India's boom helped create a shortage of talented leaders. IT giant Infosys took bold actions other Indian companies would be wise to follow
Two years ago, leaders at Indian IT giant Infosys (INFY) realized that the company faced a leadership crisis. In the midst of unprecedented growth, people were being rushed into jobs for which they were unprepared. According to Nandita Gurjar, senior vice-president and group head of human resources at Infosys, many Indian organizations today face a similar talent problem.
"In part because of the phenomenal growth this country has seen over the past 5 to 10 years, people started to get promoted before their time," Gurjar says. All too often, the result is the perception on the part of the jobholder that they are not empowered. While they may have authority, they lack the experience and confidence to be true leaders. "Retaining those people is very hard. Attrition is high," she says. And why wouldn't it be in a growing economy with plenty of employment opportunities elsewhere?
The Infosys reaction was bold and swift. In 2007 it created an 18-month initiative that reorganized the business into new roles and new structures. Job requirements were revised and human resources created new job descriptions to reflect the new requirements. For the first time this included years of experience, role maturity (how long the incumbent has been in the position), and performance. "You need a lot of courage to take this stand," says Gurjar. "If you tell people they must stay longer in a role, they will just walk to another organization."
That's why the initiative's communications component was so important. During the reorganization, up to 15% of the employees were transferred to positions with less authority. "We told them, 'you are just not ready. We are setting you up for failure by keeping you in the role,'" says Gurjar. "It took us months to communicate that and convince the communication champions at all levels that this was a good idea." Line managers, she says, had to communicate the message and get buy-in from the line. That had to be handled carefully. "This was the largest change-management initiative in our organization," notes Gurjar. While it may be too early for measurable results, Infosys is the only Indian company on the BusinessWeek.com/Hay Group 20 Best Companies for Leadership. Attrition is lower than ever, says Gurjar.
Sustainability Is Key
Infosys handles leadership development better than most other Indian companies, according to Jacob Peter, a consultant in Hay Group's New Delhi office.
"A leader's greatest value is in providing clarity, setting the standards, and giving constructive feedback," he says. Leaders in India need to understand that this—and not merely barking out orders—is their prime role. That's the difference between management and leadership. But a lot of leaders still don't get it, says Peter. "They look for the quickest way to get the project out. But they're not thinking about the process of communicating context and clarification to subordinates. That's the hard work of leadership."
This reluctance might come from an economy that began liberalizing only recently. According to Peter: "Until the early '90s if you got a license to manufacture a product, you were set." Supply was constrained and demand wasn't an issue, he says. So the lack of leadership didn't affect companies' balance sheets in a significant way.
Another factor that might be contributing to a leadership crisis: Until very recently, Indian organizations were mostly hierarchical. Now they're getting flatter. According to Peter, many traditional leaders are simply resistant to change. Perhaps it's because of this top-down approach that leaders demand control and de-motivate their people, he says. Now that these organizations are competing in the global market, Peter believes that their leaders must adopt varying styles of leadership—or possibly face dire consequences.
Confronting a de-motivating climate
The data seems to back up Gurjar's and Peter's perceptions about Indian leadership. In a 2009 Hay Group review of 1,249 leaders from high-profile organizations operating in the Indian market, Hay Group found that more than 60% create a de-motivating climate and do not engage those they lead. According to the research, only 18% create an engaging climate that encourages high performance. If enough of today's leaders fail to motivate the people who work for them, how will their organizations sustain even conservative growth estimates? How will they keep employees around long enough to develop them into effective leaders?
Decades of Hay Group research shows that the right climate can increase a team's bottom line performance by up to 30%, as well as reduce absenteeism and attrition. Slightly improving an organization's climate can have a huge impact.
Peter believes sustaining profitable growth is one of the biggest challenge facing Indian businesses. "If a majority of your employees work in a de-motivating climate, how sustainable is your company's performance? As a CEO, I would be very worried."
Infosys, he says, is doing a lot. "It is walking the talk when it comes to investing in developing its leaders." The company has set up what is arguably the world's largest corporate training facility at its 270-acre campus in Mysore. Money, effort, and time are invested in developing leaders. "That's one reason why Infosys can compete globally," says Peter. "They have a talent pipeline that can feed this growth."
What puts Infosys ahead of the curve is more than just the good-news story behind it. With Infosys leading the way for Indian organizations committed to world-class leadership, Peter offers some advice for other enterprises that want to create better leaders:
Understand the organizational context. "Be clear on how the organization's current and future business strategy will impact the organizational structure and its talent needs," he says.
Think about demand. "Ask what are the business-critical roles for my organization—what kind of roles is the future going to bring?" suggests Peter. For example, if your organization is planning an aggressive international expansion, what kind of new skills or competencies would the company demand from its people?
Think about supply. Take a long, hard look at the current state of talent in your organization. Where are the critical gaps? Who are the people in line to take over the critical roles in the future? How far are they from being ready? Where is your talent pipeline most likely to leak? Keep reviewing the supply situation consistently.
Aggressively create and implement a "talent risk management" strategy. This should mitigate any demand-supply imbalances in your talent pipeline.
Provide incentives to leaders in your organization who not only perform, but create committed and energized teams, too.
Above all, says Peter: Ensure that leadership development and talent management remain firmly on the agenda of the CEO and the board.
Perhaps because of a culture that puts a premium on education, leaders in India excel at analytical thinking and designing solutions to problems that face the Indian marketplace. This had led to nearly 20 years of growth. But to reach the next level, more is needed. "To succeed in the next phase of sustainable global growth, they must look at leaders who have a clear insight into what drives their people and invest time and energy in creating an environment where their people are encouraged to challenge and push themselves," says Peter. As more Indian organizations take this step, Indian employees should be energized, engaged, and ready to step into a magnificent destiny that's truly theirs for the taking. There's just no other way to sustain the growth in a global economy.
— With Hay Group