Tech knowledge driving CXO hiring

According to human resource consultants, more than the length of experience, the diversity and the breadth of experience is what is driving hiring of top layer of the management.

tech knowledge
In financial year 2021-2022 versus 2018-2019, the salary increases have also been the highest for chief digital or technology officers with a median increase of 14% and 13%, respectively. (Representational image)

Knowledge of new-age digital technologies is becoming a must for C-suite executives in Indian companies across sectors. Be it manufacturing, e-commerce or financial services, demand for CXOs who have a good knowledge in technology are being preferred over those who have longer years spent in one domain.

According to human resource consultants, more than the length of experience, the diversity and the breadth of experience is what is driving hiring of top layer of the management. The need is due to the increased requirement of agility in the way chief executives function, so that they are able to adapt to the rapidly changing business and economic environment, which is volatile and has become highly uncertain since the start of the Covid-19 pandemic.

Roopank Chaudhary, partner and chief commercial officer, India and South Asia at Aon, told FE that instead of looking at having 10 years of experience in manufacturing, or eight years in telecom, or nine years in financial services, companies now prefer having someone with maybe six years of experience but having worked across banking and technology or worked in a startup and fintech, or say in auto manufacturing and technology.

“What the pandemic has taught is that one has to work in different domains and jobs, and if you are stuck with only one kind of experience that is actually working as a disadvantage. It is the diversity of skill set and the experience which is more valued than the length of experience,” Chaudhary said.

He added that with the dynamic business environment, companies are looking for candidates who can adapt to rapid changes in case the company wants to alter its business model, or steer tech-enabled transformations.

CXOs with experience and capability in agile working are also seeing higher demand and greater pay increases, HR consultants said.

With the environment becoming highly fluid, there has been a higher-than-usual movement of CXOs as well since the recovery from the pandemic. Rajul Mathur, consulting leader India, (work and rewards), WTW said the volatility and churn in CXO appointments has touched most sectors in the country. “The most noticeable movements are in the startup ecosystem, across technology and e-commerce organisations. While CXO movements can be noticed across all functions — sales, marketing, technology, commercial functions, supply chain, manufacturing, HR and finance, the demand supply gap remains higher for roles like chief digital officer and head of corporate development,” he said.

In financial year 2021-2022 versus 2018-2019, the salary increases have also been the highest for chief digital or technology officers with a median increase of 14% and 13%, respectively. This is followed by chief risk officer at 12% and others in the range of 8-9%, according to Aon.

In a recent executive remuneration survey by Deloitte India, the average compensation of Indian CEOs touched a three-year high in FY22 at Rs 11.2 crore, and median at Rs 7.4 crore. This includes compensation for both promoter CEOs as well as professional CEOs and takes long-term incentives into account.

In FY21, the average salary of CEOs was Rs 9.4 crore and median Rs 6.4 crore, which was slightly subdued when compared to 2020, when the average salary with long-term incentives stood at Rs 9.8 crore and median at `6.9 crore.

According to Aon’s Chaudhary, there is also a shift in incentives from ESOPs (employee stock option scheme) to RSUs (restricted stock units) that the companies are offering to the top management now. “People are moving away from stock options to RSUs because in ESOPs a person has to buy that option. Also, since markets are volatile, people are not making money in ESOPs and they are not really a preferred flavour anymore,” he said.

However, RSUs are becoming far more popular for getting in CEOs and CXOs. “The person has to pay a nominal value. So, say if the stock price is Rs 2,000, in an ESOP you will have to pay Rs 2,000 and if it becomes Rs 3,000 you make money and if it goes down to Rs 1,000 you lose it. In RSUs, you pay a nominal sum or at par value which could be Rs 100, and if the stock comes down to Rs 800 from Rs 1,000, you have still made money. The only disadvantage is that the stock price does not go up as much, so the upside is limited, but there is no downside,” he said.

According to Chaudhary, in an ESOP, while there is a very high upside but in the last three years there has also been a very high downside.

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