8/19/13 Non-performance of CEOs is not tolerated anymore, big names get the boot - Economic Times articles.economictimes.indiatimes.com/2013-07-01/news/40307976_1_manu-anand-ceo-churn-pepsico-india 1/3 Tags: WalMart India | Stanton Chase | Shibulal | PepsiCo India | Japan | InGovern | Indian School of Business Hyderabad | Haribhakti & Co | Groupon | Booz & Company | Bharti Airtel Tweet Tweet 0 26 Recommend S S Non-performance of CEOs is not tolerated anymore, big names get the boot Sreeradha D Basu, ET Bureau Jul 1, 2013, 06.46AM IST MUMBAI: When Walmart India released a terse statement last week that its CEO "is no longer with the company", without touching upon the reasons for his exit, Raj Jain became the latest high-profile exit from a company in strife to leave that question hanging: did he leave or was he nudged? Ads by Google Share Market Tips on SMS 98% Accurate Intraday SureShot Tips Get 2 day Free Trial of Stock Tips BestStockSolutions.com/stock-tips/ Puranik Builder's Sayama Exclusive Luxury Row Villa Project 3 & 4 BHK Row Villas in Lonavla puranikbuilders.com/Row_Villas In most cases, that question might never be answered formally or directly, but the circumstances and manner of some CEO exits in the past year from companies that were punching below their weight underscore a declining tolerance for under-performance at the highest level. "The market is tight," says Nina Chatrath, partner in the leadership consulting practice of Heidrick and Struggles. "Boards are no longer sitting back and watching. Even in promoter-driven companies, where people were given a longer rope, tough decisions are now being taken," says Chatrath of Heidrick and Struggles. With the CEO position in India Inc becoming tougher to hold, India is trending towards global practices, though cultural differences still influence the finer details of such separations. Earlier this year, a study by Booz & Company, a global management consulting firm, examining CEO changes among the world's top 2,500 public companies showed that 15% of CEOs left office in 2012, up from 14.2% in 2011. In the history of this study, which began in 2000, this is the second-highest rate of CEO churn, after 2005. CEO turnover rates increased in 2012 over the average for the past five years (2007-11) in every region except Japan. The increase was the highest in Brazil, Russia and India, where turnover increased from 15.4% in 2007-11 to 23.9% in 2012 (India-specific numbers were not disclosed). CEO turnover is especially pronounced in Indian subsidiaries of multinationals that have come to mean more to their parents. "India's contribution to revenues of global firms is increasing," says Shriram Subramanian, managing director of InGovern, a proxy advisory firm that provides independent advice on company-specific governance issues. "Often, overall global performance is a reflection of the company's performance in India." BSE NSE 317.35 -5.51 % -18.50 Vol: 12151 shares traded 317.60 -5.38 % -18.05 Vol: 100978 shares traded Prices | Financials | Company Info | Reports Bharti Airtel RELATED ARTICLES Rising high: Women hold 25% of leadership positions at... November 19, 2010 CEOs may get longer tenures December 14, 2010 NGOs vs India Inc: How are companies gearing up for the... November 11, 2011 Ads by Google News By Company News Stock Quote Type Company Name Home News Markets IPO Personal Finance Mutual Funds Tech Jobs Opinion Features Environment Blogs Slideshows Blogs ET NOW Top News News By Industry News By Company Economy Politics and Nation International Business Emerging Businesses PSU Press Releases Other Press Releases NRI Corporate Trends Corporate Announcement Earnings You are here: Home > Collections (“Boards are no longer…)
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
8/19/13 Non-performance of CEOs is not tolerated anymore, big names get the boot - Economic Times
articles.economictimes.indiatimes.com/2013-07-01/news/40307976_1_manu-anand-ceo-churn-pepsico-india 1/3
Tags: WalMart India | Stanton Chase | Shibulal | PepsiCo India | Japan | InGovern |
Indian School of Business Hyderabad | Haribhakti & Co | Groupon | Booz & Company | Bharti Airtel
TweetTweet
0 26
Recommend
StumbleUpon
Submit
Non-performance of CEOs is nottolerated anymore, big names get thebootSreeradha D Basu, ET Bureau Jul 1, 2013, 06.46AM IST
MUMBAI: When Walmart India released a terse statement
last week that its CEO "is no longer with the company",
without touching upon the reasons for his exit, Raj Jain
became the latest high-profile exit from a company in strife
to leave that question hanging: did he leave or was he
nudged?
Ads by Google
Share Market Tips on SMS
98% Accurate Intraday SureShot Tips Get 2 day Free Trial of Stock TipsBestStockSolutions.com/stock-tips/
Puranik Builder's Sayama
Exclusive Luxury Row Villa Project 3 & 4 BHK Row Villas in Lonavla
puranikbuilders.com/Row_Villas
In most cases, that question might never be answered formally or directly, but the circumstances and
manner of some CEO exits in the past year from companies that were punching below their weight
underscore a declining tolerance for under-performance at the highest level. "The market is tight," says Nina
Chatrath, partner in the leadership consulting practice of Heidrick and Struggles.
"Boards are no longer sitting back and watching. Even in promoter-driven companies, where people were
given a longer rope, tough decisions are now being taken," says Chatrath of Heidrick and Struggles.
With the CEO position in India Inc becoming tougher to hold, India is trending towards global practices,
though cultural differences still influence the finer details of such separations. Earlier this year, a study by
Booz & Company, a global management consulting firm, examining CEO changes among the world's top
2,500 public companies showed that 15% of CEOs left office in 2012, up from 14.2% in 2011. In the history of
this study, which began in 2000, this is the second-highest rate of CEO churn, after 2005. CEO turnover
rates increased in 2012 over the average for the past five years (2007-11) in every region except Japan. The
increase was the highest in Brazil, Russia and India, where turnover increased from 15.4% in 2007-11 to
23.9% in 2012 (India-specific numbers were not disclosed).
CEO turnover is especially pronounced in Indian subsidiaries of multinationals that have come to mean more
to their parents. "India's contribution to revenues of global firms is increasing," says Shriram Subramanian,
managing director of InGovern, a proxy advisory firm that provides independent advice on company-specific
governance issues. "Often, overall global performance is a reflection of the company's performance in India."
BSE NSE
317.35
-5.51 % -18.50
Vol: 12151 shares traded
317.60
-5.38 % -18.05
Vol: 100978 shares traded
Prices |Financials | Company Info | Reports
Bharti Airtel
RELATED ARTICLES
Rising high: Women hold 25% of leadership
positions at...
November 19, 2010
CEOs may get longer tenures
December 14, 2010
NGOs vs India Inc: How are companies gearing
up for the...
November 11, 2011
Ads by Google
News By CompanyNews Stock Quote
Type Company Name
Home
News Markets
IPO
Personal Finance
Mutual Funds
Tech
Jobs
Opinion
Features
Environment
Blogs
Slideshows
Blogs
ET NOW
Top News News By Industry News By Company Economy Politics and Nation International Business Emerging Businesses PSU Press Releases
Other Press Releases NRICorporate Trends Corporate Announcement Earnings
You are here: Home > Collections
(“Boards are no longer…)
8/19/13 Non-performance of CEOs is not tolerated anymore, big names get the boot - Economic Times
articles.economictimes.indiatimes.com/2013-07-01/news/40307976_1_manu-anand-ceo-churn-pepsico-india 2/3
How to choose a terminsurance plan
How to transfer your property Step-by-step guide to fileyour income tax return online
As a result, the Indian arms are under greater scrutiny. "Earlier, for an MNC, India would not even come up in
a board-level discussion. Now, the questions increasingly being asked are: 'What is the strategy for BRIC
countries? What is the strategy for India?' The expectations from India are that much higher," says Amit
Tandon, managing director of Institutional Investor Advisory Service India (IIAS), another proxy advisory firm.
Unmet expectations have been the backdrop for several recent CEO exits, including Raj Jain at Walmart
India, Manu Anand at PepsiCo India and Sanjay Kapoor at Bharti Airtel. When Kapoor left, the company had
recorded 12 consecutive quarters of declining profits.
The Indian operations of Walmart, the world's largest retailer, are part of a global internal investigation on
whether its employees paid bribes in the course of doing business; as part of this, it had suspended its CFO
and the entire legal team, and postponed the opening of new stores. According to Shailesh Haribhakti,
managing partner of Haribhakti & Co and an independent director on the board of several companies, other
than the changes in the regulatory environment many can't keep pace with, professional managers don't like
to be intensely questioned by multiple agencies.
Ads by Google
Aviva i-Life Term Plan
50 lakh Life Cover@ Just Rs.11*/day Really Quick,Easy & Affordable.Buy!
www.avivaindia.com/Term-Plan
5 Signs of Alzheimer's
Doctor: 5 Warning Signs You're About to Get Alzheimer's Disease
www.newsmax.com
Elsewhere, at PepsiCo, though Anand is being tipped to join Mondelez, two company officials who spoke to ET
on the condition of anonymity say that losing market share to rival Coca-Cola and less-than-expected returns
on its Rs 160-crore Indian Premier League spend contributed to his departure. Numbers from research firm
Nielsen show that PepsiCo's market share this April fell to 29.7%, from 32.1% in April 2012, even as that of
Coca-Cola increased to 48.3%, from 45.8%.
According to K Sudarshan of EMA Partners International, an executive search firm, growth pressures are
catching up even with MNCs. "In the past 10 years, India has seen hyper-growth in most industries," says the
managing partner-India & regional VP-Asia. "Headquarters expect the same kind of growth as before, but that's
not possible."
According to Tandon of IIAS, it's usually the global headquarters that decide leadership changes at Indian arms
of MNCs, and the owner in promoter-driven companies. R Suresh, managing director-India of executive search
firm Stanton Chase, feels CEOs being held accountable for performance like this is fair game. "Being a CEO is
not just an entitlement; it's an obligation. He or she has to perform."
Ads by Google
Buy Tata Premium HomesNestled amongst Nature Ariana by Tata Housing, Bhubaneswar
projects.tatahousing.in
Submit Resume NowImmediate Requirement. Sign up to Apply & Find Jobs
www.monsterindia.com
1 | 2 | Next
FEATURED ARTICLES
More:
8/19/13 Non-performance of CEOs is not tolerated anymore, big names get the boot - Economic Times
articles.economictimes.indiatimes.com/2013-07-01/news/40307976_1_manu-anand-ceo-churn-pepsico-india 3/3
© 2 01 3 Ben n ett , Colem a n & Co. Ltd. A ll r ig h ts r eser v ed In dex by Key w or d|In dex by Da te
LIC launches two new insurance policies
Step-by-step guide to file your income tax
return online
Why NPS is the best way to plan for your
retirement
Eight smart money moves to make before the
age of 30
All about Savings Bank interest rates!
Reliance-BP joint venture to source LNG from
Freeport Terminal in US
More from The Economic Times
To put career in fast lane, go for offbeat
courses to earn good salaries 10 Aug 2013
Kingfisher Airlines lenders stumped as value
of pledged properties crashes 16 Aug 2013
Narendra Modi no more dogmatic, urges
BJP to reach out to Muslim voters 19 Aug 2013
Do not start alone, find a co-founder: Sachin
Bansal, Flipkart 09 Aug 2013
More from the web
Content Marketing in Asia? Outbrain
expands local presence.. Campaign Asia
Human trafficking the fastest growing
criminal industry WALK FREE
Do the Hard Work Today for an Easier
Tomorrow It's All About Data Recovery
Do You Have These 3 Important Insurance
Polices? LearnVest
Recommended by
Readers' opinions (16)
Sort by: Newest | Oldest
17 Jul, 2013 01:52 PMCOLRANBIRLAMBA lamba (PTA)
BEST WAY...BOOT THEM OUT...NON PERFORMERS
11 Jul, 2013 09:06 PMsmruti shetty (mumbai)
As the salary package CEO's get is comparable with global counterpart and is generally very high so they need togive results.
02 Jul, 2013 10:06 AMPerpetual Polyanna (Chennai)
I think India is now on a tide over phase.. where we are trying to globalize ourselves and are still unable to let-goof the culture around which we have built our initial years..
02 Jul, 2013 04:57 AM
Aasheesh Kumar (Noida)
The top management in India is out of sync. I worked for a leading Cargo Shipping Company in Mumbai.The topmanangement was not aware what is happening in the company. They would play politics .No wonder industrialgrowth is going down in India !
01 Jul, 2013 03:34 PMSoni Kumari (hr)
Now losing a winning match or vice-versa, may cost you a lot. The ICC has now decided to form a BettingAnalysis Wing to keep a close watch at the matches. With betting and fixing scandals, dogging cricket more andmore the need of this wing is required urgently. To fight betting and fixing, support and follow Sh. Narendra Modi
with @narendramodi.
» READ ALL COMMENTS
w w w .econ om ict im es.com Feedba ck|Pr iv a cy Policy|Ter m s of Use|A dv er t ise w ith u s
Related Documents
