Talent management firm Development Dimensions International (DDI) has been in the news recently after it was entrusted with the responsibility to find a suitable internal candidate to head Infosys after incumbent Chief Executive S D Shibulal retires by January 2015. The US-based company, which has been present in India for seven-odd years, has some significant Indian clients here, including the Tata Group. David Tessmann-Keys, senior vice-president (international operations) at DDI tells Bibhu Ranjan Mishra and Itika Sharma Punit about the merits of having internal candidates to lead companies. Edited excerpts:
What are your views on the internal leaders created by Indian companies?
Indian organisations have been working hard to build internal leadership pipelines. We have been working with companies to help them strengthen that. In fact, I was with an Indian firm this morning, and they have made it clear that from January, they are not going to allow any external recruitment beyond certain levels. They have an absolute desire to ensure they are growing leaders internally.
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Do Indian companies have strong formal processes for succession planning?
I think it is varied. There is a rapidly-growing number of Indian companies actually developing robust processes to identity internal leaders. They are assessing the current state of the leadership bench. What they are struggling with is to take those people assessed and accelerate their development.
What are the chances Infosys appointing an internal candidate as chief executive?
We can certainly acknowledge that we are working with Infosys but it is a highly sensitive internal issue; so, I can’t comment on it. Our job is to look inside the company for an appropriate candidate, while Egon Zehnder will look outside. At the end of the day, both of us come to the table with observations and data. The decision is left with the client. However, Infosys is a good example of an Indian organisation taking the issue of succession seriously. They are deploying robust processes.
What are the merits of an internal candidate?
Research pretty clearly proves organisations are far more effective when they recruit from inside than when they recruit from outside. Internal succession is a far more effective way to maintain stability than external recruitment, particularly for a senior-level role. Significantly, a large number of external CEOs fail faster than those who appointed from within the organisation. That is why the issue of succession planning is such a hot topic. Your chances of success with an internal appointment are significantly higher that your chances of success with external one.
Do you think that having an internal candidate in the top post instils confidence among the employees?
With an internal candidate, you get a much higher level of stability. It shows that the organisation respects its people and develops options for growth for them, and that is a big retention factor. Often, the appointment of an internal candidate helps since he has a far greater connection with the people within the company, and he appreciates the values and culture of the organisation. So you can avoid a lot of culture shock that can come by bringing in an external CEO.
After the last global recession, why have we have seen instability in leadership positions globally?
When you go through periods of economic uncertainty and significant change, often what happens is that organisations re-evaluate their strategies. They look at the strategies that they have used in the past and evaluate if these strategies are going to allow them to grow in the future. If the answer to that is no, you may see some changes in the organisations as they would be evaluating the talent that they have and there you might see some changes. Also, executive-level leadership is usually far more volatile than any other level.
What is your opinion about Indians in leadership roles globally?
India is a unique country and it has had a long track record of producing successful global leaders. I find Indian leaders to be extremely innovative and entrepreneurial. I think Indians are, in general, extremely result-oriented and so, they would do everything that they need to do in order to get the desired result. Also, Indian professionals are very flexible and adaptable in terms of their working strategies. Additionally, technical depth is a real differentiator for Indian professionals as they often have very strong technical understanding of the businesses that they operate in.
