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Fifteen to twenty years ago, CEO search — the business of finding business leaders — was not a particularly well-known profession. The dotcom boom and bust, and then the upward shift in the Indian economy's growth trajectory changed all that.
Already in the late 1990s, three large global firms — Heidrick & Struggles, Korn/Ferry and Egon Zehnder set up shop in India. A number of new businesses were mushrooming; existing industrial and business houses were expanding rapidly, and the need for people to head these businesses was keenly felt.
Spencer Stuart, another international firm, came in 2005. Local firms, such as Hunt Partners also made their way up the value chain; others either merged with larger international firms, or began to set up boutique firms, catering to the needs of a specific sector or industry.
A few years ago, estimates indicated that companies and businesses needed about 3,000 chief executive officers (CEOs) to head various businesses within larger conglomerates. Even mid-sized companies were looking for professionals to lead expansion efforts.
Even in the current downturn, the demand for executive talent still exists, even if it is less visible. The landscape is dotted with several domestic firms, and franchisees of global players. But when it comes to the top searches in India, only a handful of headhunters, mostly from the above-mentioned firms, get the assignments.
Which begs several questions. Who are these people? What does it take to be a headhunter of quality? Who can be relied to find the right people to run the right businesses? How do they carry out their assignments? These are some fascinating stories.
Catch On The Go
Yes, most CEO searches happen through a well- structured process of contacting, deliberating, negotiating, etc.; but a few are just coincidental. Mehra recalls one such incident from a few years ago, when he was on a flight from Singapore to Mumbai. At that time he was working on a mandate to find a CEO for a large Indian textile firm. Imagine his pleasant surprise when he met Deepak Khetrapal, then with a Swedish company.
"It was chance," says Mehra. "Deepak was on my list of potential candidates for the job. I knew him, but not that well." By the time the flight landed, Khetrapal was partially interested. A few meetings later, Mehra took Khetrapal to meet Gautam Singhania, the promoter of Raymond. "Both were happy with the first meeting, and my gut feeling was that it would work out," says Mehra. "The radar is up all the time, and you never know when these chance meetings will become business deals."
Khetrapal joined Raymond as its CEO in 2007. Airports are great places for such fortunate meetings. Arun Das Mahapatra, partner in charge, India, at Heidrick & Struggles, was another who benefited from them. As he was queuing up to take a connecting flight from Frankfurt, he bumped into the promoter of a large IT services company.
They didn't know each other but bonded as two fellow Indians. A casual conversation ended with a business mandate. "They had been trying to hire a managing director for over a year," says Mahapatra, "I offered them two potential candidates whom they could meet immediately." The search closed in less than a month, after the firm settled on one of the candidates Mahapatra had proposed.
What about social gatherings? Sometimes, they work too. "We were at the wedding anniversary of a friend," reminisces Deepak Gupta, former country head, India at Korn/Ferry International. "I met the CEO of an MNC in the consumer goods business. He asked me if I could help him outplace some of his people." Gupta refused outright; he was not in the outplacement business anyway. What followed was a heated discussion on ethical issues and professional differences, but at the end of the evening, Gupta won a client. "Since that incident we did six top level placements for them."
The outplacement business is another related business that some head hunters deal in. Says Sunil Goel, Director, GlobalHunt India which has received requests to outplace around 20 candidates in the last six months, "Outplacement is done in cases where a candidate has been with a company for several years in a certain role but his fitment in that role becomes an issue due to restructuring of a vertical or a change in strategy".
Method In Hiring
Not all executive searches, however, begin at social gatherings. Usually, the structure is fairly formal. A company calls in a search firm; at the first meeting, the human resources (HR) head provides a briefing on the job, what skills and experience are required. If the company has tried finding people on its own, it shares the names of its desired targets . Then, another member of the senior team — perhaps an executive director on the board — adds his or her perspective. Finally, the chairman or chief promoter meets the partners of the executive search firm to set out what he is looking for.
"The process and initial meetings are also a way of forcing the client to ask some critical questions that may have been hitherto not discussed," says Gita Dang, founder of Talent Advisory Services, a Delhi-based boutique executive search firm. "The first conversations, for example, are about defining the business need. Is it a specific role, or a special project?"
That makes executive search a sort of high-level talent acquisition business, not an HR function. Executive search firms are consulting and advisory businesses, with all the trappings that come with it: confidentiality, research capability, domain knowledge, etc.
A consulting business' services very often centre around improving a company's competitive position relative to its rivals. The best executive talent is most often securely ensconced, and is in no rush to move.
Finding the best talent — not just the best available talent — and persuading them to move can be the biggest challenge. And the success with which partners at executive search firms are able to do this is a critical indicator of how reliable they can be. "That means that research capability — knowing the best people in every domain, and where they are located, and their career paths — is something search firm partners have to have at their fingertips," says Ganesh Shermon, director at KPMG, Mumbai.
Headhunters have to build trust not only with their clients but also with the prospective hire. Search firms spend considerable time addressing the needs of their search lists . "We invest time in understanding the needs of individuals," says Govind Iyer, managing director, India, Egon Zehnder. "We help them see that the opportunities we offer are the right ones for them to realise their potential and aspirations." Case in point: placing Shikha Sharma at Axis Bank as its CEO. "I was stepping out of ICICI Prudential Life Insurance and I was not sure what I was going to do next," says Shikha Sharma, now CEO at Axis Bank. Iyer called her, and she agreed to meet. Sharma was one of the more high-profile bankers, and speculation was rife about where she'd go though Sharma had discussed it only internally. They met at the Willingdon Club in Mumbai, "Iyer spent a couple of hours with me to find out the kind of person I am, what my frustrations were, and the possible options," says Sharma. "He helped me think through it all."
By the end of the discussion, Sharma was open to the offer. Iyer arranged for her to meet the Axis Bank Board in January 2009, and in June 2009, Sharma joined Axis Bank as its CEO. "We needed somebody who had the ability to engage with the organisation, who was mature and yet had youthful energy," says Iyer. Axis was among the fastest growing large banks, and needed someone to build upon that growth. Sharma says what she liked about Iyer was that he focussed on her motivation and the difference she could make if she went to Axis Bank. "There was no hard-sell," she recalls.
Hiring a CEO calls for finesse; a prospective candidate is more likely to be receptive when the job appeals to his or her sense of being challenged. Take the case of Jeya Kumar (then with MphasiS), who was courted by Patni Computer. The firm, once a pioneer in the information technology services business, was languishing because of disputes between members of the promoters' family over its future strategic direction. The challenge was to transform an apparently moribund company. And that is how Anjali Bansal, managing director, India at Spencer Stuart, positioned the job.
But before they got to that stage, it took a while. "In the first call, Bansal did not even give me the name of the client she was working for," says Kumar, former CEO, Patni Computer (iGate bought the firm in 2011) and now CEO, Asia Pacific, IPsoft . "It was during our second call that I figured the company from the revenue figures and industry verticals." It took Bansal half a dozen calls before the first face-to-face meeting with Kumar in September 2008. The meeting was positive, and in mid-September, Bansal took Kumar to meet Loek Van Den Boog, who was then an executive director at Patni. "I wanted to learn more about the firm," says Kumar. "I was convinced when I met Narendra Patni." Kumar eventually joined Patni in November 2008.
All through the process, Kumar says he found Bansal a responsive partner. She delivered on his two key conditions: One, that the promoters would not intervene in the day-to-day functioning, and two, that the board will vote unanimously to hire him.
Bansal acknowledges that it was a hard sell. The company had apparently not been growing, besides there were several issues between promoters and investors to tackle, not something to tempt a CEO with.
But in the end, Kumar turned out to be a key hire. In the first year, the decline in sales and stock price was halted. In the second, revenue grew by 7 per cent, and the stock went up. Result: General Atlantic, the private equity firm that held over 17 per cent of the company, brought in iGate to buy out the promoters Narendra, Gajendra and Ashok Patni: a happy ending for all concerned.
So what kind of personality does it take to make a good CEO hunter? In the 1980s, accounting firms were among the best resources for finding business heads. Then, in India's mostly family run business landscape, it wasn't so surprising. "They knew the business inside out, and they were trusted by the promoters," points out KPMG's Shermon. "Today, AF Ferguson and a few others who were around then are still very much there."
"But it has also become much more professionalised in the last decade," says Dang of Talent Advisory Services, who was a partner at Korn/Ferry before she set up on her own. "At the senior level, promotions into leadership positions require talent acquisition capabilities, and companies recognise that."
Anecdotes abound about how promoters would give the accounting firm a list of 10 names and direct them to get the best on the list; in one case, or so the story goes, the patriarch was impressed by someone he saw on TV, and called up a search firm to get him.
There is no single characteristic common to CEO hunters. They come from a host of different backgrounds, have worked in a very broad range of companies, and most have no human resources experience whatsoever. Yet, they know people, in more ways than one, which makes them great talent spotters.
Their skills are artistic (or soft) rather than scientific in the management sense, or hard (though their management-speak is as good as that of a specialist); they are adept at dealing with egos, insecurities, expectations and fears.
They are sensitive to organisational cultures; they deal with MNCs and family run companies differently if need be. They can also be pragmatic, and play the bad guy occasionally. "At the initial meetings, we push the discussion into areas that must be looked at," says Dang. "What happens to the second-in-command? What about the senior management team? Questions like that are uncomfortable, and so easy to avoid." Simply put, as headhunters, they need to be able to get into the candidates' head.
(This story was published in Businessworld Issue Dated 20-02-2012)