succession planning in business, woman or male heir

1. SUCCESION PLANNING
IN
FAMILY BUSINESS
THE GENDER ANGLE
“THE CASE OF MEHTA STEEL”
PRESENTED
BY
RANJIT ACHARY
VARTIKA SHRIVASTAVA
SACHIN OJHA

2. CASE SUMMARY
 About Rakesh Mehta
 About Company
 Group Structure
 The Future
 The Probable Successors
 The dilemma

3. RAKESH MEHTA
 From Uttar Prdesh
 Came to Mumbai in 1971
 First job in Iron and Steel as a helper-cum-clerk
 Learned about inportant traders and consumers
of steel market
 1975, a broker in steel market
 1977, started Mehta Steel Corporation

4. Mehta Steel Corporation
 1977, started fuctioning
 1986, Own office
 1989, mehta traders was established
 1995, got into manufacturing
 1996, mehta steel PVT Ltd.
 As of 2003-04, two steel manufacturing units ,
capacity of 20000 tons per annum
 30 crores sales in 2004-05

5. COMPANY STRUCTURE
• Wife and a friend are directors
• Centralized decision making
• Need based – lean structure

6. The Probable Successors
 Daughters: 3
 Oldest married, no interest
 Youngest in college
 Second Daughter, interested and pursuing
MBA
 Nephew : with company since 1998, looks after
purchase, not professionally qualified nor
modern in outlook
 A technical sound manager from outside

7. Future of Mehta Co.
 Rakesh mehta is not preparing any succession
plan
 He is open to discussion
 He has no gender bias, and is happy if his
daughter wants to help him in business
activities.
 But for the moment concentrating on day to
day activities…
But what if ….???

8. Should Women Be
Or
Not Be

9. Various Factors
Favourable Unfavourable
 Education  Stress factor
 Modern outlook  After marriage
 Support system  Male Dominance

10. FACTS AND FIGURES
 11% of 240 all large companies - have women CEOs, according to a
EMA Partners. In comparison, only 3% of the Fortune 500
companies have women CEOs.
 35% of the women CEOs are also promoters of their companies
including
1. Rajshree Pathy – “Rajshree Sugars and Chemicals”
2. Meher Pudumjee -“Thermax”.
 The other 65 percent are professional CEOs.

11. SECTOR WISE
 54% , in financial services.
1. Chanda Kochhar is the Managing Director and CEO of ICICI
Bank,
2. Shikha Sharma heads Axis Bank and
3. Kalpana Morparia is the Country Head of JPMorgan
4. Naina Lal Kidwai occupies the corner office at HSBC Meera
Sanyal at ABN Amro.
5. Manisha Girotra heads UBS, Ashu Suyash Fidelity.
 In the Fortune 500 list, only 7 percent women CEOs are from
financial services.

12. Contd…
 11% of the Indian women CEOs are in the MEDIA
 11 % IN PHARMACEUTICALS.
1. Kiran Mazumdar-Shaw is the Chairman and Managing Director of
Biocon .
2. Villoo Morawala Patel is the Founder, Chairman and Managing
Director of Avesthagen.
 8% In Consulting
 8% In FMCG and Consumer Durables. The big names here are
1. Vinita Bali of Britannia
2. Nadia Chauhan of Parle Agro.
 4% In Manufacturing and
 4% In It And It-enabled Services.
1. Hewlett-Packard, is headed by Neelam Dhawan.

13. Women In top position
 Akhila Srinivasan, Managing Director, Shriram Investments Ltd
 Chanda Kocchar, Executive Director, ICICI Bank
 Ekta Kapoor , Creative Director, Balaji Telefilms
 Jyoit Naik, President, Lijjat Papad
 Kiran Mazumdar-Shaw, Chairman and Managing Director, Biocon
 Lalita D Gupte, Joint Managing Director, ICICI Bank
 Naina Lal Kidwai Deputy CEO, HSBC
 Preetha Reddy, Managing Director, Apollo Hospitals
 Priya Paul, Chairman, Apeejay Park Hotels
 Rajshree Pathy, Chairman, Rajshree Sugars and Chemicals Ltd
 Ranjana Kumar ,Chairman, NABARD
 Ravina Raj Kohli, Media personality and ex-President, STAR News

14. Contd…
 Renuka Ramnath, CEO, ICICI Ventures
 Ritu Kumar Fashion Designer
 Ritu Nanda, CEO, Escolife
 Shahnaz Hussain, CEO, Shahnaz Herbals
 Sharan Apparao, Proprietor, Apparao Galleries
 Simone Tata, Chairman, Trent Ltd
 Sulajja Firodia Motwani, Joint MD, Kinetic Engineering
 Tarjani Vakil, former Chairman and Managing Director, EXIM Bank
 Zia Mody, Senior Partner, AZB & Partners
 Women CEO’s in india nearly 4 times more than that of the US.

15. THE DILEMMA
AND
THE SOLUTION

16. THE DILEMMA
 INDIA is full of family run businesses – reliance, birla, godrej, tata,
hcl, etc…
 Wrong CEOs have virtually drove companies to bankruptcy. When
Rohinton Aga, MD, Thermax passed away in 1996, Abhay Nalawade
was appointed his successor.
 Indian business houses like
 The Murugappa Group
 The Eicher Group
have demonstrated a high degree of professionalism in this regard.

17. Companies which have faced Companies currently facing
difficulties difficulties
prominent family-owned  Tata
business houses that got
 Infosys
afflicted by “messy
succession issue” include  L&T
 Reliance,
 Godrej
 Birla and
 ITC
 Ranbaxy groups.

18. Few Facts In Family Run Business
 Only 13% of family-run businesses survive till the 3rd generation &
only 4% go on to the 4th generation.
 Additionally, 1/3rd of the business families disintegrate because of generational
conflict at the leadership levels.
 Family disputes and the lack of succession planning has triggered the decline in
fortunes of many business families.
 Traditionally, succession planning has always been a hush-hush affair, clearly
depending upon the life expectancy of the founding chairman or patriarch.
 Succession planning in family-run businesses is generally an intuitive process with
the family patriarch taking the decision as to who will take charge of the business
empire

19. PROBLEMS
 They forget the big picture and stay focused on day to day
operations.
 They have an exaggerated sense of self importance and begin to
think they are indispensable.
 They are poor in building a second layer of management because of
an unwillingness to tolerate good people or to delegate.
 They try to avoid conflict and hesitate to send a clear message who
the successor is going to be.
 They continue to play a role in the company even after the new
CEO has been put in place.

20. THOUGHT PROCESS
 Is leadership growth keeping pace with business growth?
 Is leadership development keeping pace with the strategic needs of
the organization?
 Are vacancies in senior management positions being filled up
smoothly through internal promotions?
 Are objective plans in place to identify and develop future leaders?

21. SOLUTIONS
 Identify the key leadership criteria and provide support to potential
leaders to meet these criteria.
 Select a few high potential leaders and concentrate the resources
available on their development.
 Monitor the results of the succession planning process at all levels of
the organization regularly

22. Why Go Outside
 Change of strategy, business models or nature of business that
require a significant change from the way the organization ran earlier;
 No one successor clearly identified;
 Identified successor not ready;
 As part of good governance, looking for the best person rather than
only from within; and
 For enhancing the image of the organization by hiring a well-known
CEO from outside.

23. Success
 The Rahul Bajaj Group headed by Mr. Rahul Bajaj has already divided
responsibilties for the group amongst his two sons.
 The GMR Group has in place a family constitution that details the role of each
member in the business. On the basis of performance. From amongst them, the
family board, which comprises his two sons and one daughter and their spouses,
will elect the successor through a majority vote.
 The Chennai-based Murugappa group has instituted a rule specifying the
retirement age of the group’s chairman, after which he compulsarily retires, making
way for his successor.
 HCL group too saw Ms Roshni Nadar, the daughter of the founder Mr Shiv
Nadar, take over as the chief executive officer of HCL Corp, the group’s holding
company, in 2009.

24. Solution
 54 – should start planning if not identify.
 Seek out strengths of all potential successors
 Have trust and cooperation of board
 Chalk out a rough draft of succession plan in case of any
unfortunate event
 In case of choosing a successor
 Involve in day to day activities.
 Diversify
 Increase the company market
 Bring in new talents
 Make sure successor knows all stages of company divisions

25. THANK
YOU