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Scions of change: how GenX is groomed to take over

Anand Mahindra, the newly-anointed chairman of Mahindra and Mahindra (M&M) group, is not the only scion in India’s family-promoted businesses to have spent long years honing leadership skills in preparation of a bigger role. Tejeesh NS Behl writes.

business Updated: Jun 01, 2012 23:51 IST
Tejeesh NS Behl
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Anand Mahindra, the newly-anointed chairman of Mahindra and Mahindra (M&M) group, is not the only scion in India’s family-promoted businesses to have spent long years honing leadership skills in preparation of a bigger role.

Mahindra spent 15 years as managing director and nine years as vice-chairman with M&M before getting the top job this week.

Successors today in India's top notch groups do not just get to sit in the high chair by virtue of bloodline alone but have to spend years being blooded in leadership positions within the group before being elevated to the top slot.

Be it pressure from investors, who today are least impressed by a surname, or pure self-interest of founding clans, family-promoted firms in India are taking care to put a process in place - even if it were a fig-leaf.

For instance, Anant Goenka, who took over as MD, Ceat Tyres in April, joined the company in 2005 and also did a stint at the family's engineering firm KEC International.

A similar script played out in Pirojsha Godrej's case, who in April, took charge as CEO of Godrej Properties - eight years after joining as management trainee.

Their management skills may not be in doubt. However, it would be virtually impossible for a non-Goenka or a non-Godrej surname holder to be similarly fast-tracked up.

While accepting that scions get a fast forward, Professor Kavil Ramachandran, who occupies a chair on family business at the Indian School of Business, says the young scions also have a greater entrepreneurial drive, which may be missing in a professional executive from outside.

“These days stock price performance is an influential factor. So there is a little more strategic thinking in terms of selection of the next leader,” he said.

Even in the case of Cyrus Mistry, deputy chairman, Tata Sons, Ramachandran says the group spent time looking for the right candidate, even if it was ultimately within Tata’s extended family. That Mistry was running his $2-billion construction business successfully did help.

However, work stints by the inheritors is not window dressing, says P Thiruvengadam, senior director, Human Capital Services, Deloitte India.

“One must remember that it is lonely at the top, so these stints also help the younger generation build relationships with the peer group,” he said.
Ramachandran says family members are preferred at the top to help in networking.

That could explain Adi Godrej’s reluctance to part with the post of chairperson of the group to a non-family person. In an interview to HT in February, he had said the “chairman of the group and the chairman of the various large companies of our group shall be from the Godrej family.”

2012 might be the year of baton-change in corporate India. And perhaps no better time than an extended economic crisis to test the mettle of scions.



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