Quest for innovative ideas in a highly competitive environment is pushing a large number of Indian firms to look beyond their organisations, and even the sector, while recruiting chief executives.
According to a study by executive search firm MANCER
Consulting, as much as 30 per cent of the new CEOs this year
are expected to be 'external hires' as companies seek
candidates who have a global approach, along with proven
capabilities and experience, which may not be available in
their internal talent pool.
Presently, external hirings for the top job have been mostly observed among the young sectors such as e-commerce,
automobiles, technology and aviation, while the trend has also
emerged with growth of small and medium enterprises and entry of foreign corporates, experts said.
However, mature industries such as Banking and Financial
sector firms as well as manufacturing entities have not often
gone outside the industry to recruit their leaders.
Experts are of the view that companies have a greater
tendency to hire externally when they face some crisis or
there is a need for change.
"There has been a noticeable trend towards hiring CEOs
from outside the firm... This also mirrors the trend observed
in the US where in 2012 more than a quarter of S&P 500 firms
needing a CEO were hiring from outside as compared to less
than 10 per cent in the 1970's," GlobalNxt University School
of Business Dean Jason Fitzsimmons said."...external hires may be more likely to be able to steer a course of change as compared to an internal candidate who may be tied to the firms existing culture and strategy," he added.
Citing similar sentiments, HR services firm Randstad India
CEO Moorthy K Uppaluri said that "young sectors that are on
growth trajectory over the last two decades look at outside
succession as they need fresh thinking into the organisation
and develop the culture, processes and systems".
"Also, large and medium sized entrepreneur driven
organisations tend to hire professional CEOs in their quest to
build the company in the context of the local and global
opportunities," he added.
Giving multiple reasons for companies to look externally,
MeritTrac CEO Vasu K Saksena said: "We have a large number of younger industries and larger number of new companies in
mature industries which have grown and reached a stage from
where they are looking to transform".
"This transformation demands newer ideas, exposure to
different practices and cultures and ability to manage larger
and diverse teams," Saksena added.
Noting that many Indian companies are also servicing
international needs which require leaders with a global
perspective, Saksena said "some of these capabilities are not
often found internally and hence they scout for a suitable
candidate outside their company or industry".
Going by data provided by executive search firm Spectrum
Talent Management, around 16 high profile CEOs/COOs from threeconsumer facing industries - FMCG, Telecom and Automobile have switched jobs in 2013.
Spectrum Talent Management Director Vidur Gupta said that
a rise in hiring of CEOs is expected to increase after the
general elections of 2014.