What was essentially a western fad has caught up big in India as well. It is all about being superstars and superheroes in whatever you do. The trend has particularly caught up in economic policymaking and business circles. The India media has started to love superstar policymakers and CEOs and hypes it with no holes barred. And then when it realises the follies of projecting an individual over an organisation, the blame is put on the individual!
Sundeep Khanna in this article points to this rising trend in India. We need CEOs as company faces but not overblown superstar images:
Last week a routine story in Bloomberg came with an unusual headline: “Infosys CEO Sikka Has First Big Setback as Global IT Stalls”. Note that it wasn’t “Infosys Has First Big Setback as Global IT Stalls”. What prompted the stern statement was the company’s latest quarterly results which disappointed the markets and sent the Infosys stock plunging nearly 10%.
The last time this happened was over three years ago when co-founder S.D Shibulal was in charge. In April 2013, as it reported disappointing fourth-quarter numbers and lower-than-expected guidance for 2013-14, the company’s shares nosedived by 22%. That plunge prompted calls for a change of guard. A professional CEO without the legacy issues that surrounded the promoters of the company, it was believed, would bring fresh energy and new ideas to leading Infosys. It didn’t happen immediately of course but eventually a new, professional CEO, Vishal Sikka, was brought in to help the company recover its position as the IT industry’s leading light.
Two years into Sikka’s regime, the jury is still out on that. What is certain though is that with Sikka the cult of the superhero CEO is here. Sikka is Infosys in popular perception and he sinks or rises with it.
But how much of a difference do CEOs make to a company’s fortunes. All of B-School-driven management literature along with its biggest proponents, American multinationals, claims that the CEO is the alpha male around whom a company runs. Which is why, US CEOs earn eye-popping salaries, massive bonuses for achievements and gallingly, generous severance packages even when they fail. In 2011, the Hewlett-Packard board sacked its then CEO Leo Apotheker after only 11 months on the job. By all accounts Apotheker had been a disaster on the job. Yet his termination terms included a huge multi-million dollar package.
In India, the CEO as popular cultural icon hasn’t quite caught on yet. India’s top banker Aditya Puri, who has run HDFC Bank for 22 years earns about Rs.9.73 crore, a fraction of what a top banker in New York or London would and way lower than what an equivalent CEO even in other Asian countries would. With 67% of Indian businesses still run by families, it is the promoters who tend to be top dog in most Indian companies.
There have been Indian CEOs who in time came to be identified as the face of their companies. Besides Puri, there is Y.C. Deveshwar of ITC and A.M. Naik of Larsen and Toubro, who spring to mind. But it isn’t a widespread phenomenon and often when a professional CEO has threatened to upstage the promoters, the consequences have been rather nasty for him. In 2003, Sunil Alagh was asked to leave Britannia Industries following differences with the principal shareholder, despite having made a huge success of his tenure.
Companies do need a recognizable face since customers, investors and analysts respond to people rather than to faceless corporations. But the cult of the CEO often masks the need for collaborative work in an organization as well as the quite human tendency for one man to make mistakes and errors of judgments.