CEOs on the move: Industrial, fin sectors see highest churn
The din over global movement of top management has surpassed the earlier peak recorded in the boom days of the dotcom era.
By Vivek Sinha, TNN |
NEW DELHI: The din over global movement of top management has surpassed the earlier peak recorded in the boom days of the dotcom era.
“It is for real this time around,” says David Daniel, CEO of one of the world’s largest executive search companies, Spencer Stuart. The one big difference, according to him, lies in the ‘froth’ factor.
“The industry has surpassed the previous peak quite significantly and in our case the action has doubled. There was a lot of froth in the market during the earlier peak in ’00.
What is happening now and certainly in India is that it is not froth,” according to him. The hottest sector has, however, changed: “At that time it was technology driven, but now it is (driven by) industrial and financial sectors,” he adds.
The swift movement of CEOs has raised some serious issues for the industry, he feels. “It is imperative for boards to have a very good and actionable succession plan. More so today than the past as CEO tenures are getting shorter.”
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A single succession plan is not enough either, “Anything can happen. Companies need to have multiple succession plans. A good plan would not only identify the high potential candidates within the organisation but would also have an idea of a few potentials candidates outside.”Explains Tom Neff, the head of Spencer Stuart’s US business, “The number twos and threes in an organisation get poached if the succession is not done soon enough.”
The next level of succession planning should encompass functional heads. Says Carolyn Eadie, who looks after the European practice of the search company, “I think the next move would be in that direction, where there would be bench strength for direct reportees to the CEO.”
While the discussions about board representation in India primarily revolve around independent directors, globally, the issue taking root is diversity.
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Says Mr Daniel, “It’s moving beyond women and minorities. When it comes to diversity, people are also looking at geographic diversity. We believe very strongly in age diversity. This is also a result of the fact that the traditional pool of CEOs willing to join other boards is shrinking and we need to enlarge the pool and look beyond the usual suspects — towards retired CEOs or young entrepreneurs or division heads in other companies — as today’s boards seek diversity.”
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