This refers to the article “Succession blues” by Shyamal Mazumdar (April 15). The pool from which CEOs are invariably drawn is the function heads in the immediate level below and vice-presidents either within or from outside. The selection of a CEO is marked by a flurry of changes, since those who were in the running exit and the incumbent is allowed to choose his own team. This indicates that the pool comprises people who are willing to work within others’ comfort zones — otherwise they would not reach those levels in the first place.
The selection is also based on the selectors’ expectations. For example, the selection of a CEO in Patni Computers before its takeover took three years because the selection committee wanted a professional in place to lift the company’s valuation, so family members had to stay out.
To become eligible for CEO-ship also requires single-minded focus with cleverly-timed career moves involving relocation across the country and the globe. This often comes at a huge personal cost. Many may opt out of this “horse race with blinkers”, so the search narrows to a few.
The huge compensation CEOs draw is another factor to be considered. Michael Eisner of Walt Disney drew 69 per cent of the net profits of the company. Nearer home Future Group roped in Vaidyanathan from ICICI Pru with a signing bonus of share options worth Rs 147 crore. The options can be cashed at the end of 18 months. Ironically, at about the same time, Kishore Biyani lamented at a retail expo about the huge attrition in the front-end staff. Front-end staffers earn anywhere between Rs 50,000 and Rs 75, 000 a year. And it would be Vaidyanathan’s job to increase margins by squeezing suppliers, employees and customers. The Mittal group acquired a steel mill in Indonesia and replaced 300 managers of German origin with Indians, resulting in a two-thirds savings in pay. This at a time when they bought one of London’s most expensive mansions. Derek Bok, former president of the Harvard Students’ Union, said “top executives in companies are paid huge amounts so that they overlook their natural inclinations”.
Finally, there are CEOs like Jeffrey Skilling of Enron and Bernie Ebbers of WorldCom who took everyone for a ride. In an interview with Fortune, a former Goldman Sachs CEO was asked what characteristics a Goldman employee should possess. Ambition, greed and paranoia, he replied. Perhaps that applies to CEOs too.
Hari Parmeshwar, on email
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