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Business News/ Companies / Jumping ship: When a top executive leaves for a rival firm
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Jumping ship: When a top executive leaves for a rival firm

COO Sanjiv Kapoor quit SpiceJet to join Vistara as its chief strategy and commercial officer the very next day. We ask experts if that was the right thing to do

A file photo of Sanjiv Kapoor. Premium
A file photo of Sanjiv Kapoor.

Chief operating officer Sanjiv Kapoor quit SpiceJet to join rival Vistara as its chief strategy and commercial officer the very next day. We ask experts if that was the right thing to do, leaving a company to join a rival immediately.

Move part and parcel of any sectorK.G. Vishwanath, partner, Trinity Aviation Consultants

CXOs and top executives are an integral part of the strategy decisions in organizations and are privy to many such confidential information. For them to join competition immediately after quitting their organization may be risking such strategy decisions becoming known to rivals in the short term," says Vishwanath, a partner at consulting firm Trinity Aviation Consultants Pte. Ltd of Singapore.

“Having said that, in today’s competitive environment, all market participants are generally aware of what competition does. What drives success is how particular organizations implement such strategies," explains Vishwanath, who is a former vice-president (commercial strategy and investor relations) at Jet Airways (India) Ltd, the country’s second-largest airline by passengers carried.

He said in the Indian aviation environment, everyone has known how IndiGo runs its business and how its strategic decisions influenced profitability, but no one has been able to replicate it for over 10 years. IndiGo, run by InterGlobe Aviation Ltd, is the largest and most profitable airline in the country. “So this is not just one individual, but how the whole organization backs such strategy roll-outs and the culture of every organization. It also depends on the relative position of such companies to be able to create success with the help of competitive information," says Vishwanath.

Every industry has such instances of top executives being poached and over a period of time, each organization is able to overcome the void through an effective replacement, he points out. Eventually the success of every such move will depend on how such a CXO is able to adjust to the culture of a new organization and how he or she gets accepted in the new environment to be able to be more effective, he says.

Also, executives who have reached CXO levels in organizations do so because of their professional and personal integrity, and they will seldom compromise on those values, says Vishwanath. “So, for me, such moves are part and parcel of any industry dynamics and does not give any short-term or tactical advantage or disadvantage to any company. In the long term, it is the successful implementation of strategies by the individual along with the team that he works with, which will make a telling difference," he adds. P.R. Sanjai

Avoid acrimonious partings—Padmaja Alaganandan, leader (people and organization), PricewaterhouseCoopers

Top leaders mould the DNA of an organization and pour a lot of themselves into the companies and teams they create. Managers, on the other hand, drive efficient utilization of resources in execution, playing a lesser role in shaping vision or culture. Departure of a manager may not cause many long-term ripples; however departure of a leader who has played a role in shaping and growing an organization—especially to join a competitor—would be a wrench, and be likely accompanied by strong and bitter reasons, including investor pressure or perception of unfair treatment meted out," said Alaganandan, leader (people and organization) at consulting firm PricewaterhouseCoopers Pvt. Ltd.

“We could see a lot of bitterness in such a situation, along with—in some extreme cases—vindictiveness, including by trying to poach senior talent, undercut to win business, etc. However, leaders of integrity have managed to stay away from such actions and conduct themselves professionally, even as they no doubt have feelings of being wronged within," she adds.

“What are the implications for organizations and leadership in such a situation? A leader needs the humility to realize he or she is dispensable. The hallmark of true leaders is to have created an organization and teams that will sustain and grow beyond them. The departing leader needs to be able to recognize the organization as a separate entity in its own right and to distance him or her even during the intervening period prior to the actual departure. Secondly, organizations, while mourning the departure, must start preparing for the next level of leadership to start taking over. Often, a quandary at this stage is whether to bet on talent from within (even if not fully ready) or look outside for a replacement. While there is no simple answer here, the former approach—along with adequate governance and coaching—can help strengthen culture and signal a message of priority to internal career progression," says Alaganandan.

“Both sides can do well to avoid acrimonious partings and their aftermath, as they end up being unproductive and destroy value on both sides. Corporate memory is short and life moves on; holding on to the past never helps," she says.

“A true leader is missed more so in times of difficulty, but the teams and leader pipeline he or she developed will see the organization through," adds Alaganandan. Pooja Sarkar.

No moratorium on joining a rival—Himanshu Rai, dean, MISB Bocconi

Our tendency to look out for something better is but natural," says Rai, dean of MISB Bocconi, an international management school in Mumbai. However, when a top executive quits to join a rival company, stakes are high if the industry is driven by innovation and/or data, and is highly dynamic or sensitive to policies, he says.

“The impact would be very limited if the industry is a mature one, and if the concerned organization has followed robust knowledge management practices that include documenting even the tacit knowledge residing in the minds of its key people," he adds. For these reasons, Rai says he does not think there should be a moratorium on joining a rival company. However, there could be other concerns. “People might follow the top professional to the new company," he explains.

Rai agrees the top executive also needs to be careful about such decisions. “As for a top executive’s image, there are two aspects to consider: personal integrity—one’s ability to lend one’s talents and motivation to the company to the extent possible—and achievement, the actual work done under him/her. If the two aspects come in conflict, in the long run, the industry identifies such a person as one who works more for self rather than organizational goals," he says.

Companies need to be disciplined in announcing these exits as well, suggests Rai.

“I believe that people work not just for an organization, but also for their superiors. It is better to let them know about exit plans. If the organization is listed on the markets, people at large are the stakeholders and from an ethics perspective, I would say it is better if they know beforehand rather than on the last working day. At the end of the day, you are answerable both to your stakeholders and to your own conscience," he says. Amritha Pillay

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Published: 04 Nov 2015, 12:13 AM IST
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