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 / Summer 2013 / Issue 71(originally published by Booz & Company)


India’s Leadership Challenge

Looking for Leaders

India’s young, underprepared population, its rapid economic growth, and its changing business models are the most visible contributors to its leadership deficit. But there is a subtler yet equally powerful underlying cause: Historically, Indian business leaders have focused on developing technology rather than people. As a senior manager at a large Indian conglomerate put it, “We have quality technical experts, but can’t convert them into business leaders.”

Perhaps the most obvious example occurs in the C-suite: Few companies have provided human resources a seat on the executive management committee. As a result, the HR department often has a limited role (or no role) in the strategic planning process, leading to a lack of focus on people matters. As U.S. companies did in the early years of the Silicon Valley boom, Indian companies have prioritized achieving technical excellence, hiring engineers who’ve been trained to pursue innovation—but not to manage people and lead organizations. Evidence of this dynamic can be found in practices prevalent throughout Indian companies.

Insufficient training for new recruits. Many Indian companies struggle with new-hire “onboarding” programs. Often, the incoming class of MBA recruits is not sufficiently integrated into the broader workforce, and companies put too much hope too early on these new hires’ shoulders.

Meanwhile, rotation programs meant to train the new recruits are often ill conceived and seen by line managers as an intrusion into daily work. “Corporate has assigned two MBAs to my department for rotation—I don’t know what to do with them,” said a department head at one midsized Indian company. “My people are already overworked with their routine work. We do not have the time to train these overpaid young recruits.”

Limited variety of experience at the top. Without a strong leadership pipeline in place, star functional specialists are typically promoted to top roles. These individuals may have a background focused within one domain, and may not have had the opportunity to develop a broader perspective or set of skills.

This experience gap is not a problem just for Indian companies; it is endemic to corporate structures everywhere. Many global companies compensate with targeted on-the-job experiences and in-depth training, where they bring senior executives together to help develop one another’s skills. But Indian companies have invested little in this type of executive development. Thus, when functional specialists are promoted into general management positions, few are well prepared and motivated to handle their new roles.

A lack of succession planning. Rapidly growing industries, such as those driven by the rise of digital media, often rely on relatively young and inexperienced managers to take on senior positions. By and large, these individuals have not yet developed a leader’s perspective. For example, the telecom boom over the past decade has led to a flurry of flourishing mobile phone brands in India. But each of these firms has had to draw upon the company’s existing pool of players to build its senior team. The growth of that talent pool has not kept pace with those of the brands. One regional sales head for a mobile handset company pointed out that “eight to 10 years ago, there were only three or four handset brands in the country. Today, there are over 60. Relatively younger managers have had to step up to take on top roles in these companies.”

The ultimate result of this lack of qualified successors? Senior leaders are postponing retirement. Instead of developing and executing a clear succession plan, executives have been extending their tenure, lacking confidence that the next level of management is up to the task of leading.

The Next Generation

Many Indian executives recognize the challenges, but are unsure what steps to take to overcome them. First and foremost, they need to take a fresh, holistic look at their leadership development practices. Their goal should be to develop a sustainable leadership pipeline throughout the organizational pyramid: a well-rounded leadership team to complement the required skills at the top, a team of successors right behind them, a strong bench of high-potential individuals identified and developed in the middle, and a cadre of young, industry-ready talent. The pipeline should also include advancement opportunities for technical specialists.

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