in leadership well in recent times, are Axis Bank and ICICI Bank. The way the change happened in both firms and the manner in which both firms handled this change is different, but successful in their own right. At ICICI, for a long time they seemed to have identified the next line of leadership and prepared, both, the incumbents and the employees for it. Owing to this, though the shift happened at a very tough time, the transition from a leadership point of view was relatively smooth. In Axis Bank, new leadership from outside took over, but the change was handled in a thought through and steady manner. The new CEO spent a lot of time in understanding the business, operations and employees. It helped that Axis has had a very profitable year and this was used smartly to craft the new vision for the organization.”
India Inc. on the world stage: States Anil on the Indian leadership in the global context, “Coming from India, one would know how to manage situations better because of the challenges that the system throws at you. One also has to go through corruption, bureaucracy and other problems. Once you learn to deal with those, it is fairly easier to adjust to less complex societies globally. Hence it would be fair to say that Indian leadership is very competent and ranks among the best in the world.”
Finally, in the words of Dr. Marshall Goldsmith, who is recognized as one of the world's leading executive educators and coaches and who writes in one of his blogs (4 Tips for Efficient Succession Planning) for Harvard Business Review, “While development plans and succession charts aren't promises, they are often communicated as such and can lead to frustration if they aren't realistic. Bottom line - don't jerk around high performing leaders with unrealistic development expectations. Only give the promise of succession if there is a realistic chance of its happening!”
The authors are freelance writers.
