Lessons from succession planning failures of godmen and executives
Sri Sathya Sai Baba may have been an avatar, a god, a social worker, a healer, an educator and a whole lot of inspiration to millions of devotees in 178 countries — prime ministers, presidents, judges, bureaucrats, cricketers and millions of lay people.columns Updated: Apr 24, 2011 22:40 IST
Sri Sathya Sai Baba may have been an avatar, a god, a social worker, a healer, an educator and a whole lot of inspiration to millions of devotees in 178 countries — prime ministers, presidents, judges, bureaucrats, cricketers and millions of lay people.
But in his passing on, he has left a void not only in the hearts of his devotees, but put in danger the continuity of all the good work he’s done in the physical spheres of education and health.
By not appointing his successor to run the Sri Sathya Sai Central Trust, he has put at risk the smooth functioning of an estimated Rs 40,000 crore social organisation. Although the trustees might still be able to elect a new chairperson, signals emanating from Puttaparthi in Andhra Pradesh are carrying the static of schism, with stakes divided between Baba’s nephew Ratnakar and the trust’s member secretary A Chakravarthi. There is no clarity on who the chairperson will be.
India’s most high-profile company, Infosys Technologies, an institution that turned even its drivers into millionaires from stock options, seems to be making the same error.
With TV Mohandas Pai resigning from the company’s board, the market is agog with apprehension that there is no space for a professional to reach the top post of the CEO until all founders have retired; that succession planning is a closed club. The new CEO of this company, valued at R170,000 crore will be announced on April 30.
Succession planning at most family-run companies and organisations has been conspicuous by its absence. Founders often feel that death will come to all but them. Inheritors are reluctant to raise the issue, for fear of seeming like vultures.
Making matters complicated is the public nature of these organisations — by listing on stock markets through IPOs or by accepting donations from the public — that leaves them vulnerable to public pressures. When stakes get merged, succession planning takes a hit.
This problem — an arrogance of perceived immortality — works down the line into average households. The ageing patriarch who has created wealth, most of which is in a house, is often caught up between siblings with their little hopes and aspirations. There is always a tomorrow to fix things, he feels. And as this inertia grips the family, a sudden death (it is always unexpected) results in an all-out war in many cases, very often in courts, with the very asset the patriarch planned to save becoming a victim of neglect — or worse, outsider capture.
Companies and organisations are complex living entities that will find their own way of dealing with succession. But what about average households? The numbers might not be large but the sentiment is the same. Here are five things you need to do if you want your assets, earned over a lifetime of work, to outlive you and serve your loved ones or precious ideas.
Step 1: Make a list of all your assets on a single sheet of paper. This would include the value of your house and other real estate; financial assets in post offices, banks, mutual funds and stocks; gold and other real assets, with their locker numbers and keys; works of art and antiques that carry a commercial value; and insurance policies.
Step 2: Decide how you want your assets to be distributed. Is there an errant son, a greedy daughter-in-law who you want to exclude? Do you want to give it all to your children or is there a charitable organisation you want to contribute to? Answer hard questions like do you want to break down your wealth equally between your three children, even if only one of them takes care of you? Make your estate allocation between all people and entities. Write it down into a will.
Step 3: Find an executor of your will. S/he should be a decade or two younger than you, so if you move on, he will be in good health and mind to ensure that your plan is executed to the last paisa. This should ideally be done under the supervision of a lawyer --- so get one. Needless to say, both the lawyer and the executor should be young, competent and trustworthy.
Step 4: Get the will registered in court. Although you need not register it and a simple paper would be enough, registering it would even the rough edges out of post-succession battles for good.
Step 5: Decide upon a communication strategy. Do you want to be transparent and let that brilliant son of your driver know that his higher education would be taken care of through an endowment? Or would you prefer that the contents — that can be modified any time you wish to — be made public only after your death?
In an increasingly complexifying world, simply creating wealth or small businesses is not enough. With great wealth comes great responsibility and it is your duty to ensure that the 40-50 years that went into creating it do not degenerate into petty squabbles after you move on to the other world.