Boards of Directors and Succession Planning in Family Group versus Standalone Firms

Abstract

Purpose: Succession planning and management is one of the prominent issues in organizations striving for continuity and survival in a globalized economy. A dynamic and adaptive successor helps to attain industry leadership and attempt successful diversification initiative for the organization. Family and non-family owned business groups have their own agenda and challenges when it comes to find out a dynamic successor. Insider and outsider successors have their own set of attributes which influence firms overall performance and stability in long run of the business. Thus, each organization faces a unique challenge of choosing a successor at the top leadership role to suit its internal organizational culture while being able to meet the fluid and ever changing technology and market competition in the era of fourth industrial revolution. In this backdrop the Board of directors (BOD) as a custodian of an established organization has a directional and decisional role to delineate and guide the organization on a set of principles for deciding future succession practices. In this empirical investigation, it is attempted to set the underlying issues and concerns of BOD in relation to succession planning and their role in formulating succession strategies in corporate organizations. Policy makers can use the outcomes and themes related to succession planning while formulating their individual organization’s plan. The significance of study is visualized in terms of extension of research of succession planning in Standalone, group firm and Family Firm context.

Design/Methodology/Approach: The present study is the outcome of an empirical investigation involving organization survey tool for understanding the preference of Indian corporate and the existing preparedness about succession planning at the top leadership levels. The data used to draw inferences about the sample organizations succession readiness is primary in nature i.e. collected specifically for this study. The hypotheses have been tested statistically to arrive at reliable and valid conclusions about the issues discussed.

Findings: It brings about the extent of the Board of Directors (BOD) influence in nominations for succession, BOD’s control on executive search committee, its contribution to succession planning and developing a succession pipeline. The prospective organizations across sectors can use them to assess the efficacy of their BOD in succession planning, succession strategy formulation and implementation.

Originality/Value: The research suggests the proactive role that Board of Directors (BOD) may have in developing a succession pipeline while finding the best fit amongst the successor candidates to achieve organizational objectives and attain long term organizational growth and development.

Paper Type: Empirical Research Paper.