Do Startups Need to Worry About Succession Planning?


Startup Succession Planning

Why is it that we don’t see too many businesses talk of or focus on succession planning in spite of the fact that finding the right successor can be an arduous and time consuming process and has a direct impact on the longevity of the business? There is no dearth of examples of succession planning gone wrong even at renowned corporate across the globe. Though the ‘biggies’ are more or less able to withstand the brunt in such cases, for startups, a wrong decision on this front, could even prove fatal.

Not too long back, Infosys went through a period of turmoil on this account. Narayan Murthy, who had stepped down as Chairman in 2011, had to rejoin in 2013 to put the house in order, in spite of a handpicked successor. Such incidents are a clarion call for all businesses, including startups, to seriously start thinking of a succession plan for key leadership positions.

Well, you may think startups are too young to be thinking of succession plans. But if you look at it the other way, every person, especially at a leadership position, plays a key role in defining the fate of the startup. With limited people and resources at hand to accomplish that ‘big dream’, even one person moving out of the startup, irrespective of the reason, can jeopardize its future since others already have their hands full, and therefore, may not be able to justice to the role, if assigned the responsibility. As a result, even their current responsibilities may suffer. Moreover, hiring and training another person for the job can take time. So, the longer it takes to fill up that position with the right person, the greater the damage to the startup.

Startups usually have a flat organizational structure. So, any exit of people at key positions can have a big impact on the running of the business. There is no guarantee that the current set of managers or skilled technical people will always remain till the end or may not have an approaching retirement age. Succession planning, to a large extent, can help in assuring the future of the company and ensure that the right people are able to fill the shoes which got it so far.

Without a succession plan there, the startup will end up functioning like a ship without a captain, thus leading to utter confusion and chaos. There will be no clear goals to bind people and synergize their efforts. As a result, people will be dissatisfied and attrition will increase. And that’ll further add to the pressure on the people working there, and the same cycle of dissatisfaction and more attrition will follow.

Whether the founder wants to take the startup all the way or chooses an exit, either way it is good for a startup to have an internal replacement process. It should identify the key people to take on leadership roles and train them in advance in order to fill in the gaps without disturbing the momentum and continuity of the business, when the need arises.

The process of succession planning starts many years in advance and involves recruitment, career development and training of the potential successors. It requires a great deal of foresight and planning to identify the strategic core areas or positions where successors need to be groomed, so they can step up when the time is right, and deliver.

A key aspect that is often missed when filling up that key position is the vision alignment and cultural fitment of the candidate. While it may not have any immediate impact on the successor being hired for the job and the company, in the long run it can turn out to be the bone of contentment between the two, since their ideologies and vision for the company may differ. It is of paramount importance that the successor is aligned with the company’s vision, because this is the most vital parameter that’ll bind him with the startup and other stakeholders in the company.

Moreover, just like any other relationship, it is important that there is a basic level of understanding and respect between the successors and the promoter/founder(s) of the startup, so its smooth sailing for everyone – the startup and all the stakeholders – in the long run.

To begin with, a risk assessment study needs to be done, so critical roles in the organisation can be identified. Once this is done, a profiling of the key competencies for the key positions in the organisation needs to be outlined. These key competencies should outline the requirements in terms of educational qualification, behavioural and technical level of competence of the individuals to successfully perform their roles. The likely successors should have these basic skills and competencies identified for the role. Moreover, they should have proved their prowess at handling similar roles and responsibilities in the past.

It is also necessary to have a formal strategy which will motivate staff into eagerly accepting new challenges and keep them interested in learning new skills. Having well defined career paths at the outset will help a startup recruit good talent and retain them in the future.

The key to a good succession plan is that it needs to be proactive with a clearly charted course. It should also put the key successor through all the possible areas of competency in an organisation before he/she is actually required to take up the position.

The successor should also have the time to take up all the key opportunities which come up in a company’s journey, add to their qualifications or have new experiences. This is also a good way to ensure your key personnel are fully integrated into the common goals and are completely aligned with your startup’s business plan.Also remember, to properly train a successor, years grooming is required. The succession planning process is only a litmus test to check whether this chosen individual is the right choice and can cope up with the new challenges that the role will bring with it.


While you will certainly look to bring in a candidate with the right hard skills for the job, it is important not to overlook the softer aspects such as cultural fitment, shared vision and values, since more often than not, the failure of a succession plan stems from these seemingly irrelevant aspects.

Such is the importance of a succession plan for businesses that since 2014, SEBI has been pondering over bringing in a regulation for listed companies to make it mandatory to have a succession plan. It is not long before investors wake up to this critical aspect while evaluating a startup before funding.

[About the Author: The article has been contributed by Vikram Upadhyaya – Chief Mentor at GHV Accelerator.]

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