Tuesday, April 19, 2011

Mohandas Pai begins to speak up

Mohandas Pai's resignation from Infosys was a huge news item in the media. Pai's departure will not make a difference to Infosys, certainly not the sort of difference that would cause a sharp drop in the stock price- he's neither a marketing person nor a software person, he was in charge of HRD. I suppose his departure caused news because it was seen as signalling a difference with the board and especially Narayana Murthy over succession planning and it also raised the question whether a company, which is said to be a model of governance, had got its succession planning right.

In his initial remarks, Pai sought to refute any suggestion of differences with the board and insisted he was merely making way for younger people. He also disclaimed any intention of wanting to become CEO himself. The company spokesmen themselves made statements that suggested that Infosys is not your run-of-the mill- company where people at the top have differences over such petty matters as who should be become CEO.

A couple of days later, Pai seems to have thought it necessary to give vent to his feelings. Here's an excerpt from a report in Indian Express:

“What goes against me? Seniority. You are discriminated against because the founders have spent longer years,” Pai told The Indian Express from Bengaluru. “I know the law, so long as the founders are there, professionals who are late entrants will not get a chance.”

....According to Pai, Murthy had, in an interview to a business newspaper, said if there are two very capable people, both fit to take on leadership roles, the one who has served for longer, would be the choice. “I don’t agree... you have to go by the person best suited for leadership over the next five years,” he said.
So, there you have it. The remarks appear to confirm speculation in the media that Pai was not too happy with the choice of S D Shubulal, one of the founders, for the post. In a separate interview with NDTV, Pai also hits out at what he calls the 'conservatism' of the company which, he thinks, has led to others overtaking in the recent past. He also suggests that Infosys might have done a better job of choosing its next CEO:

"When you choose a CEO, you should have a very transparent process and you choose the best person for the job," Pai said, adding, "In corporate India, the whole idea of CEO succession requires more transparency."
--"If left to me I would have drawn a list of people and I would have interviewed them and invited them to come and present to the board what their vision for the future is and I would have looked at their capability and decided for the next 5-10 years who are the people we should back and what they are going to do," he said.

Pai implies that what he has in mind did not happen at Infosys- and he has a point. It's hard to defend a system whereby the founders take turns at becoming CEO; this betrays too much of a closed shop mentality. It could be argued that it turns out that, in a competitive process, one of the founders was the best suited. However, this strains one's credulity- it cannot be that, after NRN, three successive CEOs who were best suited all happened, by a coincidence, to be founders.

Infosys has a board committee looking into CEO selection. Pai's remarks do raise a question mark over how effective this process has been, whether the board has exercised the necessary independence in the matter and made its choice based on a truly global and competitive search.


Sunny said...

so the "big picture" here is that HRD has no significant role to play in an organization's branding/ positioning in the market? the guy was in HRD, so what he says or thinks is of little significance. i often wonder why great, strategic minds of any organization, aka finance, sales and marketing etc., agree to spend so much money on this unnecessary function and its manpower

Rahul said...

For the last few years we are witnessing high profile exits from the Top IT Companies. I think this is the result of wrong policies being followed by companies for years.

blackadder said...

Frankly, it's difficult to see the role of a CEO being given to someone outside the core functions of a company - the CEO of an FMCG company will typically be from sales / marketing, the CEO of a telecom company from customer service or network operations, the CEO of a pure manufacturing Co. will come from manufacturing. HR is a support function and a person who is not well versed with the core functions of a company typically can't aspire to be CEO.

Anonymous said...

Blackadder, yes but Infosys can also be viewed as a labor arbitrage company. In which case HR (and training) becomes the core function. Even without the labor arbitrage aspect, the costs and assets of a technology company are its people and HR is surely a core function.

blackadder said...

I would agree with anonymous but having worked with an IT services company as a consultant I know that HR doesn't perform the labour sourcing role so it can't be considered a core function.