The slowdown has given India Inc an important lesson: The best candidate for a job could be a cubicle away. So, if a couple of months ago, companies were hiring an external agency to hunt for a C-level executive, they are now searching only within the network of their large groups.
C-suite is a widely-used term to collectively refer to a company’s most important senior executives.
“Companies are holding themselves back on hiring. They are exploring internal upgradation of candidates more rigorously than hiring them from outside. Simply because it’s always better to promote an internal official. Also, the lucrative rise that candidates are looking for while switching jobs, is a thing of the past,” said R Suresh, managing director, Stanton Chase.
This is probably what Essar Group had in mind while it was scouting for a chief executive officer (CEO) for its group company Essar Steel and decided to elevate Dilip Oommen as the CEO and MD of the company after that position was left vacant. Prior to this, Oommen was the head of the company’s Hazira complex in Gujarat.
“Talents from within the system come with an observed track record of performance and keenly monitored potential level. They have established a record of alignment with the culture of the organisation and the chances of success are always higher than those for external candidates,” said Adil Malia, group president, human resources, Essar Group.
At automotive major Mahindra and Mahindra (M&M), Pravin Shah was promoted as the CEO of the automotive division recently. Shah has been with M&M since 1981 and was the CEO of its international operations in the automotive and farm equipment sectors.
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Sangeeta Lala, vice-president at TeamLease Services, says, “Companies are realising that the cost of a new hire, training and then getting a person to manage a large function is much more than sourcing someone from within the organisation. Also, to cut costs, companies are merging functions for the top slot.”
Typically, when companies hire external talent to fill in a C-suite position, a 30-40 per cent increment is the norm. However, given the slowdown, this has come down by half.
Also, a bad market has impacted the bargaining power of candidates where companies have become very firm and demanding.
“We recently shortlisted a candidate for the CEO level position. He immediately turned down the offer due to the pay scale not matching his expectation. But a day later when he came back to us agreeing to the offer, the company declined the offer to him,” said the managing director of an executive research firm.
Lala says the overall hiring in mid and senior levels has come down by around 15-20 per cent so far, adding it may be bleak this year.
“Based on the projections, the bleak hiring scene will continue. People may not give us great business. We are expecting a marginal growth,” said Lala.