Letter to BS: Crisis in YES Bank highlights a weak spot in governance

This refers to “Who will bell the cat?” (October 8). To ensure a seamless transition when an incumbent leader has stepped down, the board of directors of a company should involve itself in the choice of the chief executive officer and the top management. It also needs to be supported by a well-structured succession planning mechanism. The company should groom its talent in a way that the system throws up prospective successors after proper filtering. Promising candidates should be identified and the ecosystem should help them move up the career ladder fast. Once that has been done, the annual review of the performance of the identified ones should decide the future course including if he/she needs some changes in his/her approach. 

While the core task of the board is to examine the current methodology of the organisation and make sure that it is reviewed to bring up the right lot, experience suggests that this process is not always faultless. The experience of the Tata group and Infosys to find successors for Ratan Tata and N R Narayana Murthy shows these inadequacies. It also shows that a full-time internal claimant is better than an outsider. Also, the text book idea of an understudy, for say, at least three months before the retirement of the incumbent is worth considering. Lastly, we should also recognise that even a carefully chosen successor may fail to deliver as Jack Welch found out even after prolonging his retirement in search of a worthy successor. 

Y G Chouksey, Pune

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