Cos reshuffle top deck to tide over downturn

There are two time-tested principles India Inc is applying to the most gruelling challenge it has faced in years: Change begins at home, and at the top. Many leading Indian companies are reshuffling their top managements to tide over the slowdown. While some companies are appointing successors to their soon-to-be retiring CEOs, others are promoting existing A-listers. In uncertain times, they realise, it���s talent groomed in-house that works best at the deck.

A couple of days ago, ET broke the story of top Tata companies ��� Tata Motors, Tata Steel, and TCS ��� identifying or announcing successors to the current CEOs. Earlier this week, a new leadership team took charge at pharmaceutical major Ranbaxy. It doesn���t end here; in the recent past, the heavyweights of Indian business such as AV Birla Nuvo, ICICI Bank, and Bharti too have made changes at the top as they have moved key talent to newer roles.

Experts say that with good succession plans in place and smooth transition of power, companies have ensured continuity in performance during the slowdown. ���Some companies might be preparing for a new future. Many are coming to the conclusion that the current downturn may not be a cyclical but a structural one. We are going to hit a ���new normal.��� Profitability and revenue will be much harder to come by, than it has been in the past five years,��� explains Gopal Nagpal, principal - human capital, Mercer. ���Companies need accountability in tough times like the one we are facing. The realisation is setting in that the movement towards a performance-oriented culture and more accountability must start from the top,��� adds R Sankar, ED, PWC.



Interestingly, most leading companies are moving in-house talent to corner offices and very few have ended up hiring external candidates to fill vacancies. In the case of the AV Birla group and Tata group, the succession plans have worked well, and internal candidates who have been identified and groomed for leadership positions tend to ease into vacant positions.

Experts say internal candidates who know the system work better in tough times and the elevation to higher roles with added responsibility also keeps the top teams motivated. In a study, the Center for Creative Leadership has found that nearly two-thirds of external senior executives poached from other companies fail within the first 18 months. ���In uncertain times, it���s often seen that in many companies the appetite for outside talent diminishes to a great extent, so a lot of internal promotions take place. A new internal candidate brings fresh perspective to current challenges without the attendant risk of any new executive coming in,��� says Atul Vohra, co-CEO, Transearch.