This article examines the typical tenure of Indian CEOs, the process of selecting CEOs from within the organization, and compares these practices to global trends. It highlights the importance of internal growth for aspiring CEOs and is based on a detailed analysis of leadership roles in 100 Indian companies across various sectors.
๐๐ถ๐๐ฐ๐ผ๐๐ฒ๐ฟ ๐ต๐ผ๐ ๐น๐ผ๐ป๐ด ๐๐ป๐ฑ๐ถ๐ฎ๐ป ๐๐๐ข๐ ๐๐๐ฎ๐ ๐ถ๐ป ๐๐ต๐ฒ๐ถ๐ฟ ๐ฟ๐ผ๐น๐ฒ๐ ๐ฎ๐ป๐ฑ ๐๐ต๐ฎ๐ ๐ถ๐ ๐บ๐ฒ๐ฎ๐ป๐ ๐ณ๐ผ๐ฟ ๐๐ต๐ฒ ๐ณ๐๐๐๐ฟ๐ฒ ๐ผ๐ณ ๐น๐ฒ๐ฎ๐ฑ๐ฒ๐ฟ๐๐ต๐ถ๐ฝ.
An ๐๐ป๐ฑ๐ถ๐ฎ๐ป ๐๐๐ข ๐๐๐ฝ๐ถ๐ฐ๐ฎ๐น๐น๐ ๐ต๐ฎ๐ ๐๐๐ฎ๐๐ฒ๐ฑ ๐ถ๐ป ๐๐ต๐ฒ ๐๐๐ข ๐ท๐ผ๐ฏ ๐ถ๐ป ๐๐ต๐ฒ ๐ฐ๐๐ฟ๐ฟ๐ฒ๐ป๐ ๐ฐ๐ผ๐บ๐ฝ๐ฎ๐ป๐, ๐ณ๐ผ๐ฟ ๐ฎ๐ป ๐ฎ๐๐ฒ๐ฟ๐ฎ๐ด๐ฒ ๐ผ๐ณ ๐ต.๐ฏ ๐๐ฒ๐ฎ๐ฟ๐. This is considerably longer than the other CXOs. This longevity in the role is true even for the professional-CEO (5.0 years). Promoter-CEOs, obviously, have been in the role much longer (18.2 years).
Is longevity good or bad? Tough one to answer. At least, initial data seems to indicate that tenureย ๐บ๐ฎ๐ ๐ป๐ผ๐ ๐ต๐ฎ๐๐ฒ ๐๐ต๐ฎ๐ ๐บ๐๐ฐ๐ต ๐ถ๐บ๐ฝ๐ฎ๐ฐ๐ ๐ผ๐ป ๐ผ๐๐๐ฐ๐ผ๐บ๐ฒ๐ – for instance, companies with shorter-than-average CEO tenure averaged MCAP CAGR of 29.3% over 10 years, while those with longer-than-average CEO tenure averaged 29.9%. Of course, many more factors play a role in MCAP than just tenure.
How do the Indian firms select their CEO? It is interesting to note that while the ๐๐๐ข๐ ๐ต๐ฎ๐๐ฒ ๐ฏ๐ฒ๐ฒ๐ป ๐ถ๐ป ๐๐ต๐ฒ๐ถ๐ฟ ๐ฟ๐ผ๐น๐ฒ ๐ณ๐ผ๐ฟ ๐๐ต๐ฒ ๐น๐ฎ๐๐ ๐ต.๐ฏ ๐๐ฒ๐ฎ๐ฟ๐, they have spent, on average, the last ๐ฎ๐ญ.๐ฌ ๐๐ฒ๐ฎ๐ฟ๐ ๐ถ๐ป ๐๐ต๐ฒ ๐ฐ๐๐ฟ๐ฟ๐ฒ๐ป๐ ๐ฐ๐ผ๐บ๐ฝ๐ฎ๐ป๐. In other words, they came in, spent ~11 years and then moved to the corner office. Clearly, the Indian companies seem to like to have their future CEOs come from within, have spent a long time in their industry and the company.
How does this compare with the global trends? Well, it seems that this is not very different โ a Spencer Stuart study of the Fortune 500 companies shows that ๐ณ๐ณ% ๐ผ๐ณ ๐๐ต๐ฒย ๐๐๐ข๐ ๐ผ๐ณย ๐๐ผ๐ฟ๐๐๐ป๐ฒ ๐ฑ๐ฌ๐ฌ ๐ฐ๐ผ๐บ๐ฝ๐ฎ๐ป๐ถ๐ฒ๐ come from within the same industry.
๐ ๐ผ๐ฟ๐ฎ๐น ๐ผ๐ณ ๐๐ต๐ฒ ๐๐๐ผ๐ฟ๐: If you are shooting for a CEO role, it is better to get in early and grow within the organization. Stay, perform and grow is the mantra.
๐ก๐ผ๐๐ฒ: ๐ง๐ต๐ฒ “๐๐๐ข ๐๐ฎ๐ป๐ฑ๐๐ฐ๐ฎ๐ฝ๐ฒ ๐ฎ๐ฌ๐ฎ๐ฐ” ๐๐ฒ๐ฟ๐ถ๐ฒ๐ ๐ถ๐ ๐ฏ๐ฎ๐๐ฒ๐ฑ ๐ผ๐ป ๐ฎ๐ป๐ฎ๐น๐๐๐ถ๐ ๐ผ๐ณ ๐ญ๐ฌ๐ฌ ๐๐ป๐ฑ๐ถ๐ฎ๐ป ๐ฐ๐ผ๐บ๐ฝ๐ฎ๐ป๐ถ๐ฒ๐ ๐ฎ๐ฐ๐ฟ๐ผ๐๐ ๐ฎ๐ฌ ๐๐ฒ๐ฐ๐๐ผ๐ฟ๐ ๐ฐ๐ผ๐๐ฒ๐ฟ๐ถ๐ป๐ด ๐ฏ๐ผ๐๐ต ๐บ๐ฎ๐ป๐๐ณ๐ฎ๐ฐ๐๐๐ฟ๐ถ๐ป๐ด ๐ฎ๐ป๐ฑ ๐๐ฒ๐ฟ๐๐ถ๐ฐ๐ฒ๐. ๐๐ป๐ฎ๐น๐๐๐ถ๐ ๐ถ๐ ๐ฏ๐ฎ๐๐ฒ๐ฑ ๐ผ๐ป ๐๐ฒ๐ฟ๐ ๐ฑ๐ฒ๐๐ฎ๐ถ๐น๐ฒ๐ฑ ๐ฎ๐ป๐ฎ๐น๐๐๐ถ๐ ๐ผ๐ณ ๐๐๐ข, ๐๐๐ข ๐ฎ๐ป๐ฑ ๐๐ต๐ฒ ๐ฒ๐ป๐๐ถ๐ฟ๐ฒ ๐๐ซ๐ข ๐๐ฒ๐ฎ๐บ, ๐ฐ๐ผ๐๐ฒ๐ฟ๐ถ๐ป๐ด ๐ป๐ฒ๐ฎ๐ฟ๐น๐ ๐ญ๐ญ๐ฌ๐ฌ ๐น๐ฒ๐ฎ๐ฑ๐ฒ๐ฟ๐.
๐ก๐ฒ๐ ๐ ๐๐ฝ: “Professional Background of the Indian CEOs”
