Expats making way for local talent

Expats making way for local talent
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First Published: Sun, Sep 14 2008. 10 34 PM IST

Nigel Harwood. Photo: Sebastian D’Souza / AFP
Nigel Harwood. Photo: Sebastian D’Souza / AFP
Updated: Sun, Sep 14 2008. 10 34 PM IST
In 2006, when the Rs1.39 trillion (by turnover) Reliance Industries Ltd made an ambitious entry into the retail business, it hired expatriate talent to steer vital functions such as supply chain management, store operations and merchandising. By the time Reliance Retail Ltd took off, it had hired 50 executives from leading retail companies across the globe. These executives, called subject matter experts or SMEs, came from mature markets such as the US, UK, France, Germany, Australia and Singapore and had at least 25-30 years experience in the retail business.
Reliance’s prominent hires included Charles Snyder from Wal-Mart Stores Inc., John Peterson, who was then working with US-based consumer electronics retailer Best Buy Inc., and Gary O. Laughlin, who came from another leading US-based consumer electronics retailing company, Circuit City Stores Inc.
Nigel Harwood. Photo: Sebastian D’Souza / AFP
Reliance chose to hire expats for these functions because there was no ready talent available within the country, at least not what it took to launch a retail business in scale. “Since the retail industry is in the nascent stage, there is a lack of local expertise. We, therefore, had to look out for bringing in required skills and competencies,” says Bijay Sahoo, president and chief people’s officer, Reliance Retail.
In the past two to three years, the expatriate executive became visible across sectors such as retail, telecom and aviation, which required efficiencies in systems and processes and best business practices.
The situation, however, is changing. Reliance, for instance, is gradually disengaging itself from expatriate executives. According to Sahoo, around 30 expat executives have returned to their respective countries in the past three to four months.
Nigel Harwood Andrew Levermore
Hired by: Kingfisher Airlines Ltd Hired by: HyperCity Retail India Ltd
When: August 2005 When: July 2004
As: Chief operating officer As: Chief executive officer
Came from: Airbus, where he was head of sales for India and Asia Came from: Makro, a chain of self-service wholesale stores in South Africa
Quit in: July 2006 Quit in: August
Replaced by: Kingfisher chairman Vijay Mallya, whose leadership team has been steering the airlines since Replaced by: Levermore is overseeing the search for his replacement and says he will prefer an experienced Indian retail professional
Maunu von Lueders Bruce Ashby
Hired by: JetLite (India) Ltd Hired by: IndiGo, run by The InterGlobe Aviation Pvt Ltd
When: April When: July 2005
As: Chief executive officer As: Chief executive officer
Came from: Finnair Plc, Finland’s leading airlines company Came from: US Airways
Quit in: July Quit in: August
Replaced by: Search is on Replaced by: IndiGo appointed its director Aditya Ghosh as its new president; he will be looking after operations till Ashby’s replacement is found
These include Snyder, Peterson and Laughlin. Around 20 more are still with the organization but indications are that their contracts will not be renewed.
“These people have been associated with defining processes such as sourcing, merchandising, supply chain, store operations and services, identifying technologies and mapping the processes to technologies,” says Sahoo. Since their role included not only setting up and launching these functions but also mentoring Indian executives, Reliance Retail now has a local team that can run the businesses without handholding. “Our managers are now ready to handle things on their own,” says Sahoo.
Andrew Levermore.
This doesn’t mean expatriate talent isn’t finding its way into the country at all. Some companies, in fact, are increasingly resorting to international searches, especially for top and specialist positions. “The criticality of top-level hiring is egging firms in India to cast a wider net to find the best people,” says K. Sudarshan, managing partner-India, EMA Partners International Ltd, a global executive search firm. “They are increasingly trawling the globe for leadership talent and so, the hires could be anybody, from expats, returning Indians, people of Indian origin to local managers.”
But clearly, in some prominent instances, local talent is winning the day, particularly in sectors that are showing signs of maturity—and where local managers have displayed a learning curve. Human resource (HR) experts say the reasons may vary from the high cost of expat compensation packages, cultural differences and inability to adapt in a few cases to the increasing availability of Indians returning to work in the country.
Whatever the reason, Reliance Retail is not the only Indian company handing the reins of businesses set in motion by expatriates to local managers. Aditya Birla Retail, the retail arm of the Rs1.24 trillion (by turnover) Aditya Birla Group, did not hire another expat after Andrew Denby, CEO of its supermarket division, quit in 2007.
Maunu Von Lueders. David Hartley / Bloomberg
It handed over charge to its then CEO, Sumant Sinha. The current CEO is Thomas Varghese, an Indian, who was earlier the senior executive president and head of group company Grasim’s pulp division.
The CEO of the K. Raheja-owned HyperCity Retail India Ltd, Andrew Levermore, is moving on in December after four-and-a-half years in India, and a search for his successor is on. Says Levermore, “The first preference would be given to an experienced retail professional of Indian origin”.
Similiarly, Daryl Green, former CEO of Tata Teleservices Ltd, who joined the telecommunications company in 2005, was succeeded by Anil Sardana, former executive director at Tata Power Co. Ltd, in August 2007. Green was the only expatriate CEO in the telecom industry before the government allowed foreign executives to head Indian telecom companies in March last year.
Kingfisher Airlines Ltd is now being run by chairman Vijay Mallya and his leadership team after COO Nigel Harwood moved on about two years ago. Another carrier, IndiGo, run by InterGlobe Aviation Pvt. Ltd, appointed its director Aditya Ghosh president after its first CEO, Bruce Ashby, quit in August. Ashby had joined the company in July 2005, a year before the carrier was launched. Ghosh, a board member, will manage the airlines till it finds another CEO.
The Naresh Goyal-promoted Jet Airways (India) Ltd, which has more than 15 expats in the senior management team, is also looking at running the airline on local talent. “These senior (expat) staff are all employed on a contractual basis and are accountable to run the operations as well as groom promising local staff to take over from them in three to five years,” says Sudheer Raghavan, chief commercial officer. “The programme is well under way in Jet Airways.”
Chief executive officer Maunu von Lueders of JetLite, the low-fare subsidiary of Jet Airways, quit after just three months at the helm.
Nigel Harwood Andrew Levermore
Hired by: Kingfisher Airlines Ltd Hired by: HyperCity Retail India Ltd
When: August 2005 When: July 2004
As: Chief operating officer As: Chief executive officer
Came from: Airbus, where he was head of sales for India and Asia Came from: Makro, a chain of self-service wholesale stores in South Africa
Quit in: July 2006 Quit in: August
Replaced by: Kingfisher chairman Vijay Mallya, whose leadership team has been steering the airlines since Replaced by: Levermore is overseeing the search for his replacement and says he will prefer an experienced Indian retail professional
Maunu von Lueders Bruce Ashby
Hired by: JetLite (India) Ltd Hired by: IndiGo, run by The InterGlobe Aviation Pvt Ltd
When: April When: July 2005
As: Chief executive officer As: Chief executive officer
Came from: Finnair Plc, Finland’s leading airlines company Came from: US Airways
Quit in: July Quit in: August
Replaced by: Search is on Replaced by: IndiGo appointed its director Aditya Ghosh as its new president; he will be looking after operations till Ashby’s replacement is found
HR managers say the main reason for hiring expats is the lack of critical industry competencies in India—and some sectors still face this. “Bringing in experienced talent helps in enhancing speed in launching a business and cuts the learning curve. And this is why companies are scouring the globe to get the best talent,” says Krish Shankar director, HR, Bharti Airtel Ltd. “Also, expat hires bring with them international exposure, best practices and operational excellence, which the industry needs now.” Bharti Airtel has a number of expat employees, including Norman Donald Price IV, director, technology, and a member of the Airtel management board; David Nishball, president, enterprise services; Tina Uneken, director, alliance and corporate responsibility, and Carol Borghesi, director, customer service.
Bruce Ashby.
An August study by HR consulting firm Mercer, which surveyed 40 firms—including Indian private sector companies, public sector firms, wholly owned foreign enterprises and a few joint ventures with international firms—found that 18 of them thought cost control was a major challenge in expatriate hiring. “Organizations are cognizant that international assignments—and, in particular, those which include family relocation—call for significant investments,” says Gangapriya Chakraverti, business leader, information product solutions, Mercer India.
“Companies are also looking for ways to reduce costs where possible by hiring local staff instead of making an expatriate appointment by reducing or eliminating benefits and allowances associated with international transfer or by looking for alternative ways to address pressing business needs,” she says. “Thus companies have been increasingly relying on short-term assignments as an alternative to long-term assignments.” “Some expats come on a retirement posting or for novelty value,” says Ganesh Shermon, partner and head, human capital advisory service, KPMG India. “Not always do the best come and they cost a lot.”
A survey of expatriates across four continents by HSBC Holdings Plc. says that though India comes at the top in terms of earnings and savings and is third in terms of a luxurious life for expats, it ranks the lowest when it comes to longevity, which measures the score of a country in terms of attracting and keeping, expats. The Netherlands, Germany and the US are the three countries that scored the highest in terms of longevity . Reliance Retail’s Sahoo says, “Also, these executives came to work here for a defined time frame. Even if they bring their families, most of them are looking at getting back.”
“The failure of expats has more to do with their inability to adapt than the Indian management style which, though formal, is far warmer than American management,” says Levermore. However, the 45-year-old South African, who was earlier with the chain of self-service wholesale stores Makro in South Africa, cautions that India is very different from any other country and it can be quite difficult for a first-time expat assignee. “The chances of succee ding are more in the case of a second- or third-time expat assignee,” says Levermore—for him, it is the third assignment in India. He adds that it would be useful for companies to check if the expatriate and his family have clearly demonstrated adaptability (having lived, studied or worked in several countries) earlier.
At the end of the day, it’s about the expertise a company needs, and affordability. Roopen Roy, managing director, consulting, Deloitte and Touche Consulting India Pvt. Ltd, explains it: “It is not about expat but expert and the expert can be from any geography.”
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First Published: Sun, Sep 14 2008. 10 34 PM IST