[reppy]

Sorry but no one here posted the one word I was looking for - culture.

Each organisation has a deep running cultural regime - good or bad. These roots are defined by the primary leaders in the organisation.

Further, Indian culture normally (not always) embraces short cuts and poor documentation / planning in the interest of faster output without the pressures of record keeping/paper work. Expats (try to) break this mould and (may) bring in class leading discipline to the organization - atleast that may be one of the primary things they are supposed to do!

My 2 cents, yours may vary.

[RSR]

Originally Posted by reppy

Sorry but no one here posted the one word I was looking for - culture.

I guess you may have missed reading comment # 14, then.

Originally Posted by RSR

For such companies, it's not just a trust or communication issue, but mainly one of culture. I don't mean "culture" as is commonly used in everyday parlance, but more like an automobile manufacturing culture.

Needless to say, I'm in total agreement with you on this. It's an issue of automobile manufacturing culture, and one simply cannot expect such companies to be headed by someone who wasn't immersed in the auto making culture of those companies right from the beginning. The risk is just too big a one to take.

[Jeroen]

Interesting topic. I don’t have the answer as such, but as an expat in India, working for a very large multinational, I can provide some insights on how it works for us, Ericsson.

Not for the Group CEO position as I have limited insight into that proces. For large corporations finding and appointing the Group CEO is something handled by the board.

We also need to get our definition right about what/who is a CEO. In my definition there can only be one (group) CEO. Whoever is the formal head of the total company is the CEO. So for instance for Mercedes, Mr Roland Folger is the MD in India, but he is not what I would call the Mercedes CEO. At Ericsson Mr. Folger would be called Region Head, not CEO.

It is relevant to make that distinction because we are comparing international companies with a local Indian presence, to Indian based/head quartered companies.

I can give some insights into the layers just below the Group CEO and the local/regional Management Teams. This group of executives is known as the Top250. This group of 250 people run our 10 regions, four Business units and various so called Group functions.

We are a global company (present in more than 180 countries) and have a strong believe that all our senior leaders must have international experience in a variety of different regions and jobs. So if you are part of the top 250, it means you have the willingness and abillity to move all over the world.

The ability to be quickly effective and make an impact, no matter what region you get send too, is part of the various assessments you need to go through to get into the top 250.

We also believe in leaders that constantly develop and broaden themselves. The ability to lead very different disciplines in different cultures and environments is very important to us. Ericsson is a very high tech company, but not necessary all our leaders have technical backgrounds. Our current Group CEO has a non technical background.

Let me illustrate that with my own career:

My formal eduction is a degree in Naval Engineering, I spend 7-8 years in the merchant navy, 6 years in the gas and oil industry and then joined Ericsson early 1990s as a project manager. Then I became Account Manager, then did some business development roles, became Head of procurement and logistics, Operations Director, Sales Director, Key Account Manager, Strategic Project Director. My previous job was in the USA as Managing Director of (ESI) Ericsson Services Inc. (Little anorak fact; if you google my name it will still show me as CEO of Ericsson USA. The "who is who business directory people" don’t understand the distinction between Group CEO and local MDs either)

Currently I am the Head of Operations and statutory managing director of Ericsson India. Next to my day job at Ericsson I have held various teaching posting (post graduate courses on Project Management and Industrial Automation) and for about 10 years I was the MD of a Private Investment Company.

I have lived and worked in various countries and regions. As you can see, I’m not an expert in any particular area really, more a Jack of all trades. In an organisation like Ericsson that does me well, because we have top experts in just about any discipline you can think of. But leadership is not about the content perse, but about how to get an organisation to move into a certain direction. That takes very different skills and experience. We believe the broader and multidiscipline you are, the better prepared you are.

My local boss is known as the head of the region (some would call that the Indian CEO). Currently an Italian, before an Englishman, before that a Swede and before that an American (from India!). My predecessor was from Brazil, before that an Indian.

Part of my and the local regional management team responsibility is to ensure we identify, coach and groom local talent for the top 250 pool. And every region and business unit does so. So our top talent comes from just about all countries and or regions of the world.

At Ericsson your nationality, your gender, your religion, who your mum and dad were, your formal training, none of it is relevant. What is relevant is your attitude, how you behave, how effective you are in our organisation and your ability to work with uncertainty and ambiguity, stimulate diversity and change and still move things forward.

The reason I started by stating “interesting topic” is that apparently for some it is relevant what nationality the CEO is? Or at least the question is raised why there are so few Indians in senior car companies?

In true global companies I don’t think the nationality of any of the talent up and down the ladder should be a matter of concern at all. What is relevant is the talent and relevant experience, insights, how effective he/she can be in India in such a senior position. And that, to a fair extent might well be a function of how many Indians ultimately over the last 20-30 years have built credible, relevant experience, know how, insights into the automotiv industry at large preparing them for the top local (Indian) slots.

There might be statutory or other legal requirements pertaining to the nationality of local CEO and or board members. For instance here in India, if you want to do business with governemental institutions it might be required that the majority of your statutory board have Indian citizenship and are Indian residents. You could argue till the cows come home whether that is fair or not, but if you want to do business in an area where this is applicable the only way would be to comply.

I know plenty of big international companies that have had all sort of nationals as their group CEO. There is also a fair number that seem to favour the nationality of the company head quarter. Again, there could be legal restrictions on some.

Certainly based on the list of Indian companies in the first post it seems that large Indian companies are headed up by Indians. I have met with several of the gentlemen mentioned and each in his own right is an astute and very succesful businessman.

Ericsson Group CEO is typically a Swedish national. We are one of the Swedish flagship industrial giants. (there aren’t that many!). So a certain degree of national pride might be at play here. Again, there might be other practical/legal reasons. But I can say that the Group CEO, probably together with the Group CFO position, are the only positions where a nationality preference is prevailing.

I must admit that for large corporates, operating all over the world, I can see why you might want to keep the CEO a local (national) appointment.

At Ericsson we believe fervently in diversity. Nationality is just one parameter. Limiting yourself to a specific nationality for a specific function seems as short selling on the companies best interest.

There are a lot of Indians swarming all over the world in all sorts of position. It would be interesting to see how well they are doing in top positions. Although I don’t have actual data at hand I do believe that you will find that in more western orientated companies you are likely to find a higher percentage of executives with a western outlook and more importantly behavioural repertoire. That goes for big multi-naitonals in particular. When we want to learn about entrepreneurship and innovation we pile into a plane a head out to Palo Alto, not Bangalore. I have spend a few weeks in Silicone valley and it was a revelation. At the same time I did have my own thoughts on how easily such an eco system of networking, finance, innovation etc could be de-Americanised to be suitable for export.

Conversely, in non-European companies you are likely to find the exact same opposite.

Jeroen

[ajmat]

The main two issues are trust and culture.

I have been working for a major semiconductor firm since it set up base in India.

At first, there was a nominal head and many expats while we were understanding India.

We then had a country head who was pretty remote from the situation. It was repeated again with another expat but he had strong links to senior management. His job was to assess and get things streamlined.

The next person was a local manager who went on to become a VP. He got rid of most of the expats and ensured talent was nurtured from within. We had another expat person but the person was placed more on behalf of the new CEO. We again have a local person recently appointed.

All the above have been working in my company for greater than 10 years. The CFO was expat until 4 years ago. The only expat now is the Infrastrcuture head - why? He has to over-see the construction of new facilities where non-conformance and corruption could occur.

It will take a while for "local" people to lead once trust, culture assimulation and a clear path forward is defined.

[VeyronSuperSprt]

Having discussed with CEO's of quite a few German automotive companies in India (directly and through whatsapp etc) there are quite a few reasons I believe this happens.

The main issue is the German headquarters of these companies do not want to get involved with Indian operations, be troubled by feedback about poor service in India or have escalations routed to them. They are interested in engineering new cars, adapting them to local conditions to the extent possible and winning marketshare through engineering.

Added to this the concept of "service quality" in India is slightly different thanks largely to the likes of Maruti and to some extent Hyundai who have taken service quality to very high levels that have spoilt the Indian customer. It's almost personalised (to an extent) and highly responsive - something that you wouldn't get with any German - even if it was a Maybach. If we still had just Hindustan Motors and Premier Automobiles, Europeans would have had a cakewalk in India.

Germans believe that their global processes are more than enough to address the Indian situation. They do not understand or even are in denial to corruption - something that exists with in quite a few areas - granting new dealerships, managing old ones, service quality, spares, etc.

The CEO's are told by the Group HO to just run the company and to see that the Group HO is not bothered with issues in India. CEO's who ask difficult questions are even asked to leave the service and dealer teams alone !!!! Difficult questions in this area are usually not asked by Germans or expats.

That should answer the question posed in this thread to a very large measure.

The smaller yet significant things:

1. Frequent interactions with Head of Operations of a European automotive company (Non German) has often had me questioning that company's assessment of competence.

2. Many customers escalate to Global Heads of German automotive companies. Nothing could be more pointless than that. If at all, it would have the reverse effect of annoying the local management and you wouldn't have your case sorted.

[sunishsamuel]

I found these articles interesting and relevant to this discussion. Some of my thoughts are exactly similar to what's written in the economic times article and probably why expat CEO's are preferred.

Further, it could also mean the lack of suitable candidates outside the Tech industry in India; in terms of relevant experience, market know how - managing dealers and the network is a different beast compared to managing banking and finance, service based clients.

Argumentative & too emotional - are Indians tough to work with?

http://articles.economictimes.indiat...dia-expat-ceos

Carmakers Turn to Expats to Steer Their Business in India

http://knowledge.wharton.upenn.edu/a...ness-in-india/

[Annibaddh]

Interesting observations I must say. Honestly, for all the rationalization, it looks too lopsided for any of them to explain this fully. So to say there isn't a perceived inferiority of Indian resources at play here would be at bare minimum unsubstantiated. The question is, if that perception is fair or not in the context of the skills that car companies look for in their executives. It would also be oddly interesting if that's what causes a lot of international giants to miss the bus in India. :P

I checked. Engineering backgrounds don't seem to be overwhelmingly dominant. MBAs, home-grown graduates and even Psychology majors in there.

[King_pin09]

Adding further to my earlier post, I presume the nature of business a particular company is into may also have to do something with the origin of CEO. For example, let us assume a Japanese company introducing its “Electronic goods”, a Japanese CEO in lead might appear more impactful in the minds of a customer. On the other hand let us imagine products such as “Gold Ornaments” on sale in India, where an Indian CEO (especially female) might appear more relevant.

Automobile industry is no different. Most cars presently on sale are primarily driven by the brand value of parent company (of foreign origin). In such case having an expat CEO, who is in regular interface with media, business associates, share holders, etc., would prima facie reinforce the perception about brand equity.

[aditya9567]

Interesting observation and thread. I'm not entirely sure as to why there are more expat CEOs in the auto industry. However, I feel them participating and hiring for leadership roles in good MBA schools in India is a step in the right direction. For example, BMW came with this wonderful global leadership program (Link) to IIMC and if I'm not mistaken, IIML this year. How I wish they had come when I was there! Would've been my dream job!

[Jeroen]

Originally Posted by VeyronSuperSprt

Germans believe that their global processes are more than enough to address the Indian situation. They do not understand or even are in denial to corruption - something that exists with in quite a few areas - granting new dealerships, managing old ones, service quality, spares, etc.

The CEO's are told by the Group HO to just run the company and to see that the Group HO is not bothered with issues in India. CEO's who ask difficult questions are even asked to leave the service and dealer teams alone !!!! Difficult questions in this area are usually not asked by Germans or expats.

2. Many customers escalate to Global Heads of German automotive companies. Nothing could be more pointless than that. If at all, it would have the reverse effect of annoying the local management and you wouldn't have your case sorted.

The expat community is a fairly small one, so I know some of these folks. Not just socially, bumping into one another at an embassy function, but I’m part of several ‘round table’ initiatives where we meet and discuss on how to operate successfully in India. We discuss/present best practices, lesson learned, visit the various companies we represent, compare notes so to speak. It’s purely on a personal basis and typically we would have at least 4-6 different industries represented.

I don’t see a fundamental difference how non Indian companies try to operate in India. Everybody understands fully well the need to adapt to the local market, the local adaptations you might require in your products and solutions, the need for absolute cost leadership etc. etc. Every western company is very concerned about corruption, home based and overseas. Corporate Social Responsibility is a huge thing these days. Maybe not yet in India, but certainly for Western based companies.

How each company goes about operating in India, is likely to be different. Trust me, every international company would prefer to have all of its subsidiaries wherever in the world run with as little oversight as possible. Any HO will get involved when the market is big enough or will be big enough in the years to come to make a material impact on the groups’ total financial result. I would argue that it is actually the local team that needs to ensure they get the attention from HO to be successful in their market. If you can’t convince HO to invest in the market you are responsible for, I don’t think you are doing a particular good job. In reality there is always a lot of tension between what HO does, has the time and budget for and what the local markets require. Having strong ties into your HO is hugely relevant for the local management team.

Even though India is a very large market, with huge volume, in most if not all industries, price points, compared to non Indian markets are low and margis are low. (which might trigger the need to manufacture locally, which requires long term investment and volume).

The customers escalating to HO is an interesting phenomena. Actually, if you do it properly, it could be effective. Bypassing the local management, to your point, is likely to be counter productive. But if you have well documented proof the local organisation just won’t help, and you have a fair ask, it might be worthwhile.

The problem I have seen is that Indians will send an email with 25 five top managers in the to: and another 100 individuals in the cc: It’s just not effective. If you need something done its all about the quality of your communication, not the quantity of people in the to/cc. Unless you take your issues onto social media and all bets are off.

Originally Posted by sunishsamuel

Further, it could also mean the lack of suitable candidates outside the Tech industry in India; in terms of relevant experience, market know how - managing dealers and the network is a different beast compared to managing banking and finance, service based clients.

Argumentative & too emotional - are Indians tough to work with?

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The articles elude to a lack of suitable candidates, as some other members and me were pointing out earlier as well. That’s not necessarily a reflection on India Leadership talent in general, but more a result how things work in a very specific Industry, the automotive, which is relatively young in India.

Argumentative & too emotional? Well, I would add, based on my four year experience:
- Hugely ambitious
- Well educated
- Very hard working
- Very innovative, but not necessarily perfectionist
- Hierarchically orientated

Is that good or bad? Neither. it is what it is, you go to a different country or maybe even a different industry you might find some other factors. You just need to find an effective way of dealing with whoever your counterparts, peers, bosses and or colleagues are.

I don’t think anybody would disagree with me that Indians love to talk and argue. And it works very well in India and no doubt in some countries as well. But for Indians with International ambitions they might have to learn some other traits to be effective in other countries.

Take my home country the Netherlands. If the CEO during an all employee meeting doesn’t get to the point within 30 seconds, his staff will walk away and he is likely to be told he needs to sharpen up his/her act. And it could be any employee that would tell him/her. From a VP to the receptionist, because hierarchy happens to mean zip all in the Netherland.

Jeroen

[VeyronSuperSprt]

Originally Posted by Jeroen

Any HO will get involved when the market is big enough or will be big enough in the years to come to make a material impact on the groups’ total financial result.

True. Exception being a market that is hugely profitable even if small.

Originally Posted by Jeroen

I would argue that it is actually the local team that needs to ensure they get the attention from HO to be successful in their market. If you can’t convince HO to invest in the market you are responsible for, I don’t think you are doing a particular good job.

This is a contradiction to the statement quoted earlier of HO attention being dependent on size (which is true) and not dependent on management competence.

Exception being:

Originally Posted by Jeroen

Having strong ties into your HO is hugely relevant for the local management team.

which hasn't got too much to do with doing a good job.

Originally Posted by Jeroen

I don’t think anybody would disagree with me that Indians love to talk and argue. And it works very well in India and no doubt in some countries as well. But for Indians with International ambitions they might have to learn some other traits to be effective in other countries.

Couldn't have put this better.

[SwiftSD]

Seeing the sheer number of this happening might seems strange but this practice at times could be a part of the company strategy/culture and I do believe and most will agree that this certainly is not due to lack of local talent.


A multinational company can have a dedicated group from which people are deployed into top position into different countries and I have seen Indian people occupying such positions outside India and similarly an expact occupying a top position in India.


There are pros and cons which is again a debatable topic.


Sorry for being a little off topic but thought this could be interesting add to the discussion…After 2000 we have seen as many as 4 coach (John Wright, Greg Chappell, Gary Kirsten and Duncan Fletcher) from a different country for our national cricket team.

[Dhruba_Nazira]

Originally Posted by ajmat

The main two issues are trust and culture.

I strongly believe it, trust and culture are the major factors.
Even though most western MNCs are now okay with a local country/regional head, same is still not true with the Asian companies. It seems most Asian companies, specifically the far eastern companies, are still comfortable only with heads from the countries of origin.

[Jeroen]

Originally Posted by VeyronSuperSprt

This is a contradiction to the statement quoted earlier of HO attention being dependent on size (which is true) and not dependent on management competence.

No, it is both. Getting attention from HO when you have size of your market behind you is relatively easier. But especially if you don’t have the size it takes a lot of effort. Being able to get a large organisation to support you, help out, adjust itself is a major skill set / competence for anybody who wants to make it in any large corporate organisation. Our Global and local talent board would look for such skill, experience and evidence for any candidate on any important function anywhere in the world.

Originally Posted by SwiftSD

A multinational company can have a dedicated group from which people are deployed into top position into different countries and I have seen Indian people occupying such positions outside India and similarly an expact occupying a top position in India.

There are pros and cons which is again a debatable topic.

True, and as the old saying goes, you can’t argue with success. I can name any number of companies who have been hugely successful with very different models. But on an individual level on who you choose to work for, there could be a preferred option. I know which one I prefer!

Originally Posted by Dhruba_Nazira

I strongly believe it, trust and culture are the major factors.
Even though most western MNCs are now okay with a local country/regional head, same is still not true with the Asian companies. It seems most Asian companies, specifically the far eastern companies, are still comfortable only with heads from the countries of origin.

True, I can think of several Chinese companies who never ever let any non Chinese anywhere in the world take any material decisions. Over the years I have interviewed quite a few (Non Chinese) people who worked for these Chinese companies in pretty senior positions. I was always amazed how little formal mandate and autonomy they really had. When I interview senior executives one of my question is often something along the line like:

i want to understand you level of autonomous thinking and acting. Give me a concrete example where you overstepped your formal authority/mandate in the company. You took a decision because you felt it was in the companies best interest and the company and powers that be, ultimately let you do it, abide to it and delivered upon your decision.

It’s partly about individual courage and autonomy, but it is also about the culture and empowerment in a company. Those candidates working at Chinese companies always struggle big time with this question. When you drill down it becomes very clear that, even though they have senior positions, very fancy titles (everybody is at least VP), big salaries, but they can’t really represent the (Chinese) company and take decisions.

There might be other Chinese companies than I’m familiar with obviously.

Jeroen

[rrsteer]

Originally Posted by GTO

Microsoft India is headed by Karan Bajwa
Nestle - Suresh Narayanan
P&G India - Shantanu Khosla
IBM India - Vanitha Narayanan
Coca Cola India - Venkatesh Kini
Citi India - Pramit Jhaveri
Apple India - Maneesh Dhir (until very recently)

None of the above companies require huge capex spend. Are there any MNC's with huge capital inlays with long investment gestation periods that have local CEOs? I'd be very interested in looking at that data.

My hypothesis is that MNCs in businesses that required huge capital investments to enter and have long gestation periods for those investments will typically be very conservative in terms of management control. And hence will typically opt for a leader with very close connect and alignment with management at the HQ.