Succession Planning at Ranbaxy - Family Drama, Corporate Style

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Case Details:

Case Code : HROB057
Case Length : 18 Pages
Period : 2000-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : Ranbaxy
Industry : Pharmaceuticals
Countries : India

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Human Resource and Organization Behavior | Case Study in Management, Operations, Strategies, Human Resource and Organization Behavior, Case Studies

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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An Un-Expected Departure? Contd...

His leadership and managerial skills were responsible for the company's excellent performance in both the domestic and the international markets. In 2002, Ranbaxy was one of the fastest growing pharmaceutical companies in the US and was very close to achieving the $1 billion revenue mark in 2004.

However, there were other analysts who believed that Brar's resignation would not affect the company's performance. This was because he had laid down a well-crafted vision (Garuda Vision) for the company and the strategies to execute that vision had already been put in place.

Human Resource and Organization Behavior | Case Study in Management, Operations, Strategies, Human Resource and Organization Behavior, Case Studies

Commenting on the conflicting views in the media regarding this issue, an analyst remarked, "We feel that this slight aberration is mainly because of the sentimental issues involved." 5

But most analysts held the view that the Brar-Ranbaxy episode was yet another case of displacement of professional management by the promoter/owners of a company.

This event stirred afresh the debate over "family control over management" in family-owned businesses (particularly in the Indian context) - the issue of whether the family asserts undue pressure on management simply to reflect its control over the business.

Succession Planning - What it's All About

The world over, organizations use the concept of succession planning to a greater or lesser extent as a way to identify and cultivate employees with leadership qualities to assume greater responsibilities in the future. The term 'succession planning' (also referred to as replacement planning) can be described as, 'a process through which leaders identify and help groom their replacements before moving on to another position themselves.'

Experts in the field of Human Resources Development believe that if formal succession planning practices are adopted and implemented, organizations stand to derive considerable benefits.

Such organizations are able to plan for future leadership positions. Also, they avoid the dangers of ill-timed promotions of inadequately trained managers. Succession planning also helps in recruitment as well as retention of employees by drawing more employees to the organization and also by filling up senior level positions from within the organization.

Commenting on the advantages derived from succession planning, Donald C Wegmiller, Chairman, Clark Consulting, Healthcare Group, says, "Succession planning may reduce the need to bring in as many people from outside, which involves expenses, adaptation time, and lack of continuity."6.

Succession planning does not necessarily mean the exclusion of candidates from outside. But companies first look at the possibility of promoting suitable candidates from within the organization, since they are already familiar with the prevailing culture and the firm's practices...

Excerpts >>

5] 'Ranbaxy Labs: Life after Brar,', December 27, 2003.

6] Gina Rollins, 'Succession Planning: Laying the Foundation for Smooth Transitions and Effective Leader,' Healthcare Executive, November/December 2003.


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