India’s biggest construction firm Larsen & Toubro (L&T) is preparing well in advance for leadership continuity, Chairman S N Subrahmanyan told Moneycontrol in an exclusive interaction, underscoring the importance of long-term succession planning in a conglomerate of its scale.
“It’s never too early, because you always need to think that anything can happen anytime,” the chairman said, adding that a succession framework 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 into place. The board and NRC (nomination and remuneration committee) are kept in confidence,” he said. L&T’s Deputy Managing Director is Subramanian Sarma, who was elevated to the position in March this year.
Subrahmanyan emphasized that succession at L&T is not simply about naming a leader, adding that smooth succession requires careful preparation.
“Succession planning in a complex organization is just not nominating somebody. He has to be acceptable to everyone,” he said.
Given the size, scale and complexity of L&T’s business, Subrahmanyan added that any potential successor needs to manage at least three to four business verticals to understand the company better.
He added that any successor has to earn the respect of the company through their performance and not just expect it because they have been anointed as the successor.
“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 said.
“Therefore, it is very important that the next person comes with that background that he is known as somebody who has achieved three, four things. Then it makes life easier for him,” he added.
Reflecting on his own journey under former chairman A.M. Naik, he commented that the focus of the company is to ensure that there is 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.
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