How professionally driven are Indian firms? Explore the evolving landscape of CEO roles, the shift from promoter-led to professional leadership
๐๐๐๐ ๐ต๐ผ๐ ๐ฝ๐ฟ๐ผ๐ณ๐ฒ๐๐๐ถ๐ผ๐ป๐ฎ๐น๐น๐ ๐ฑ๐ฟ๐ถ๐๐ฒ๐ป ๐ฎ๐ฟ๐ฒ ๐๐ป๐ฑ๐ถ๐ฎ๐ป ๐ณ๐ถ๐ฟ๐บ๐? ๐๐ป ๐ผ๐๐ต๐ฒ๐ฟ ๐๐ผ๐ฟ๐ฑ๐, ๐ต๐ผ๐ ๐บ๐ฎ๐ป๐ ๐ผ๐ณ ๐๐ต๐ผ๐๐ฒ ๐๐ต๐ผ ๐ผ๐ฐ๐ฐ๐๐ฝ๐ ๐๐ต๐ฒ ๐ฐ๐ผ๐ฟ๐ป๐ฒ๐ฟ ๐ผ๐ณ๐ณ๐ถ๐ฐ๐ฒ ๐ฎ๐ฟ๐ฒ ๐ณ๐ฟ๐ผ๐บ ๐๐ต๐ฒ ๐ฝ๐ฟ๐ผ๐บ๐ผ๐๐ฒ๐ฟ ๐ผ๐ฟ ๐ฝ๐ฟ๐ผ๐บ๐ผ๐๐ฒ๐ฟ-๐ณ๐ฎ๐บ๐ถ๐น๐, ๐ฎ๐ป๐ฑ ๐ต๐ผ๐ ๐บ๐ฎ๐ป๐ ๐ฎ๐ฟ๐ฒ ๐ต๐ถ๐ฟ๐ฒ๐ฑ ๐ฏ๐ ๐๐ต๐ฒ ๐ณ๐ถ๐ฟ๐บ ๐ณ๐ฟ๐ผ๐บ ๐๐ต๐ฒ ๐บ๐ฎ๐ฟ๐ธ๐ฒ๐?
๐ฏ๐ฏ% of the firms are still led by the promoter-CEO while ๐ฒ๐ณ% are professional-led.
And which way is this headed? We know from our study last year ๐๐ต๐ฎ๐ ๐ฝ๐ฟ๐ผ๐บ๐ผ๐๐ฒ๐ฟ ๐ณ๐ถ๐ฟ๐บ๐ ๐ฎ๐ฟ๐ฒ ๐๐๐ฟ๐ป๐ถ๐ป๐ด ๐ฝ๐ฟ๐ผ๐ณ๐ฒ๐๐๐ถ๐ผ๐ป๐ฎ๐น ๐ฎ๐ ๐๐ต๐ฒ ๐ฟ๐ฎ๐๐ฒ ๐ผ๐ณ ๐ญ.๐ต%, i.e., roughly 2% of the promoter firms are handing over the CEO role to a professional on an annualized basis.
This might seem small, but actually, it is quite significant. In just about a decade, ๐๐ต๐ฒ ๐ฝ๐ฟ๐ผ๐บ๐ผ๐๐ฒ๐ฟ-๐๐๐ข ๐ฝ๐ผ๐ผ๐น ๐๐ผ๐๐น๐ฑ ๐ต๐ฎ๐๐ฒ ๐๐ต๐ฟ๐๐ป๐ธ ๐ฏ๐ ๐ฎ ๐ณ๐๐ฟ๐๐ต๐ฒ๐ฟ ๐ฎ๐ฌ% ๐ฎ๐ป๐ฑ ๐๐ผ๐๐น๐ฑ ๐ฎ๐ฐ๐ฐ๐ผ๐๐ป๐ ๐ณ๐ผ๐ฟ ๐ท๐๐๐ ~๐ฎ๐ฑ% ๐ผ๐ณ ๐๐ต๐ฒ ๐ผ๐๐ฒ๐ฟ๐ฎ๐น๐น ๐๐๐ข ๐ฝ๐ผ๐ผ๐น. In two decades, promoter-CEOs will become an even smaller minority.
Is this likely to happen? The answer to that lies in the CXO layer below the CEO, especially in those who helm the “๐๐จ ๐ต๐ฒ๐ฎ๐ฑ” roles.
๐๐๐น๐น๐ ๐ต๐ด% ๐ผ๐ณ ๐๐ต๐ฒ ๐๐จ ๐๐ฒ๐ฎ๐ฑ๐ ๐ฎ๐ฟ๐ฒ ๐ฝ๐ฟ๐ผ๐ณ๐ฒ๐๐๐ถ๐ผ๐ป๐ฎ๐น (i.e., not from the promoter family) in companies across the promoter-professional divide. If we remember that 33% of the companies are still led by promoter-CEOs, this is quite amazing and points to a situation where the layer below the CEO, even in a promoter firm, is entirely professional. ๐ง๐ต๐ถ๐ ๐ฎ๐ฑ๐ฑ๐ ๐๐ฒ๐ถ๐ด๐ต๐ ๐๐ผ ๐ผ๐๐ฟ ๐ฒ๐ ๐ฝ๐ฒ๐ฐ๐๐ฎ๐๐ถ๐ผ๐ป ๐๐ต๐ฎ๐ ๐๐ป๐ฑ๐ถ๐ฎ๐ป ๐ณ๐ถ๐ฟ๐บ๐ ๐๐ถ๐น๐น ๐ฐ๐ผ๐ป๐๐ถ๐ป๐๐ฒ ๐๐ต๐ฒ๐ถ๐ฟ ๐ฝ๐ฟ๐ผ๐ณ๐ฒ๐๐๐ถ๐ผ๐ป๐ฎ๐น๐ถ๐๐ฎ๐๐ถ๐ผ๐ป ๐ท๐ผ๐๐ฟ๐ป๐ฒ๐.
๐ก๐ผ๐๐ฒ: The “CEO Landscape 2024” series is based on an analysis of 100 Indian companies across 20 sectors covering both manufacturing and services. Analysis is based on very detailed assessments of CEOs, CFOs, and the entire CXO team, covering nearly 1100 leaders.
๐ก๐ฒ๐ ๐ ๐๐ฝ: “Span of Control of the CEO”