The avoidable spectacle of CEOs taking a jibe at the previous management

During the April-June quarter, Wipro saw a sequential decline in employee attrition, compared to more people leaving at Infosys Ltd. and Tata Consultancy Services Ltd.

Govil spelled out the steps and concluded on a sanguine note, saying that attrition rates should continue to decline.

It was here that Wipro’s chief executive Thierry Delaporte made a remark that, until now, went unnoticed but gives an insight into the boss’s thinking.

“The team has done an incredible job," said Delaporte, adding “Maybe in the past, we (Wipro) never paid enough attention or spend enough time to explain (to our employees) in which way we are different."

Wait. What did the CEO just say?

Your writer had to hear the less than three-minute question and answer more than a few times to be sure of what actually played out.

Delaporte’s slip-up was bizarre.

Instead of answering Wipro's performance against its rivals, Delaporte, who completed two years at the helm, actually took a dig at the past performance of the company.

It’s important to mention that Govil has been Wipro’s HR head for over a decade and comment on the past people's policies is a commentary of his stint.

This statement made Twich+ question why and what made Delaporte talk about Wipro’s past.

Delaporte is not the first boss in the technology services industry to have made a disparaging remark about the company’s past.

In 2016, Infosys’s then-boss Vishal Sikka had come under fire as the company saw a string of senior management exits. In an analyst meeting on 26 August, Sikka, without provocation, suggested that a few of the leaders were asked to go on account of underperformance.

“I am also aware that many of you believe that certain recent leadership attrition has resulted in stretching our executive leadership bandwidth. I have to candidly say that some of the exits were related to performance," said Sikka.

At Cognizant Technology Solutions Corp., Brian Humphries has highlighted the shortcomings of the earlier management on more than one occasion. In a post-earnings interaction with analysts on 31 July 2019, less than six months after he was anointed as the successor to Francisco D’Souza, Humphries said the company did not have some of the right set of people (client partners) and which will be corrected. Humphries again faulted the earlier leadership, when in a post-earnings interaction on 28 July last year, he expressed his displeasure with the company failing to execute the integration of a company it acquired (TriZetto).

It can be argued that the three examples merely reflect a frank assessment by the leaders. But bosses don’t need to be reminded that this candour is unwarranted as it only alienates a CEO from his colleagues. Worryingly, it also suggests that a CEO faces an insurmountable challenge as everything is broken at a company.

It is a no-brainer that an external CEO is brought in to fix a company when it is struggling. A new CEO, invariably, sets out his own strategy and assembles his own team to execute it well. Now, by your writer's assessment, most CEOs by nature are narcissistic. It probably is the reason why they can climb up the corporate ranks and become leaders.

But instead of pointing to the shortcomings of the past, a smart leader would let the company’s performance speak over everything else.

This is something that Infosys’s incumbent boss Salil Parekh has done over the last four and a half years. When Parekh took over in January 2018, Infosys was thrown into chaos after the abrupt resignation of Sikka. But during his stint, Parekh stayed away from talking about the past and instead dwelled on the present.

To Delaporte’s credit, Wipro has done well under his watch: The company reported the fastest annual revenue growth of 27.3% among the five largest software services firms last year.

But now the early turnaround is losing momentum: Wipro’s sequential dollar revenue growth of 0.5% during the April-June period was entirely brought by the acquisitions making many analysts question if the organic growth engine was sputtering. Profitability tanked 200 basis points sequentially to 15%, the lowest.

Agreed, the operating margin at both TCS and Infosys took a hit. But this was because TCS and Infosys booked salary increases during the first quarter and both the companies expect margins to improve during the course of the year.

Wipro will give an annual salary hike to employees from September and will book the expenses in the second and third quarters, thereby limiting its ability to significantly improve its operating margin.

In all likelihood, it was probably this underperformance that made Delaporte break the unwritten rule of leadership and take a dig at the past.

Back in 2017, when Rajesh Gopinathan succeeded Natarajan Chandrasekaran, your writer asked the TCS boss how he sees himself working as a CEO. Gopinathan likened his role at the country’s biggest software services company to that of a conductor leading a musical ensemble. “The orchestra is trained to follow the conductor. But it is not dependent on the conductor," said Gopinathan.

Surely, Gopinathan and other CEOs do not act like Terence Fletcher (the fictitious character in the movie Whiplash).

But the last thing expected from a boss is to snub the past performance. It is only in the interest of both the CEO and the company.