Read Conquering the Chaos: Win in India, Win Everywhere Online
Authors: Ravi Venkatesan
The shortage of talent is the single largest issue that can affect our growth in India.
—JOHN FLANNERY, PRESIDENT, GE INDIA
If the right country manager is the biggest determinant of success in India, building
a strong team and organization is, by far, the biggest imperative for a country leader.
In addition to delivering results locally, a capable organization earns the confidence
of the global headquarters, ensures its commitment, and sets off a spiral of success.
The converse is equally true, and companies can fall back into the midway trap if
they fail to build capable country organizations.
In India, building an engine that pumps out talent is tough. Despite a young population
and India’s vaunted education system, shortages of every kind of talent and skill
are evident in the country. A PwC survey in 2011 showed just how critical talented
people are: 41 percent of CEOs surveyed said that they canceled or delayed a key strategic
initiative, and 39 percent said that they were unable to meet growth projections because
of a shortage of people or because the costs of hiring people soared more than expected.
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The talent shortage shows up in the difficulty that companies face in retaining talent.
A mobile workforce with high aspirations and low maturity has driven attrition rates
in India into the high double-digits. Companies must hire even as they bleed people
and compensation shoots up by between 10 percent and 15 percent every year. There’s
a shortage of middle managers, especially people managers who can develop frontline
workers, as well as managers with expertise in functions such as product engineering,
supply chain management, and project management.
Nearly every company, Indian and multinational, faces a succession challenge. There’s
a steep drop in leadership capability between the CEO and the next level, and an even
more alarming drop one more level down. With companies growing at 20 percent to 30
percent every year, jobs outgrow incumbents, leading to the chant: “Will X grow into
the job or is it time to make a change?” Sadly, there often isn’t a stronger candidate.
Although talent ought to be high on CEOs’ agendas, and they should be investing heavily
to grow people, the reality is very different. Many companies are paying little more
than lip service to the issue. Every CEO can point to the company’s talent review
process and leadership development programs, but in India investments in leadership
development, training, and building capability are anemic. The median spending on
learning and development per employee is $125 a year, rising to $300 in the top quartile.
Investments in people across India Inc. are only 1.6 percent of the costs of wages—half
that of the United States. Given the realities, I would have expected it to be the
opposite.
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Companies rely disproportionately on external hires, so everyone chases the same talent.
HR managers continue to be overwhelmingly focused on recruitment and retention. A
2012 Indicus–
Business Today
survey of the best companies to work for is quite telling.
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In a bid to attract and retain employees, companies are disproportionately focused
on compensation, benefits, and a work experience that includes everything from Thai
foot massages to wine tastings. There’s scarcely a mention of investing in building
capabilities or innovative approaches to growing leaders from within. The talent crisis
will likely get worse, severely limiting companies’ abilities to grow faster than
the industry average.
There are many reasons for this. Companies in India are on a hiring treadmill. When
you have a business growing at 20 percent and attrition of 15 percent, a company is
essentially hiring a third of its workforce every year. The challenges of screening,
hiring, and assimilating so many people are extraordinary. Add on the pressure of
delivering quarterly results, and it’s almost impossible to focus on the talent agenda.
Talent development isn’t a priority for headquarters either. Most multinational companies
focus on succession, so it’s hardly surprising that their Indian subsidiaries aren’t
very different. Several rely on expats, while others have a systematic bias toward
filling senior roles from outside. That creates a revolving door of leaders, a mixed-up
culture, and low employee commitment.
Creating a leadership engine and developing new capabilities take between five and
ten years. If the country leadership team turns over every three years, and they can
do well just by meeting budgets, there is no chance of building a world-class organization.
In addition, building capabilities and growing leaders cost money; people have to
be sent to work on projects in other parts of the world and expatriate managers may
have to be flown in. If there are no budgets or head count for such things, it is
hard to make progress.
Despite these factors, some companies have been able to get off the treadmill. Hindustan
Unilever, for example, has earned a reputation for developing talent, alongside familiar
champions such as GE and P&G in India. The sidebar “
License to Lead
” vividly portrays HUL’s obsession for growing talent that is a striking contrast
to the tick-the-box approach in many companies.
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H
industan Unilever’s (HUL) office in Andheri, Mumbai, lies an hour away from the legendary
Wankhede Stadium, where legions of cricket fans throng to witness their cricketing
gods clash in the India Premier League. Inside HUL, though, it is the Talent Super
League (TSL) that’s getting everyone charged up. The contenders for the TSL crowns
aren’t brand managers with stellar records for belting competitors out of the park
or knocking down rival P&G wickets in the marketplace. The leaders of HUL compete
for a different kind of award: best mentor. Interestingly, it’s the mentees who decide
the mentors’ fates, by rating them on their performance as coaches. The high-scoring
mentors are congratulated by HUL managing director Nitin Paranjpe on the famous “street”
at the center of the sprawling new HUL campus, cheered on by hundreds of Leverites
from the galleries. Working behind the scenes, executive director of HR, Leena Nair,
and her spirited team make sure that HUL talent machinery churns out winners consistently.
And for those keeping score on the number of CEOs have come out of HUL’s ranks, at
last count, more than four hundred CEOs (including from within Unilever) had HUL work
experience on their resumes. And that’s not all—there are more than two hundred HUL
managers working for Unilever around the world. Even with that kind of track record,
Nair’s team is preparing to take the game a notch higher. Inside the HUL campus, they
have unveiled a secret weapon to keep the edge on the famed Lever talent pipeline:
their very own Crotonville. “Fifty Weeks of Training”—a sign at the gate of the newly
inaugurated learning center makes the intention and goals clear. In plush training
rooms, the displays spell out the fifty-week training programs and the components
of the company’s “blended learning approach”: one lists online academies, another
has motivating mantras like “Seek and you shall find” and Get Abstract, a learning
module.
Companies often talk about people being their most important assets but this doesn’t
reflect in their day-to-day functioning. At HUL, learning is built into jobs. 70:20:10
is the basic tenet around which the company’s training and development program is
built. Simply put: 70 percent of training happens on the job, 20 percent by coaching
and mentoring, and the remaining 10 percent through e-learning and classroom training.
Since on-the-job training is the largest component of training, the HR department
facilitates the career management of 16,000 employees (including 1,500 managers) in
a way that offers new and challenging assignments and new learning opportunities.
“It’s a Herculean task, given that executives move on to new jobs every three to four
years,” acknowledges Nair.
The training for new management recruits starts from day one. New hires are put through
a 15–18-month cross-functional training program that includes international exposure
and three months of independent responsibility, known as subordinate charge. At the
heart of the HUL training program is the Individual Development Program, a customized
training program for a large number of employees. Employees are evaluated for their
training needs—functional as well as leadership skills—every two years. For functional
skills, the personal-skill profile of every employee is matched against the skill
profile for his job to identify the gaps. The 1,500 managers go through a 360-degree
evaluation where 18–20 people provide input on their leadership. An individual development
program is then created, recommending classroom training and e-learning courses that
will help close those gaps. On average, every manager ends up taking five e-learning
courses, two classroom sessions (one functional, one leadership), and four sessions
by external leaders. With more than 40,000 e-learning courses a year, HUL is the largest
consumer of e-learning in all of Unilever. Classroom training adds another 2,000-plus
hours toward skill development of employees.
Experts agree that corporate training programs deliver results when they are well-matched
to the needs of the business. Every three years at HUL, the top 30–40 leaders undertake
a vision exercise that draws up the company’s ambition and sets top lines, bottom
lines, market shares, targets, etc. A talent and organization plan is prepared alongside
the vision document to get a fix on the present and future talent and skill needs
of the organization. For example, during the last vision exercise, one of the focus
areas identified was the need for better digital marketing skills. HUL hired partners,
developed e-learning modules, and called in digital experts to shore up the digital
skills of its marketers and, yes, every marketer had a digital skill program in his
development program.
The true differentiator of HUL’s training lies in its mentoring program. “A lot of
organizations have training programs, but what makes ours special is the commitment
of leaders to build the next generation of leaders. It’s a strong part of our legacy,”
explains Nair. In the fifty weeks of training, more than half the programs are run
by HUL’s own leaders, who share their experiences with juniors. At any point in time,
300–500 managers are being mentored over and above their immediate bosses in a mentoring
program. While the immediate boss is the mentor, every new recruit, new promotee,
or high-potential candidate has an additional mentor. Moreover, the boss can’t take
mentoring lightly. Every year employees fill in a global people survey, which has
10–12 questions about the immediate boss. While the best mentors are lauded in the
talent super league, the ones who lag are taken off the mentoring program for a year.
For the senior leaders there’s reverse mentoring as well. CEO Nitin Paranjpe, Pradeep
Banerjee, executive director of supply chain, and Nair are being mentored in digital
savviness. “I wasn’t on Facebook, Twitter, and LinkedIn until about nine months ago.
Now a young brand manager teaches me how the world is changing,” says Nair. With the
business landscape changing drastically in the last decade or so, an important part
of development is getting leaders from outside to share their ideas, insights, and
experiences with HUL managers. A program called Sip And Share has CEOs like Future
Group’s Kishore Biyani, Walmart’s Raj Jain, and HCL’s Vineet Nayar come to HUL’s campus
and talk about their experiences.
In the HUL universe, the shining stars are the “Listers”—managers on a fast-track
career path and they constitute 15 percent of the 1,500 top-managerial talent, out
of 5,000 people overall in supervisory/managerial roles. The eight members of the
HUL management committee decide how the Listers will be rotated in the system, and
what challenging assignments will they undertake. But even the Lister list is reviewed
every year, so if the person does not perform for three years, the list is challenged.
This leaves no room for doubt that within this global giant exists a league of extraordinary
leaders.
Note
: adapted from
License to Lead
, by Vinod Mahanta, in
Economic Times
, April 20, 2012.
The world does not need another book or even a chapter that shows how to build a talent
engine or grow leaders; shelves sag with such books and Amazon has seventy-seven thousand
books on leadership and twenty-two thousand on talent. I’d like to focus on answering
one central issue: how do CEOs of multinational companies build a capable country-level
organization in India or any other developing country?
First of all, companies have to get serious about growing leaders. Many companies
point to the wonderful things they do to develop leaders, but when the time comes
to fill key roles, they find they have no internal talent. Successors who are “ready
now,” it often turns out, aren’t quite ripe to take over, so companies have to rely
on search firms. The problem is that when you go outside the company, the person you
hire doesn’t fit into the culture more than half the time. The interview is a notoriously
weak process; it’s a conversation between two liars, goes the joke. Even reference
checks don’t help. The cost of failure is large. Besides, young leaders become demotivated
when they see juicy roles repeatedly going to outsiders. Above all, the company’s
culture becomes a weird mishmash of the values that various leaders brought with them.
Why do I say this? Because, at one stage, I made the mistake of relying almost entirely
on external hires. Our business was growing at between 35 percent and 45 percent a
year, jobs were growing faster than incumbents were, and I hesitated to bet on the
devils I knew, preferring the ones I didn’t. Big mistake!
The journey toward creating a leadership engine begins with two simple but vital rules.
Without them, leadership development will never be taken seriously.
Rule One:
Growing leaders is a necessary condition for a promotion. Companies that don’t build
a talent engine don’t hold senior leaders accountable for growing leaders; what matters
are financial results. At GE India and Hindustan Unilever, half the senior management’s
bonus is driven by organizational outcomes. The number of leaders developed is a fundamental
criterion for advancement.
Rule Two:
70 percent of management roles must be filled from within. Every exception will require
the approval of the country manager.
Next, identify people with fire, passion, courage, and entrepreneurial flair, and
give them big jobs and big challenges—bigger than they are ready for. You must then
do everything possible to help them succeed. And you must do this repeatedly. These
big jobs and big challenges become crucibles for leadership development and provide
the context for mentoring, coaching, and classroom learning. The stresses of trying
to survive and excel create leaders.
I say this from personal experience. In 1988, when I was twenty-five years old, I
was given the opportunity to be a shop-floor supervisor in a Cummins plant in Indiana
that was heading for closure and had a tough industrial relations record. I was thirty
when I became the general manager of a group of underperforming businesses, and my
mandate was to fix, sell, or close them. At thirty-two, I found myself the managing
director of a troubled joint venture between Cummins and Tata Motors in India. At
thirty-five, I was given the responsibility for all of Cummins’s businesses in India
and appointed chairperson of the publicly listed Cummins India.
I was underprepared for each of these roles, which were bigger than my ability at
that time. However, the leaders at Cummins put young managers with potential through
progressively bigger challenges. They had the courage to take the risks of doing so.
Few of us let the company down, working harder and smarter to justify the faith they
had placed in us. What we lacked in maturity and experience we made up in effort and
our willingness to learn. Cummins’s entire global leadership has come up the same
way, including my former colleague and peer, Tom Linebarger, currently the company’s
chairman and CEO. The credit for much of my professional success goes to the remarkable
leaders of Cummins at that time.
A related practice is to link strategy and leadership development. In most companies,
these are disconnected processes. By contrast, Indian CEOs who have an outstanding
record of grooming CEOs, such as Ashok Ganguly of Hindustan Unilever and K. V. Kamath
of ICICI Bank, see strategy and leadership development as inextricably intertwined.
The companies’ major strategic initiatives are, by design, led by next-generation
leaders and staffed by rising stars. They give them tough missions, such as launching
a new business or turning around a business unit. Those become crucibles for leadership
development, in which mentoring, coaching, executive education, and strategy development
are anchored. The CEO and senior leaders engage deeply with these teams, and they
assess and mentor several generations of leaders. Close observation enables precise
and hard-hitting developmental feedback and coaching. The approach ensures two outcomes:
successful strategic initiatives and a pipeline of leaders. Only this kind of action
learning, which the CEO personally mentors, will provide the transformation in leadership
capabilities in the compressed time frames that companies need.
That’s not just a theory. In 2000, then chairperson of Hindustan Unilever, K. B. Dadiseth,
launched an initiative called Project Millennium. The project included a rural distribution
initiative, an Internet business, and a water-purification business. Explained Dadiseth:
“These are new growth engines, which will become thriving businesses of significant
size over the next six to eight years … To develop top talent, we have put in place
a process that will help identify potential business leaders much earlier in their
careers than we did before. We will also create substantially more opportunities for
entrepreneurial leadership … The nine new growth engines are only the beginning. As
our managers get a taste of the independent leadership opportunities that Hindustan
Unilever can provide, their commitment to the company’s growth will only increase.”
Not only did Project Millennium result in Unilever’s water business and the Shakti
rural distribution network, it also spawned a new generation of leaders such as incumbent
Hindustan Unilever CEO Nitin Paranjpe.
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The idea of systematically betting on young talent by putting people in big jobs and
giving them big challenges is smart. It’s different from moving people on an escalator
at the same pace, which is what multinational companies tend to do. Taking a bet on
someone and thrusting her into a larger role is a proven process, and the only one
that I know works. Despite the evidence, most leaders are conservative about taking
such risks with internal talent. For some reason, it seems less risky to bet on an
external hire, although the challenges, such as cultural integration and values fit,
are higher.