Sackings are par for the course in corporate life. But public sackings of head honchos are rare, alarming and costly. In terms of brand value erosion alone, the Tatas may have lost a pile. That’s not counting the severance package and fees of executive search firms, lawyers et al .

This is why CEO succession and finding the right cultural fit for the job is so important. A report in PwC’s Strategy +Business publication estimates that companies that fire their CEOs forgo an average of $1.8 billion in shareholder value compared with companies that plan a succession well. Even when CEO successions are planned and are successful, there is a cost to changing the leadership, the report says, pointing out that financial performance suers in the year before and the year after the change.

So why do successions so often fail? “This happens a lot, because many boards treat succession as a discrete event, not as a process, leading them to overdelegate succession planning, usually assigning it to the CEO,” notes the report.

Let’s see if the Tata Sons board gets it right in the next four months!

Read more on Succession Planning andfinancial performance:

http://www.strategy-business.com/article/00327?gko=8dfe1

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