Cos launch silent hunt even as CEOs sit pretty

MUMBAI: Chief executives across India Inc are a vulnerable lot these days. Executive search firms say they are increasingly working on assignments to scout for CEOs even while the incumbent is still in office and unaware that a search is underway to replace him. With the quarter-on-quarter culture dominating the performance evaluation system for CEOs, industry experts say there is no room for comfort for corporate India's top deck.
An executive search firm head says he is currently working on four assignments across sectors to help companies identify ways to replace their existing CEOs.While one of them is a $200-300 million mid-sized IT services firm, the other companies operate in the consumer and automotive space. The IT services company has lagged on the performance barometer compared to its peers and, therefore, is looking for a new CEO to boost its performance-something very similar to what happened at IT major Wipro in January this year. The company's chairman Azim Premji showed the door to joint CEOs Suresh Vaswani and Girish Paranjpe, the first-of-its-kind public ouster of senior officials in the country. However, the successor, T K Kurien, came from within the system unlike what is going to happen at this IT services company.
Failure to perform, though, is not always the reason for CEOs being asked to leave. For instance, a head hunter says that an automobile company has given it a mandate to launch a search because the present CEO was not being able to rally his team and is an individual worker even as the company's performance has not been hurt.
Once on the job, confidentiality is the key to such a search as naturally, the news should not reach the existing CEO, says a head hunter. Narrating an instance, he says, a multinational launched a replacement search for its local CEO through a firm in Hong Kong, which eventually spoke to a number of candidates without understanding the Indian context and in a matter of few weeks, the local CEO knew of this search. He then challenged his bosses who then had to sheepishly withdraw the search as it drew a blank and quietly extended the contract of the incumbent.
Most head hunters who work with companies to help them recruit top officials say that such a search is challenging and extremely sensitive for the client and the agency involved. "It is tricky to launch such external searches without a proper internal back-up plan or a quiet market scan," says an executive search firm head who did not want to be named.
Most companies watch their CEOs for at least six to eight quarters before taking any drastic action, say experts. "The purpose of such search assignments are sometimes to have a back-up if in case
things go awry. So corporates are continuously evaluating the quality and calibre of talent available externally. It is not at all a one-sided contract negotiation anymore with the CEO, it has to be backed up by some stringent performance criteria," says R Suresh, MD, Stanton Chase, a leading executive search firm.
Things are tougher for publicly
listed businesses which are under the board and media scrutiny. "All this calls for strong and independent boards and we believe it is still evolving in the Indian context as a majority of listed businesses are still promoter controlled and managed," says K Sudarshan, managing partner, EMA Partners India, an executive-level recruitment agency. However, experts feel this kind of replacement searches are mandated and executed quicker by a promoter-run company as compared to an MNC where a lot many processes are followed.