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Key Takeaways From Infosys Saga

Emergency at Infosys clearly shows that no matter how large, most companies fail to plan for leadership vacuum at the top

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Allegations and counter-allegations have been flowing thick and fast since Vishal Sikka resigned as managing director and CEO of IT bellwether Infosys. Crises at Infosys opens up the Pandora box which has led head hunters analyse the key takeaways.

Emergency at Infosys clearly shows that no matter how large, most companies fail to plan for leadership vacuum at the top. However, the failure to plan smooth succession is a global phenomenon. At Uber, the company’s CEO had to step down without a successor in place. Also at Korean mobile maker Samsung, its scion has been sentenced to prison with no successor in place.

“Shareholders and boards continue to undermine the serious impact of poor succession planning, not only on shareholder value but also on the survival of their organizations. In cases like Infosys, which has witnessed a sort of exodus at top, even before its CEO resigned, the events can result in decision-making conundrum,” said Pankaj Dutt, managing partner at executive search firm, Alexander Hughes

Also, analysts have flagged executive departures as an area of concern for the company. Headhunters, too, believe that the top level executive exodus is considered to send wrong signals. “People believe that leaders at the top are likely to spot the forthcoming danger first,” pointed Kamal Karanth, former managing director of US based staffing firm, Kelly Services.

“Churnings at the top is always a norm whenever there is any transition or a new CEO takes over. However, Infosys has seen exodus even after two years post transition,” said another analysts wishing to remain anonymous.

However, every organisation encounters such exodus situation at some point. “In Infosys case, there is a turnaround situation in terms of financial performance or organisation crisis due to top management conflict. Many e-commerce majors saw the situation around existential crisis at the top management due to the merger and acquisitions or a financial instability of the organisation,” Karath pointed.

Meanwhile, this may bring cheer to Infosys stock for a while, its effect in long term still remains ambiguous. “Such drastic board changes are never healthy. Expect short term cheer for Infosys stock but long term pray…,” tweeted Sanchit Vir Gogia, chief analyst and CEO at Grey Hound Group.

Infosys, which is in the early stage of a turnaround, has seen a string of senior leaders leaving the firm despite the company’s overall attrition coming down.

Since Sikka took over as CEO in August 2014, at least 12 senior executives (rank of senior vice-president and above) have left the company. Some of the executives other than Sikka who have left the firm in the last 23 months include chief financial officer Rajiv Bansal, head of manufacturing and EVP Sanjay Jalona, Infosys BPO head and EVP Gautam Thakkar, and Infosys EdgeVerve head and EVP Michael Reh.

The road ahead for Infosys is fraught with challenges as the company works to scale its aspirational goal of becoming a $20 billion firm by March 2021.

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