Many new CEOs expected to be 'external hires': Experts

Written by PTI | New Delhi | Updated: Feb 23 2014, 21:05pm hrs
Quest for innovative ideas in a highly competitive environment is pushing a large number of Indian firms to look beyond their organisations, and even the sector, while recruiting chief executives.

According to a study by executive search firm MANCER

Consulting, as much as 30 per cent of the new CEOs this year

are expected to be 'external hires' as companies seek

candidates who have a global approach, along with proven

capabilities and experience, which may not be available in

their internal talent pool.

Presently, external hirings for the top job have been mostly observed among the young sectors such as e-commerce,

automobiles, technology and aviation, while the trend has also

emerged with growth of small and medium enterprises and entry of foreign corporates, experts said.

However, mature industries such as Banking and Financial

sector firms as well as manufacturing entities have not often

gone outside the industry to recruit their leaders.

Experts are of the view that companies have a greater

tendency to hire externally when they face some crisis or

there is a need for change.

"There has been a noticeable trend towards hiring CEOs

from outside the firm... This also mirrors the trend observed

in the US where in 2012 more than a quarter of S&P 500 firms

needing a CEO were hiring from outside as compared to less

than 10 per cent in the 1970's," GlobalNxt University School

of Business Dean Jason Fitzsimmons said."...external hires may be more likely to be able to steer a course of change as compared to an internal candidate who may be tied to the firms existing culture and strategy," he added.

Citing similar sentiments, HR services firm Randstad India

CEO Moorthy K Uppaluri said that "young sectors that are on

growth trajectory over the last two decades look at outside

succession as they need fresh thinking into the organisation

and develop the culture, processes and systems".

"Also, large and medium sized entrepreneur driven

organisations tend to hire professional CEOs in their quest to

build the company in the context of the local and global

opportunities," he added.

Giving multiple reasons for companies to look externally,

MeritTrac CEO Vasu K Saksena said: "We have a large number of younger industries and larger number of new companies in

mature industries which have grown and reached a stage from

where they are looking to transform".

"This transformation demands newer ideas, exposure to

different practices and cultures and ability to manage larger

and diverse teams," Saksena added.

Noting that many Indian companies are also servicing

international needs which require leaders with a global

perspective, Saksena said "some of these capabilities are not

often found internally and hence they scout for a suitable

candidate outside their company or industry".

Going by data provided by executive search firm Spectrum

Talent Management, around 16 high profile CEOs/COOs from threeconsumer facing industries - FMCG, Telecom and Automobile have switched jobs in 2013.

Spectrum Talent Management Director Vidur Gupta said that

a rise in hiring of CEOs is expected to increase after the

general elections of 2014.