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BW Businessworld

Corporate: Unlikely Lessons

The exit of a senior executive raises questions about how India Inc. manages an internal crisis

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Many senior leadership roles have been cut short at the peak of their careers. Reasons vary – cases being slapped at them, serious non-performance issues, and, of course, the industry bug bear of changes in top management. However, in Rakesh Sarna’s case, the going went tough with each passing hour – a slew of issues including a sexual harassment case worked against the collapse of carefully built career of nearly four decades. And now, Sarna’s departure from Taj Hotels may have been a forgone conclusion for many, especially after the unceremonious exit of Cyrus Mistry. After working with the Taj Hotels for nearly three years, Sarna, quit citing personal reasons.

Sarna was exonerated of the accusations by an independent panel constituted by Indian Hotels Company or (IHCL), which is part of the Tata Group and runs Taj Hotels. Despite the turbulence, there were voices that  said he would stay on. Several other issues too played a role in the exit of the CEO of the hospitality giant. For starters, Sarna was handpicked by former Tata Sons Chairman Mistry to turn around the loss making business. Considering the controversies surrounding Mistry’s exit, Sarna’s departure too was perhaps expected.

Any organisational behaviour expert will tell you that culture is a “learned” behaviour; that a leader’s behaviour reflects the culture of the organisation. And an organisation’s culture define businesses and offer lessons on how to treat an employee during a crisis, especially when the crisis is also affecting the organisation’s reputation.

To his credit, Sarna was successful in taking up the mandate given to him by Mistry – turning the business around. Taj Hotels posted a profit of Rs 201.04 crore (post-tax) for the year 2015-16 compared to a loss of Rs 82.02 crore the previous year.

The Rejig

Before joining Taj Hotels, Sarna was the Group President (Americas) with Hyatt International. Here, Sarna was responsible for the development and management of all Hyatt Brands and was also responsible for co-authoring the brand attributes of Hyatt’s boutique Andaz brand. The fact that Sarna would be bringing in a whole new brand of management style to Taj Hotels and shake things up in the company was evident right from the start. For instance, those in the know mention that offices of the Sales team were being moved around and team members were being told to stay out to get more business.

There were also decisions taken to rejig the position of the hotels under the group. For example, in February 2017, Sarna decided to rebrand the group and do away with earlier classifications of the hotels. The Vivanta and Gateway brands, with 53 hotels in India and abroad, were to be brought under the Taj brand and given an upgrade. This move was seen as a way to increase the Taj presence in the luxury segment as Vivanta and Gateway were marketed as upscale and premium brands. Sarna, in his stint as the CEO, also brought about the Tajness campaign, which saw the introduction of signature rituals and other brand experiences.

At the moment, any information on Sarna is hard to come by. Those who are in the know are unwilling to go public with their views. The publicity department too has been wary to comment. Those closer to the epicentre narrate versions of what led to Sarna exit, all of which have now been dismissed as baseless allegations. For instance, around 2015, a rumour emerged about money exchanging hands. No substantiate evidence was found to back this allegation.

Sources say that a few within the group may have expressed unhappiness over Sarna’s rebranding exercise, since it was Ratan Tata who preferred different entity of the brands. Sarna’s efforts thus were just spokes in the rusty old wheel.

What Next?

Financials and numbers during Sarna’s short stint, moved the company forward into the black, and shaken things up. Still, industry insiders say that IHCL may need some “real shock treatment”, to become the leader in hospitality they should be.

The frontrunners for Sarna’s job include Ajoy Misra, head of Tata Beverages and Zubin Dubash, who left the IHCL as its executive director in 2004. Others on the list include former IHCL Director Abhijit Mukherji. Whoever becomes the next CEO, the job is cut out for them – turning this iconic hotel company into a truly modern hospitality giant.