- Fifties again the golden age for Indian CEOs
MUMBAI: Grey hair, wisdom and experience seem to be back in vogue. At a time when succession planning is playing out in top Indian companies including the Tatas, L&T and ITC, there appears to be a strong trend which suggests that the fifties are the new forties when it comes to the appointment of new CEOs in India http://timesofindia.indiatimes.com/topic/India Inc.
Over the last few months, appointments at large companies, across sectors, point to that trend. Wipro's new CEO T K Kurien is 50 as is the new Genpact CEO, Tiger Tyagarajan. Recently, in a top management restructuring, India's second largest software firm, Infosys, named veteran banker K V Kamath, (63, already retired from an executive role at ICICI Bank) as the new chairman to succeed founder NR Narayana Murthy.
It also appointed S Gopalakrishnan as the executive co-chairman and promoted COO S D Shibulal as CEO and MD, both of them in their fifties. When HDFC http://economictimes.indiatimes.com/hdfc/stocks/companyid-13640.cms chairman Deepak Parekh, moved into a non executive role at HDFC one-and-a-half years ago, 57-year-old Keki Mistry stepped in as VC and CEO. Similarly, ACC appointed a veteran 66-year-old professional, K K Kaura, to head ACC Cements when Sumit Banerjee decided to move on a year back. The list goes on.
Contrast that with the trend in succession planning even in the last decade and you will see that almost all blue chip companies were appointing executives in their forties as their leaders. Nitin Paranjpe, now in his mid forties , was appointed MD and CEO of HUL in April 2008. During 2007, Shiv Nadar appointed Vineet Nayar, then in his early forties as his successor in HCL Technologies http://economictimes.indiatimes.com/hcl-technologies/stocks/companyid-4291.cms. Similarly, in 2010, HCL Infosystems http://economictimes.indiatimes.com/hcl-infosystems/stocks/companyid-10506.cms chose Harsh Chitale, 39 to succeed Ajay Chowdhry http://timesofindia.indiatimes.com/topic/Ajay-Chowdhry. K V Kamath himself chose Chanda Kochar http://timesofindia.indiatimes.com/topic/Chanda-Kochar, then in her late forties, to replace him as the CEO of ICICI Bank http://economictimes.indiatimes.com/icici-bank/stocks/companyid-9194.cms. Ditto for N Chandrashekharan of TCS and Rohit Kapoor of WNS Global Services http://timesofindia.indiatimes.com/topic/WNS-Global-Services.
The age gap between the successor and the incumbent is also reducing substantially as a result. So, going forward, for a professional, it's perhaps the best time to be in the fifties-an age where managers earlier had to be content with playing second fiddle to a younger successor. But the reason why managers in their fifties are more in demand now has got nothing to do with age as a criteria but experience in handling critical and complex structures.
The set of challenges in the last two decades, post-liberalization , was decidedly different from the current decade. Between 1990 and 2010, growth made these CEOs acquire vast empires, across geographies. The challenges for their successors in the current decade emanates from this vastness they created , since they would now have to be able to manage the size, the people, the cultures and the overall complexities that arise out of them.
So, even the brief being given out to head-hunters now for a CEO-level position is to search for a candidate who has got rainbow vision with proven skills to manage complexities arising in the business, across geographies , who would be good to lead for the next 10 years. And as R Suresh, MD, Stanton Chase, an executive search firm which specializes in hiring CEOs, puts it, most of these qualities are now found in the slightly more experienced lot. "The golden age for CEOs suddenly is 50 to 55," he points out. Krishnamurthy Subramanian, assistant professor, finance at the Indian School of Business, Hyderabad http://timesofindia.indiatimes.com/topic/Hyderabad, who tracks succession planning closely, describes it as a part of a global trend. "The increase in CEO age http://timesofindia.indiatimes.com/topic/CEO-age reflects a global trend towards hiring older CEOs. For example, among the S&P 500 firms, the typical CEO is now about 55 years old. Also, the percentage of new CEOs over the age of 50 has been increasing every year."
So once the playground of the 40-year-olds is now the pad of a slightly older set of hands. K Sudarshan, the CEO of another executive search firm, validates the trend. "Earlier, anyone above 50 was called a dinosaur, but now they are as tech savy as managers in their forties. At the end, it all boils down to experience and maturity and somehow the managers in their fifties seem to possess that fit right now," he said.
Ashish Singh, CEO of consulting firm Bain & Company http://timesofindia.indiatimes.com/topic/Bain-&-Company, however, still swears by the forties but adds that more than the age of an executive, it is their accomplishments, their track record of creating value and of improving or expanding the business, which matters. Besides, he feels that it also depends on the person and the business he is in.
Having said that, the lifespan of a CEO, which used to be around twenty years in the post-liberalization period, is also much shorter now. Besides, the trend of having more 50-year-olds in old economy (manufacturing companies) earlier does not hold good as executives of this age group are playing an equally important role in services sector like IT, banks and financial services now.
But ask Deepak Parekh, chairman HDFC, and he pretty much seals the issue by saying ; "I think today's sixty is like yesteryears' forties. Longevity (in business) has gone up."
Courtesy : TOI - 08-Jul-2011
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