When it comes to succession planning, India Inc seems to prefer internal candidates for passing on the baton for the top position, experts feel.
Choosing an internal candidate for top managerial posts, as seen in the case of Larsen & Toubro today, provides multiple benefits for the corporates, and also sends out the message that hardworking people would be rewarded, they say.
"These days, career progression is taken seriously by employees. Appointing an internal candidate as the successor also sends out a good message that hardworking people would be rewarded by the company," HR consulting firm ManPower Group (India) Managing Director Sanjay Pandit told PTI.
"It is also a good (talent) retention tool," he noted. Corporate giant L&T today appointed K Venkataramanan, associated with the company for over four decades, as its new CEO and Managing Director, while the current chief A M Naik would remain Executive Chairman.
While L&T is the latest major Indian entity to repose faith in an internal candidate for the top position after about one-year-long search process, many others, including salt-to-software conglomerate Tata Group, have taken a similar stand in the past.
As was the case for Tata group, L&T is also believed to have considered various candidates, including some from outside, in their months-long search processes.
Cyrus Mistry, son of construction magnate and the Tata group's single-largest shareholder Pallonji Shapoorji, would take over from Ratan Tata as the group chairman in December.
In January, Godrej Properties also appointed Pirojsha Godrej, son of group chief Adi Godrej, as its new MD and CEO.
"An insider will have a good understanding of the company. He will know the people and culture well," staffing services firm Ma Foi Randstad chief E Balaji said.
According to experts, the practice of choosing an internal candidate as successor at the top is a global trend.
"More and more companies are looking to groom talent internally, especially for top positions. This is happening globally as seen in the cases of General Electric, Apple and HSBC," Balaji said.
Pandit pointed out that having an internal candidate as the successor has "multiple benefits such as a good understanding of the company culture".
"Every organisation has a talent succession plan by default and the plan (usually) pans for about three to four years," he added.
"Going for an outside candidate to succeed (at top positions) also reflects the lack of talent internally. Companies are focusing on developing internal talent and a deep management bench (which is a good sign)," Balaji said.
L&T's current chief A M Naik joined the company in 1965 as a Junior Engineer while his chosen successor 67-year-old K Venkataramanan has been with the group since 1969.
Choosing an internal candidate for top managerial posts, as seen in the case of Larsen & Toubro today, provides multiple benefits for the corporates, and also sends out the message that hardworking people would be rewarded, they say.
"These days, career progression is taken seriously by employees. Appointing an internal candidate as the successor also sends out a good message that hardworking people would be rewarded by the company," HR consulting firm ManPower Group (India) Managing Director Sanjay Pandit told PTI.
"It is also a good (talent) retention tool," he noted. Corporate giant L&T today appointed K Venkataramanan, associated with the company for over four decades, as its new CEO and Managing Director, while the current chief A M Naik would remain Executive Chairman.
While L&T is the latest major Indian entity to repose faith in an internal candidate for the top position after about one-year-long search process, many others, including salt-to-software conglomerate Tata Group, have taken a similar stand in the past.
As was the case for Tata group, L&T is also believed to have considered various candidates, including some from outside, in their months-long search processes.
Cyrus Mistry, son of construction magnate and the Tata group's single-largest shareholder Pallonji Shapoorji, would take over from Ratan Tata as the group chairman in December.
In January, Godrej Properties also appointed Pirojsha Godrej, son of group chief Adi Godrej, as its new MD and CEO.
"An insider will have a good understanding of the company. He will know the people and culture well," staffing services firm Ma Foi Randstad chief E Balaji said.
According to experts, the practice of choosing an internal candidate as successor at the top is a global trend.
"More and more companies are looking to groom talent internally, especially for top positions. This is happening globally as seen in the cases of General Electric, Apple and HSBC," Balaji said.
Pandit pointed out that having an internal candidate as the successor has "multiple benefits such as a good understanding of the company culture".
"Every organisation has a talent succession plan by default and the plan (usually) pans for about three to four years," he added.
"Going for an outside candidate to succeed (at top positions) also reflects the lack of talent internally. Companies are focusing on developing internal talent and a deep management bench (which is a good sign)," Balaji said.
L&T's current chief A M Naik joined the company in 1965 as a Junior Engineer while his chosen successor 67-year-old K Venkataramanan has been with the group since 1969.
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