Monday, February 16, 2009

Incubating Young Business Leaders

At ICICI Bank’s leadership management programmes, held through the year, young managers are shown movies based on the lives of intrepid voyagers like Ernest Shackleton, change agents like Mikhael Gorbachev and war heroes like Dwight Eisenhower. Free-flowing discussions about the Second World War and Perestroika follow. Cynics might wonder what battlefields or Communist Russia have to do with men and women whose pain points are more likely to be non-performing assets or employee attrition. The bank, however, has good reason: "These discussions help our managers really understand what it takes to be a leader in the true sense. At the end of a session, we ask each of them: ‘Do you see Eisenhower in yourself?’" says K Ramkumar, Executive Director, Credit, Treasury and HR, ICICI Bank.

In his spartan office in suburban Mumbai, Marico Chairman Harsh Mariwala is toying with the idea of instituting a ‘best failure’ award. "It may be a good idea to celebrate failure. Youth and risk-taking go hand-in-hand," says the 57-year-old, who heads the Rs 1,900-crore FMCG and wellness group. "People should not to be afraid of failure. Otherwise, leadership goes down as everybody is thinking of just covering their backsides."

At Bombay House, the headquarters of the $62.5-billion Tata Group, posters inviting employees to apply for the company’s prestigious talent nurturing programme, TAS, are everywhere. The programme, formerly known as the Tata Administrative Service, was instituted half a century ago along the lines of the Indian Administrative Service (IAS). Over the last 50 years, it has churned out over 475 cadres. Of these, more than 200 still work for the Tata Group. "Despite the perception that TAS is a very old programme, 110 (of the 200 TAS cadres today) are less than 30 years old. About 150 are less than 40," says Rajesh Dahiya, Vice-President, Group Sourcing and TAS.

These three unique instances have one common objective: developing leaders. Corporate India is processing its next generation of managers. In bulk—companies we spoke to revealed that they are looking at incubating young business leaders by the hundreds, if not thousands. Tata Consultancy Services (TCS), India’s largest IT services player, which employs about 130,000 people across the globe, tracks thousands of employees it believes have high leadership potential. Says Ajoyendra Mukherjee, Head, Global HR for TCS: "With our formal systems (such as workplace appraisals) and informal mechanisms (interaction and feedback from senior management), we identify and track about 7,000 such employees." For ICICI Bank, that number is close to 3,100. Last year, the M&M Group (excluding Tech Mahindra) groomed over 240 young employees. A majority of them were below the age of 35.

Fresh thinking

So, why are these companies looking at young talent? "Experience is important, but so is energy. Sometimes, the past exerts too much influence," says Mariwala. About 290 business-school graduates work at Marico, where the average employee age is 32 years. Mariwala’s ‘A’ team’s average age is about 45, while that of the second rung is just 36. "I’m not saying the past is not relevant; but somebody who is too steeped in it is not relevant in today’s times, where everything is unpredictable and constantly changing," adds Mariwala.

That’s something Rajesh Kamat, the 35-year-old CEO of Colors (the Hindi general

Somebody who is too steeped in the past is not relevant today, where everything is unpredictable and constantly changing Harsh Mariwala, Chairman, Marico
entertainment channel) would agree with. The 50:50 joint-venture between Network 18 and Viacom debuted in a market already cluttered with more than 10 players. "We had to take risks. We had to experiment. We risked airing a male-skewed reality show, Fear Factor, during prime-time, when audiences were used to watching family soaps. But the gamble paid off," reminisces Kamat, who credits his entire team (mostly in the 28-37 age group) for its fresh ideas and appetite for risk. Despite not getting enough sponsors for Khatron Ke Khiladi, Colors launched the show hoping they would come in as the ratings picked up. Even airing a reality show (Big Boss 2) with contestants like Rahul Mahajan, Sanjay Nirupam and Monica Bedi was risky, but Colors went ahead, and the risk paid off. Today, the channel is already in the number two spot, snapping at Star Plus’ heels, barely six months after its launch.

With India’s renowned demographic dividend kicking in, companies are looking at younger managers to drive growth. TAS’s Dahiya points out: "Facebook is not just a social networking tool. It’s a business model for the future. Younger people (and managers) are more clued in to the latest happenings of a changing world."

Seeding young talent in companies has its fair share of challenges. Ashok Leyland has had a structured programme called ‘mission YEs’ (young executives) since 2006. The initiative hopes to "engage, enable and empower young managers", says Shekhar Arora, Executive Director, Ashok Leyland. The programme was the brainchild of the company’s Managing Director R Seshasayee, who kicked it off by spending a day with executives below 35. Today, about 40% of Leyland’s 3,500 employees are below 35. "There are two generations living here—20% are 50 and above and about 40% are 35 and below. When they come together, there will be undercurrents," says Arora. "We felt there was a need to reduce this generation gap. The benefit of experience and knowledge had to be blended with the competitive attitude of the youth."

Stringent selection process

The next step is identifying young leadership material. ICICI has a few criteria to identify budding leaders. A starting point would be annual appraisals. "They must be consistent performers, at least in the top 20% of their level," says Ramkumar. The next step would be a 360-degree review from peers, subordinates, bosses and even super bosses. Once that’s done, a dossier is created, which, among other things, notes the person’s weaknesses and strengths as perceived by co-workers. From that, specific areas are picked up, and a second round of open-ended discussions are initiated with those the person has worked with.

We want to reduce our generation gap. The benefit of experience has to be blended with the competitive attitude of the youth Shekhar Arora, Executive Director, Ashok Leyland "For example, if he is a corporate banker, we will check with people in risk management, compliance at the leadership level on the person’s ability for team work, collaboration, etc. It’s a thorough process. After all, if we are looking at a future leadership talent, he cannot be somebody you don’t know about," says Ramkumar. Finally, the talent’s case is presented to an assessment panel, which makes a recommendation on whether the person is ready to take on more responsibility or needs more handholding.

At M&M, young talent is simply identified as anyone under 35 with the potential to move up one level immediately and two levels over five to six years. Talent is assessed on criteria like global mindset, result orientation, customer-service orientation, teamwork and people management. Once the talented few have been identified, most companies put them through classroom training sessions, job rotations and constant evaluation. "At TCS, we call them the three Es: education, exposure and experience," says Mukherjee. It’s a view echoed by his CEO, S Ramadorai. "Mobility across roles, across functions, across geographies is critical."

Employees selected for the TAS program (including MBAs from the top seven institutes), on the other hand, are asked to "get their hands dirty" with a compulsory rural stint. "After that, they are shuffled across Tata Group companies once every three-and-a-half months," says Dahiya. One of the stints is invariably an international posting. The talent is expected to pick up a foreign language by the end of the first year. After a year, the TAS cadre is assigned to a Tata Group company for two years. Their performance is tracked for five years, from the date of recruitment by TAS.

M&M has a similar process. "Last year, we rotated 22 people across group firms. This year, we have already rotated 19," says Allen Sequeira, VP, Corporate HR, M&M. Rajesh Jejurikar has worn several hats during his eight years in M&M. At 36, he headed the marketing of M&M’s best-selling Scorpio. Later, in 2005, he went on to head the Mahindra-Renault joint venture, which launched Logan, the group’s first mid-sized car. Currently, Jejurikar is involved in slaying the very category that he created with the Logan (sedans), with the Xylo. "I am a great believer that as you go up, you need to have more and more product perspective, and less and less specialisation," he says. "If you’ve spent your whole career in one function or industry, your ability to pick up new things that are unfamiliar starts deteriorating." he explains.

At Marico, employees with just four to five years of experience are promoted to crucial roles like brand management. "Only if we empower them will they take greater ownership of what they are doing. The average age of a brand manager in Marico is 30-33, compared to 38-40 in other FMCG companies," says Saugata Gupta, 40, CEO of Marico’s consumer division. TCS’ Head of Retail and Consumer Product Group, Pratik Pal, 39, believes empowering employees early on creates business leaders. Pal says he learnt a lot from interactions with the company’s senior management. "We have won every deal we have pitched for in the retail space in the last four years," says Pal.

Ashok Leyland has put in a plan to fast-track the growth of high value talent below 35. It has identified 120 senior management positions that young managers can fill. "About 150 employees have been identified. About 116 have opted for it, and we are building a developmental plan with them. We are also committing about Rs 9 lakh as development expense per executive," says Arora. The average age of a senior management person in the company will fall from 52 years to 42 in the next eight years, adds Arora.

M&M and ICICI also have mock boards made up of young managers. These boards
The finest example of ICICI’s ability to pick and hone young leaders is right at the top of the organisation-its CEO designate, Chanda Kochhar, is just 47
are asked to present ideas and even critique company strategy in presentations to the company’s real board. Still, nothing can substitute experience. Companies are aware of this, and perhaps that’s why talent is occasionally thrown in at the deep end. Forty-year-old Sanjiv Sherawat, ‘a lifer’ and General Manager at ICICI Bank, was recently moved from handling a 60-plus team with an SME focus to heading the business banking section, which has about 10,000 employees. "That’s a whole new ballgame. It’s good to be shaken out of your comfort zone...I don’t know of even 10 other people who have gone from managing such a small team to such a huge team," says Sherawat.

It starts at the top

Perhaps, the finest example of ICICI’s ability to pick and hone young leaders is right at the top of the organisation—its CEO designate, Chanda Kochhar, is 47 years old. After completing B-school, she joined ICICI in 1984 as a management trainee. For the first few years, Kochhar handled project-appraisal and monitoring across industries, including petrochemicals, textiles, paper and cement. When ICICI made a foray into commercial banking in 1993, she was moved to that division as part of the core team. Over the next decade, Kochhar steadily rose up the ranks, heading the bank’s infrastructure industry group, major client group (which handled the top 200 clients) and strategy & e-commerce. Once the bank got into the retail business in 2000 under her stewardship, there was no looking back.

Another ICICI ‘lifer’ Vijay Chandok (41), who handles agriculture, rural and SME businesses, believes empowerment and responsibility at an early age is the key to creating successful leaders. "In the mid-90s, I was barely a year out of B-school and was already talking to promoters of companies about valuations, debt-equity ratios...that’s the kind of empowerment ICICI gives you. It gave me a massive high," says Chandok. Today, his team is about 2,500-strong, and Chandok says he would not want to lose 273 of them "under any circumstance". Eisenhower would approve.

Author T V Mahalingam With inputs from Ajita Shashidhar, Kunal Talgeri and Sharada Balasubramanian

Source : Outlook Business

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