Succession Planning In Indian Family Businesses Is Still Being Done Wrong
· Free Press Journal
In conversation with Dr. Yogish Arora, Director & CEO, HR Anexi
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What looks like a practical delay is usually something deeper—a founder's reluctance to make himself less important. Dr. Yogish Arora, who has worked with over 700 family-managed businesses, explains why succession planning fails, how to fix it, and why the cost of delay is always higher than you think.
The Succession Paradox
Ask a founder why he has not planned his succession, and he will give you a practical reason. He is busy. The next generation is not ready. There is still time. All of it is true, and none of it is the real reason.
"The real reason is that succession is the first major decision of his career that asks him to make himself less important," says Dr. Yogish Arora, Director and CEO of HR Anexi. "Every instinct that built the business pushes the other way. He succeeded by holding everything in his own hands and being the final word on what mattered. You are now asking him to unlearn that."
There is also a practical reality peculiar to India. Many founders stay active and sharp well into their seventies, so there is no natural forcing event. The business keeps running, the founder keeps deciding, and the absence of a crisis quietly becomes the reason nothing gets planned. By the time it feels urgent, it is usually too late to do it well.
Inheritance Is Not Succession
One of the most common mistakes promoters make is confusing inheritance with succession.
"Inheritance is a transfer of ownership. Succession is a transfer of capability," Dr. Arora explains. "You can hand over shares in an afternoon. You cannot hand over thirty years of judgment the same way, or relationships that took decades to earn. Families pour their attention into the estate and forget the enterprise. The result is an heir who owns the business but was never prepared to run it, which is far more dangerous than owning nothing at all."
The Mistakes That Repeat
Having worked with over 700 family-managed businesses, Dr. Arora has seen the same errors play out with remarkable consistency.
The first is mistaking exposure for preparation. He recalls a second-generation son in an auto components business who had sat in on every board meeting for six years. His father was proud of how much he had absorbed. But the son had never once owned a decision that could have cost the company money.
"He had watched his father decide hundreds of times and mistaken watching for learning," Dr. Arora says. "When responsibility finally landed on him, he hesitated—not for want of intelligence, but because absorption and accountability are different muscles, and only one of them had ever been used."
The second mistake is testing the successor only in good weather—handing him responsibility when the business is healthy and never in the difficult moments, so no one knows what he does under pressure until the pressure is real.
The third, and the most expensive, is preparing one person for the top chair while ignoring the entire layer of leadership beneath it. "You cannot build a single successor and call the organisation ready," he warns.
The Case for Professional Help
A father is the least reliable person to judge his own child, not because he is unfair, but because he is the most invested party in the room. His affection distorts the read in one direction and his disappointment in the other.
"Competency assessments and psychometric evaluations give the family a neutral baseline that does not bend to who is asking," Dr. Arora explains. The qualities that matter are rarely the ones a family instinctively looks for—can this person earn the trust of people who did not grow up with the family name, can they make sound decisions with incomplete information, are they willing to be measured honestly rather than protected.
But an assessment only tells you where the gaps are. Closing them is the longer task. Capability is built the same way it was built in the founder—through real accountability rather than proximity.
The Cost of Delay
Succession that begins after a funeral or a sudden illness is not succession. It is an emergency transfer of ownership.
Dr. Arora remembers a mid-sized engineering company where the founder suffered a stroke and his son took charge within a week. The son was competent—that was never the issue. The issue was that three of the company's most senior people, men who had spent twenty years dealing only with the father, left within eighteen months. No one had ever built their relationship with the next generation.
"The business did not collapse," Dr. Arora recalls. "It lost close to a decade of institutional memory in a year and a half and spent years rebuilding what a planned handover would have simply preserved. That is the real cost of delay. The market senses the uncertainty before the family has finished the paperwork, and the people with options are the first to leave."
Where to Begin
Dr. Arora's advice to promoters is blunt: "The right time is a story people tell themselves so they can postpone the discomfort. There is no season in which it becomes convenient to plan for your own replacement. There is only earlier and later, and later always costs more."
He recommends three first steps: map the roles whose sudden loss would genuinely threaten the business—and resist the urge to look only at the top job; assess the people who might one day carry those roles, honestly, using tools that strip out affection and wishful thinking; and start moving the relationships and knowledge across now, while the current leaders are still in the building to hand them over rather than take them with them.
"The families who begin while there is still time tend to be surprised by what they find," Dr. Arora concludes. "The conversation they dreaded turns out to be one of the more generative stretches the business ever goes through."
Succession planning is not about planning your exit—it is about ensuring the business you built survives and thrives beyond you. The question is not whether you are ready to step back, but whether the next generation is ready to step forward.