A major leadership challenge is succession planning. Three decades ago, NM Desai of L&T said in an interview to a business magazine that if one of these days, if he is knocked down by a red bus, there are six people to take over after him. He was referring to his vice presidents. Today With all the progress in leadership, succession and building next generation leaders, while some are doing an excellent job many corporations cannot still find top level talent to take charge of corporations. Our public sector banks are a pathetic example of poor succession planning. In the next 3 to 5 years, most top level managers of PSBs are going to retire and nothing is being done by most. A few like BOB and UBI have started grooming them, but very inadequately. We do not yet have a mature methodology to identify and train future leaders. The only methodology we have is to provide them general management training and some training in foreign soil and by foreign experts who have very little idea of leadership or leadership development in India. In India, leadership, besides other things, is an emotional connect. Foreign scholars have limitations in understanding and training leaders for Indian corporations. While there is some work happening in India, we have a long way to go.

Largely, companies opt for general management programs because most of those who come to occupy leadership positions are either technical or functional specialists and have very limited general management exposure. However, the global exposure needs to be better planned than mere education trips to other countries. These programs also have leadership modules which are largely theory based. The project component part of the program is very useful, but poor follow-up on the projects; providing incomplete experience; and lack of seriousness in guiding and using such projects mars their effectiveness in some cases. Few are using 360 degree feedback and development center based programs which can be very effective in developing leadership and the succession pipeline.

From the organization perspective - global perspectives, vision development, long term thinking and ability to lead from the front - are the primary agendas, along with development of self confidence. The use of a 360 degree mechanism would lead to a lot of self awareness, ability to take criticism, and the ability to view oneself from different perspectives. I have recently completed a study of 100 managers from among a list of 8000 managers who underwent the 360 degree feedback based leadership development program at TVRLS. These managers were selected based on their 360 DF scores. It was found that the managers, whom we rated as influential managers, shared certain qualities in common. These qualities include a desire to learn, desire to learn from various sources, and a high degree of self awareness. Thus, the programs help in sensitizing them to the leadership qualities and leadership roles.

There is a need to quantify the assessment of ROI on leadership development and in my book on Hurconomics (Pearson Education, 2011), I have suggested a simple tool called R-COT (Real Cost of Time) and O-COT (Opportunity Cost of Time). Talent of executives is cost in terms of their time. It is a simple formula of dividing the CTC by 120,000 (2000 hours multiplied by 60 minutes). It gives real and opportunity cost of your time and provides an estimate of a reasonable price for the talent. For example, if one’s CTC is Rs. 6,00,000 (per year), the cost to company is Rs. 5 a minute, which means when you use your cell phone for ten minutes, you are using Rs 50 of your company time. If two managers are talking to each other for ten minutes on the cell phone, it costs the company Rs 100 besides the connectivity cost. The opportunity cost for the same (that is a rough estimate of the return on the time invested or talent invested) is ten times in manufacturing and three to four times in the services sector like IT and financial services. Which means the opportunity cost for a ten minute conversation on your mobile or e-mail is Rs. 400 to Rs 1,000. The same formula can be used to measure the returns on investment on executive education.