India’s biggest construction firm, Larsen & Toubro (L&T), is laying out a roadmap well in advance for successful leadership continuity, revealed the company chairman, S N Subrahmanyan.
In an interview with Moneycontrol, he emphasised the importance of long-term succession planning in a conglomerate of its scale.
Plan early – key to future leadership
“It’s never too early, because you always need to think that anything can happen anytime,” the chairman said, adding that a succession framework of the company is already in place.
“There is a succession in place today; there is a deputy managing director in place. But the long-term succession planning is also in place. The board and NRC (nomination and remuneration committee) are kept in confidence,” he said.
Subramanian Sarma was named L&T’s Deputy Managing Director in March. He has been serving as a Director on the Board of L&T since 19 August 2015.
Focus on smooth transition
Subrahmanyan also noted that succession at the construction firm is not simply about declaring a leader. It largely depends on smooth succession, which in turn requires careful preparation.
“Succession planning in a complex organisation is just not nominating somebody. He has to be acceptable to everyone,” he said.
Reflecting on his own journey under former chairman AM Naik, he commented that the firm’s focus is on ensuring a smooth and efficient transition.
“The idea is to have a smooth succession, like what happened between Mr. Naik and me. He appointed me in 2016-17, and moved away as a non-executive and was hardly present on day-to-day matters. That’s the way it has to be. And therefore a lot of thought and mind goes into it, because it’s not a one-year job, it’s a five-year, six-year job,” said Subrahmanyan.
Why is planning early crucial?
Speaking of L&T’s size, scale and complexity of its business, Subrahmanyan underscored the responsibilities that one must face upon joining the company as a successor. “Any potential successor needs to manage at least three to four business verticals to understand the company better.”
He added that a successor’s performance has to be up to the firm’s standards in order to earn the company’s respect. They should not just expect it because they have been named successors.
“The respect in L&T does not come with you getting anointed. It is you performing and showing to your colleagues that, hey, you are a performer and you are a deliverer and you have the client’s respect and that you’ve done something extraordinary,” he told Moneycontrol.
Hence, it is crucial that the next person is known as somebody who has achieved three, four things throughout his career. Then it makes life easier for him, he added.
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