Are Indias Leaders Global?

When talking about the worlds top business leaders, Indians generally are
doing well at running both multinational companies outside of India, as well as
globalizing Indian companies. Vikram Pandit, head of Citibank; Rajat Gupta, the
erstwhile managing director of McKinsey; Vinod Khosla, one of the most
successful venture capitalists in the world; Narayana Murthy, a global citizen
and visionarythese are but some of the great names often regaled as proof of
Indias leadership potential. Amidst the hype, buzz about brain drain,
reverse brain drain, etc, begs the question: How are Indias leaders viewed
in the global context? This issue is pertinent because what works in India
doesnt necessarily work outside of Indiaeither in terms of professional work
ethos, or leadership styles.

In 2007, Korn/Ferry International along with the International Management
Assessment (IMA) group conducted a study of Indian leadership styles where 100
very seasoned CEOs were assessed nationwide and across industry sectors. The
study showed that Indian leaders are still more task-focused and action-oriented
and less participative or social than their North American counterparts. The
traditional leadership styles might impede some senior Indian executives from
being effective in a truly global context.

Joy Nandi Client Partner, Global Technology Market, Korn/Ferry International

So, whether you are sending your Indian leaders abroad, or evaluating NRIs or
expats for India-based assignments, having a concrete understanding of their
mindset and leadership preferences is essential. In fact, extensive research
conducted by Korn/Ferry International shows that 50% of the best leaders
success is based on their leadership styles and behavioural competencies,
and not from their technical skills, experience, or market knowledge alone. So,
when seeking new talent or promoting internally for global assignments, it is
helpful to get a scientific, research-based perspective on who would
potentially succeed better

Indeed, clearly defining parameters that can be used to benchmark and
evaluate Indian leaders helps determine the most essential and appropriate
leadership characteristics required for any given role. This article examines
some of the most pressing scenarios facing corporate India todayscenarios where
the early evaluation of executives true leadership acumen could maximize their
chance for success.

Do NRIs have an Edge?

Looking at the BPO space in India, you might be surprised to learn that
Indian executives working in this segment havent really seen scale on the order
of their counterparts (and competitors) elsewhere. Imagine: the largest of the
BPOs in Indiawith 30,000+ people in 10+ geographieshas less than $1 bn in
revenue. Compare the leaders of these firms to people who are responsible for
more than $3 bn in revenue handling global outsourced operations and you can
appreciate the issue of scale. In fact, during a recent global search we were
doing, two extremely successful Indian BPO heads were rejected by a client in
Australia. Reason: they hadnt managed the type of scale needed to succeed,
despite having run relatively huge operations and teams.

To fill the gap, it might be assumed that NRIs would be better-equipped to
manage global scale and steer Indian companies into global waters than their
peers who never have left their native shores. At Korn/Ferry, we have at least
two-to-three NRI or PIOs reaching out to us every month looking to return to
India. Some want to reconnect with their roots, some want to give back to Indian
society after being extremely successful abroad, but the majority see the Indian
marketplace as a great career challenge and opportunity.

Unfortunately, not all NRIs succeed when they return to India, and not
because they lack the relevant skills or experience. Rather, they fail because
they havent been assessed in terms of how they process information and relate
to people and how that then translates into their ability to re-enter the new
Indian landscape.

Indeed, Indian companies as well as MNCs in India need to know how to choose
the right NRI based on their ability to integrate into the specific
organization, as well as the Indian business culture at large. And this has to
be done before they join, rather than after. As a rule of thumb, NRIs who have
been away for five to six years are typically more successful at making the
transition both professionally and personally. Those who have been away longer
generally face significant professional challenges as they are not used to
hierarchical decision-makingthe dont know when to say no to their boss
cultureor even dealing with promoter-led companies.

M&As, and the Keys to Success

Let us look at another global phenomenonmergers and acquisitions
(M&A)involving Indian companies. While we used to only hear about Indian
companies being sought after for an acquisition by a multinational giant, the
reverse is actually the trend now. According to a recent study done by Tholons,
in the Indian IT/BPO segment, there were about thirty three M&A deals concluded
in April 2008 alone, with a total of $1.76 bn spent, and an average deal size of
$45 mn. Just recently, WNS announced acquiring Avivas BPO back-office
operations in India for $250 mn plus, and HCL BPO announced buying out the
financial outsourcing operations of a company in the UK. Whats happening here?
In simple terms, Indian companies with global ambitions and huge war chests are
looking to scale their operations inorganically in order to reach new markets
and clients more quickly.

M&As require the seamless integration of different corporate cultures, and
choosing the appropriate leader for the consolidated company is critical to the
mergers success, more so even than its financial and operational consolidation.
But how many times do you see a failed merger? Unfortunately, too often, as
evidenced by the recent exodus of executives at Oracle after the company
acquired BEA Systems. It was reported that there was a culture clash and the
merger was mismanaged. Could this have been prevented?

Ideally, the best talent from the merging companies would lead the combined
entity, however, typically, the acquiring company leaders stay, the acquired
company leadership moves on, and the combined ship is run by the loyalists of
the Indian companythose with 25 plus years experience there. It is quite rare
that the leadership of the acquired company is ever benchmarked against the
Indian companys top executives, but this should be done before the M&A is even
made official.

I advise CEOs planning an M&A that, in addition to using internal resources
and specialized consultants to perform financial and operational due-diligence,
they need to do a talent audit of their top management teams to benchmark the
target companys leadership team against the acquirers, and evaluate who is
better suited to run the new organization. Sometimes, this even includes
benchmarking against talent available externally, as well as against
best-in-class global leaders. Taking the time to do so contributes significantly
to the success of M&As. In my view, corporate India will see talent
due-diligence being done early on in the M&A process more and more unless they
want to continue spending billions of dollars only to lose the intrinsic value
of what they paid forthe people.

Indias Glass Ceiling

In terms of going global many Indian companies prefer to have their
long-time loyalists drive their ventures into new geographies. We all know that
there is a so-called glass ceiling in most Indian companies, albeit not all.
There are also many who have hired foreign leaders to oversee operations in
geographies where the need for fluency in the local language or tremendous
cultural adaptability is immense, for example, in China. So, while Indian
companies are fine hiring a Frenchman in France, and a Chinese in China, it is
rare to see, say, an American heading an Indian technology company in the US.
Rather, an experienced Indian statesman with a very long tenure at the company
would be driving the business there.

Recently, I spoke to a senior executive at one of Indias tier-1 software
development services companies, who is currently based in the US. He was a
lateral hire from one of the best global management consulting firms in the
world. After a short two years in the new company, he is frustrated, stating
that what others see about this company from the outside is very different from
what is going on inside. He said that to move to top management roles, it is
necessary to have been in the company for over twenty years! While this approach
might be sound in some cases, without properly evaluating the senior Indian
execs ability to work across cultures and inspire others to drive innovation,
the potential for failure is very high.

Align your Talent Strategy

Another thing that Indian companies often overlook is which leadership and
behavioural competencies are required of their management team depending on
their businesses and market needs at different times. Often, competencies are
defined without necessarily correlating to the state of businesswhether the
company is going through a boom or a slumpor the overall business strategy. The
reality is that the kind of leadership talent required at any given time is
actually a moving target, and needs to be refreshed often enough to accommodate
new scenarios. Two competing companies from the same industry dont need the
same kind of leaders. Also, the leaders you needed when your business was half
its size two years ago is probably not what you need today, and will surely not
be what you will need in the future.

I was speaking to several leading global mobile equipment manufacturers in
India. One company said as they are already the leaders in India they need their
leadership team to learn how to innovate. They fear that their leaders might
have become complacent with their own success, and might not be motivated to
think out-of-the-box, since there is no pressure to do so at this point. Another
wanted entrepreneurial talent and people who would know how to work against
the oddspeople who could deal with trouble. Similarly, if companies were losing
market share to others, their leadership requirements would be very differentin
effect, they would want someone who is a turnaround strategist.

Many Indian companies have started using psychometric tests and performance
assessments. But how many companies in India are assessing their leadership
teams to evaluate their future potential? Unfortunately, not many. Most
performance rating systems are based on past successes and good performance is
rewarded with greater accountability, responsibility, and compensation. But
past performance is no guarantee of future success. An astronomical 40% of
leaders globally fail within the first eighteen months of joining a new
organization because most organizations cannot predict someones future success
and ability to deal with new organizational issues, culture, and teams. It is
important therefore to know exactly what competencies you want based on your
organizations culture and market positioning at any given point of time, which
needs to be assessed every two years in todays dynamic environment.

Business leaders are expected to be masters of business
forecastingpredicting their revenue and CAGR over the next five years,
annually, quarterly, and even on a monthly basis. So, everyone forecasts their
business goals. But has anyone stopped to think about forecasting their talent?
Do they really know whether their leadership team can, in fact, achieve those
goals, adapt to moving targets, align themselves to global changes, deal with
downturn, competition, and even obsolescence? How do you measure the future
potential of your leadership team? It is becoming a best practice globally to
assess the learning agility that leaders possess, ie, the ability to quickly
adapt to fast-changing environments and to innovate and excel under pressure.
Considering the global competitiveness and appetites of Indian companies, this
is a direction they must head in as soon as possible.

Conclusion

Given the above, what challenges lie ahead? For starters, companies need to
start looking at their leadership team from a global standpointputting less
emphasis on loyalty, and more on the specific competencies required for the
job. Determining whether someone is the most qualified for any given role will
be based not only on their knowledge of the product or service, the scale they
have handled in the past (and the scale that is expected of their peers), and
markets they have served, but also on their people skills and emotional
intelligence. In the case of an M&A, the best person for the top leadership role
might even be someone from the acquired company.

CEOs everywhere are being kept awake at night contemplating their talent
issues: How to attract, retain, develop, and reward the very best people who
will help them continue to deliver greater shareholder value. Being armed with
the knowledge of exactly how likely their leaders will rise to future
challenges, and how they compare to other available talentwithin the
organization, within competing organizations, or even in companies that they
would possibly want to acquireis of the utmost importance. The global Indian
leader needs to adapt to changing business scenarios and benchmark themselves
with their peers, globally.