How do Indian companies structure their CEO role? Discover the preferred architecture and reporting structures shaping leadership in India’s top companies.
𝗛𝗼𝘄 𝗱𝗼 𝗜𝗻𝗱𝗶𝗮𝗻 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝘀𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲 𝘁𝗵𝗲𝗶𝗿 𝗖𝗘𝗢 𝗿𝗼𝗹𝗲?
𝗜𝘀 𝘁𝗵𝗲 𝗖𝗘𝗢 𝘀𝘂𝗽𝗽𝗼𝗿𝘁𝗲𝗱 𝗯𝘆 𝗮 𝗖𝗢𝗢 𝗼𝗿 𝗕𝗨 𝗛𝗲𝗮𝗱𝘀? Or both? Or do all functions such as Sales & Marketing, Finance, and R&D report directly to the CEO?
𝗜𝗻𝗱𝗶𝗮𝗻 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝗼𝘃𝗲𝗿𝘄𝗵𝗲𝗹𝗺𝗶𝗻𝗴𝗹𝘆 𝗽𝗿𝗲𝗳𝗲𝗿 𝘁𝗵𝗲 𝗦𝗕𝗨 𝗮𝗿𝗰𝗵𝗶𝘁𝗲𝗰𝘁𝘂𝗿𝗲, 𝘄𝗶𝘁𝗵 𝟴𝟬% 𝗼𝗳 𝘁𝗵𝗲 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝗵𝗮𝘃𝗶𝗻𝗴 𝗮𝗻 𝗦𝗕𝗨 𝘀𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲. Typically, most companies have between 3-5 SBUs. And this is not just the large companies. Anecdotally, we see that our clients, as they approach the ₹3000-₹5000 crore benchmark turnover, strongly prefer to have a BU structure, if they have not already pivoted to this structure earlier.
Of course, the nature of the industry plays a big role. For commodity firms, the threshold might be higher, while for firms with specialized or technical products, the threshold might be lower. However, 𝘁𝗵𝗲 ₹𝟯𝟬𝟬𝟬-₹𝟱𝟬𝟬𝟬 𝗰𝗿𝗼𝗿𝗲 𝘀𝗲𝗲𝗺𝘀 𝘁𝗼 𝗯𝗲 𝗮 𝗴𝗼𝗼𝗱 𝗿𝘂𝗹𝗲 𝗼𝗳 𝘁𝗵𝘂𝗺𝗯.
Within a BU structure, firms seem to be divided on how much the BUs should control. Some 32% of the companies have 𝗯𝗼𝘁𝗵 𝗮 𝗖𝗢𝗢 𝗮𝗻𝗱 𝗕𝗨 𝗵𝗲𝗮𝗱𝘀, meaning the SCM & Operations are centralized, with the BUs largely running the commercial function. Most of the firms (48%), however, seem to be folding the important commercial and operations functions within the BUs themselves.
We don’t have long-term data on how this has evolved over time, but as we engage with promoters to help them find CEOs for their newly established BU structure, we sense a preference for folding as much within the BUs as possible and holding them accountable.
Interestingly, in one case, the client took a geography-based approach (US and Non-US business) for creating the SBUs, while in another, the client took the product group approach (commodity and specialty).
𝗡𝗼𝘁𝗲: 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.
Leave a Reply
Want to join the discussion?Feel free to contribute!