Firms hiring CEOs with teams for faster results

Firms hiring CEOs with teams for faster results
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First Published: Mon, Jun 02 2008. 11 05 PM IST

Business sense: Executives at a bank in Mumbai
Business sense: Executives at a bank in Mumbai
Updated: Mon, Jun 02 2008. 11 05 PM IST
New Delhi: In February, when Ratnesh Kumar, former managing director and head of research at Citigroup Inc., joined local investment bank Anand Rathi Financial Services Ltd as its chief executive officer (CEO), it wasn’t the end of the bleed for one of the biggest banks in the world.
Business sense: Executives at a bank in Mumbai
Kumar’s colleague Rajesh Mayani, who was director of institutional equity sales for almost four years, and Narayan Mulchandani, director of India sales based in Hong Kong, waited barely a month before joining him.
Six months ago, when former ABN Amro Bank executive vice-president and country head Ramesh Sobti joined IndusInd Bank Ltd as managing director and CEO, he brought others along. They included Paul Abraham, who joined as the chief operating officer, K.S. Sridhar as chief risk officer, Sumant Kathpalia as head of consumer banking, Suhail Chander as head of corporate and institutional banking, and Anesh Behl, who joined as the head of insurance business.
An increasing number of firms, especially start-ups or those in relatively new sectors such as retail, or even more well-established ones such as banks, are seeking to hire entire teams from rival organizations rather than just bringing on board a top honcho.
“We have seen a significant increase in the trend of key people moving along with their teams, especially in the financial services, print and electronic media, retail and telecommunications sectors in the last eight to 10 months,” says Charul Madan, partner, Executive Access India Pvt. Ltd, a leading executive search firm. “Such teams are a huge asset as they mean quicker turnaround time.”
The Aditya Birla Group has hired a clutch of executives from ICICI Prudential Asset Management Co. Ltd or ICICI Prudential AMC, for its financial services and asset management business. Ajay Srinivasan joined as CEO of Aditya Birla Group Financial Services from Prudential Asia, where he served as CEO of fund management.
The group also roped in Pankaj Razdan, former CEO of ICICI Prudential AMC as its financial services business deputy CEO. Kalpen Parekh and Naveen Tiwari from ICICI Prudential AMC joined Birla Sun Life Asset Management Co. Ltd to co-head its retail sales business, while their colleagues Ashok Suvarna and Molly Kapoor joined as chief operations officer and as head of customer service, respectively.
Headhunters say many companies, especially start-ups or firms entering a new market or business segment, seek to hire entire teams because they come with experience that cuts down on the learning curve.
Says James Agrawal, head, BTI Consultants India, an executive search firm, “Clients have been increasingly looking at hiring an entire management team... The objective is to put in place an experienced team from day zero and begin operations at the earliest,” says Agrawal, who recently placed four senior executives from the same team in one of the leading asset management firms.
Experts also point out that in today’s competitive environment, when there is constant pressure on companies to keep their shareholders happy, a team that can start producing results soon helps.
“Having a team that is proven and familiar makes the task (of keeping the balance sheet in order) easier,” says N.S. Rajan, partner and national head of human capital at Ernst and Young Pvt. Ltd. Besides, it is assumed that people who move in teams are also likely to have a good working relationship, which is good for the company as a friendly team is likely to be more productive, say experts. “Teams that have worked together in the past have a greater degree of success in a new domain or environment,” says Rajan.
Ananth Iyer, director, Shilputsi Consultants, says although most clients don’t spell it out, it is understood that when a key official is placed, the candidate will bring along a few others with him. He also points out that many a time, candidates themselves want to move in teams.
“We are seeing an increasing number of executives offering themselves and their close people to be placed,” says Madan, who recently placed two teams in two companies that he doesn’t want to name.
Moving in with a team, according to headhunters, also allows candidates more room for salary negotiation. “Candidates joining as part of a team usually get a higher compensation for multiple obvious reasons,” says Madan.
In the case of team deals, executives on an average can negotiate hikes in the range of 30-40% compared with a hike of 25-30% otherwise. In addition, they could get an assured bonus for the first year and an equity stake, or a combination of both in some cases.
On the search firm side, team movements mean lesser effort and higher fees. On an average, firms end up getting 33% of the lead candidate’s cost to company, in addition to fees for other team members, which could amount to anywhere between 15% and 20% of their gross package, without really having gone headhunting for the rest.
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First Published: Mon, Jun 02 2008. 11 05 PM IST