Tuesday, May 16, 2006

Sucession Planning at IT Cos.

It’s a dilemma faced by most of companies when it comes to have a succession plan for top management. Some companies like GE are really good at developing and mentoring next generations of leaders while some may find it really difficult to keep pace with the changing times. ET has a repot on succession plans for IT companies.

“If you look at the dominant companies in the technology industry, most of them are still led, or until recently were led, by a charismatic founder. By and large the companies that have made the transition have done a pretty good job of it,” says Kevin Werbach, professor of legal studies and business ethics at Wharton.

While succession is important at any company, it can be even more critical at a firm run by entrepreneurs, like Gates or Jobs, who are also celebrities. “In a situation where the CEO is also the founder, it’s not just a succession event when he or she steps down,” says Wharton management professor Peter Cappelli. “These people are closely identified with the organisation and it can be extremely traumatic when somebody like that [leaves]. They have to think carefully about what kind of person could step in.”
Young start-ups flourish with creative, charismatic leaders who have a deep passion for, and understanding of, technology. But as the organisations grow, they need chief executives with a different set of skills, including the ability to delegate and to operate in a highly structured management system, says Kartik Hosanagar, Wharton professor of operations and information management. “In the technology industry, you have entrepreneurs who have been running the show for a really long time. But as these firms start to grow, they need to be looking at seasoned managers who have broad-based management skills.”

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