Corporate or government roles, there’s no getting away from timely succession plans

For business operations, the value of having a plan in place is well understood by now. It ensures companies can run smoothly without interruption after people in key positions move on. 

Some find new opportunities, others retire, and, given that we are all mortals, a few might even pass away. Nobody is indispensable. 

‘TINA’ is a catchy acronym for ‘there is no alternative’ that individuals at the helm might like to believe is true of themselves. But, in the real world, alternatives exist. 

Organizations, corporate or governmental, will carry on. 

Also Read: Why do business families delay the inevitable: Succession planning?

However, the manner of their continuance is affected by the presence or absence of key personnel. The wise among them recognize this and prepare accordingly.

In the case of a company, failure on this front will, at worst, adversely affect its performance and the fortunes of its stakeholders, owners and employees included. 

In the case of major public institutions like, say, the Reserve Bank of India (RBI), a failure to fill key positions in good time—indeed, well in advance—can impact the entire country. 

Potentially, i.e., and perhaps adversely too. 

Yet, governments of the day tend to drag their feet on making crucial appointments. True, given the need for checks and balances, the process is cumbersome. 

A selection panel must be set up, then candidates picked, security clearances sought, and so on. 

But none of this is new. Except in the tragic event of an incumbent’s death, governments are fully aware of when someone’s term in office will end. 

Hence, the process should be set in motion well before, so that the new appointee can take the baton from his or her predecessor without any hitch or slip-up. 

Ideally, the appointment should be announced a month or so before the incumbent steps down, so that the successor has time to gain familiarity with the nuances and challenges of the job.

Appointing people to key roles well before the incumbent’s stint ends is one of the cardinal principles of good governance. But this is often observed in the breach rather than in practice. 

In the recent case of RBI’s governorship, for example, the appointment of Sanjay Malhotra was announced by the government just a day before Shaktikanta Das’s term was to end, even as markets were rife with needless speculation over Das being given an extension. 

Also Read: From North Block to Mint Street: Sanjay Malhotra has his task cut out as RBI’s next governor

Likewise, the appointment of a successor to RBI’s deputy governor Michael Patra is still awaited, even though it was known that his extended term would end on 15 January 2025. 

Remember, Patra was the deputy in charge of the central bank’s monetary policy department and had been on its rate-setting Monetary Policy Committee (MPC) ever since its inception in 2016. 

Although his portfolio has been entrusted to fellow deputy governor M. Rajeshwar Rao (also serving an extended term), who is doubtless both competent and aided by the substantial professional bandwidth available within RBI, it would have been better by far if a successor had been announced before Patra’s term ended. 

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Note that the February meeting of the MPC will be Malhotra’s first as its chairman. As it happens, this panel’s external members are also relatively new to their roles, as they were appointed only in October 2024. 

All said, better planning would have afforded India’s new participants in policy-rate decisions more time to get their eyes in.