New Delhi: India Inc will witness a big churn of CEOs in the next few years considering the amount of changes it has seen in the past five years, global executive firm EMA Partner International has said.
A study done by the firm stated that in the past five years 66 per cent of companies in India have changed their CEOs, with MNCs having the highest percentage at 86 per cent.
"We expect the attrition rate to go up, especially in certain sectors like financial services, ITEs and BPO, which are in the process of maturing," EMA Partner International Managing Partner K Sudarshan said.
He said even a mature sector like manufacturing will see changes as many of the stable CEOs, who had been at the helm for a long period, will be retiring in the next few years.
"The manufacturing sector will have to look at younger people as replacements for the old guard who are set to retire in the near future," he said.
According to the EMA study, 57 per cent of Indian business houses witnessed change in CEO in the past five years, while that of MNCs stood at 86 per cent.
The IT/ITEs sector saw the highest rate of change of CEO at 88 per cent followed by banking at 70 per cent, pharma (67 per cent) and FMCG (61 per cent).
Sudarshan said even emerging sectors like retail could have an impact on the rate of change of CEOs as it would try to poach experienced people from sectors like FMCG and telecom.
The EMA study said CEO changes in India were primarily led by resignations (41 per cent) or retirement (24 per cent).
"While the CEO resignations are mainly on account of better opportunities, many of the firms in India are not yet as forthcoming in disclosing the exact reasons as their western counterpart," Sudarshan said, adding that the trend was expected to change over the years with independent boards coming in.
As far as replacement for CEOs are concerned, in the manufacturing sector 82 per cent of the companies had internal replacements although IT/ITEs sector relied on external appointment (73 per cent), the study said.
Reasoning the factors behind the changes, Sudarshan said the job of a CEO is becoming more demanding and they have to prove themselves in a shorter span of time.
"At the same time the CEOs are also demanding a premium for their job, which the companies expect them to deliver. Performance in a short time is becoming key," he said.
The EMA study covered 100 publicly traded and privately held companies in India with focus on manufacturing, pharma, banking, IT/ITEs and FMCG sectors.
Comments
0 comment