End Of The CEO?

t’s getting tougher being a top manager in India Inc. And no, we’re not talking about the high stress and long hours that come bundled with those astronomical salaries. Deeper change is being signalled from the likes of Wipro, Infosys, L&T and MindTree, large to mid-size Indian companies, which have retired to their dressing rooms to bandage up for an economy recovering from a hammering. These companies want to forget sweet ideas like “passion” and “ambition”, and are pulling top employees through the more brutal science of constant “succession planning”.

The method of choice seems to be hit and trial. Take Wipro, which has had one CEO, followed by two, and then one, in relatively quick succession. The flavour of the moment now is Indian companies trying to reorganise along “verticals”—companies within companies that will give clients their full attention. This decentralised model has many CEOs steering different ships all sailing under one company’s flag. The goal is to make enterprises “agile” or responsive to markets before they slip away. “As a company becomes large, decisions often fall prey to procrastination. If separate units have enough autonomy, and the company values accountability...that’s the way ahead,” says Sunny Bannerjee, head of performance and technology, KPMG.

It is built into the culture in India to not question authority, something younger managers believe less in. But Vikram Chhachhi, executive V-P, DHR International, a global search and management consultancy, says the current crop of changes is still “reactive”. “We’re comparing with Cognizant’s management style, but that story is 12 years old,” he says. Others like Genpact, and even Indian companies (eg. Mahindra), have been reforming slowly, over the years. Those who’re suddenly in the throes of management style changes may live to regret it.

That said, the process has CEOs really in the mixer-grinder. There was a time when he/she would have got to stay for as long as it pleased the real boss, the promoter. To continue along this path is to risk all, say experts. Indian businesses now believe they won’t grow if the CEO remains a stereotypical, invincible-type figure, someone whose job is always secure. This could really short-circuit the current dispensation, where ceos are unable to grow the company beyond the first couple of billion (“from garages to SEZs was a great ride, but what now?”).

Apart from the uncertainty this breeds, it raises the issue of availability of talented managers to replace outgoing stock. KPMG’s Bannerjee says a company needs to have a second rung that can take over the reigns for 3-10 years. Surveys of Indian boards already show a high degree of churn at the top. “Stereotypes don’t work anymore in a world in which the next convulsion is moments away,” says Subroto Bagchi of MindTree Consulting.

With CEOs moved around like on a chessboard, where’s the silver lining? Hewitt’s Anandaroup Ghose, head of executive compensation consulting, says that Indian top corporates have been getting the biggest pay hikes in the region (more than Aussie or Chinese counterparts) since 2006. In purchasing power terms, Indian top guns make as much as their counterparts in the US or Europe-and it’s only going to get higher.

Whether these companies get it right or not, crystal-gazers can only hope to predict. “The outcome of any restructuring depends 99 per cent on implementation and 1 per cent on the formula,” says Vishesh Chandiok, national managing partner, Grant Thornton India. But it stands to reason that if management “leaders” introduced it for everyone else, why shouldn’t it be perform or perish for themselves?