Infosys HR Director Mohandas Paiís resignation set off alarm bells ringing in the world of Indian IT. Pai explains his reasons for leaving to Forbes India
You played a significant role in the bringing the next generation leaders on the Executive Council (the apex body that runs the operations of Infosys). Will your leaving have any impact on that process?
The project of bringing in younger leaders on the EC and giving them more responsibility will continue, it is now part of the formal structure of the organisation. The reason I pushed for the concept was that you have to give these leaders an enterprise view of the business. So far all they had was the business unit view. When we discuss thee business - we look at it from the enterprise view but they would look at it from their unit’s view. So that was to be expanded. Plus we needed to start handing over responsibility to the next generation leaders and this was a good platform to induct some of them. The Board needed to look at the next generation leaders to understand who among them could be the next CEO or COO.
Has it worked?
I would say it works fairly well, but these things are fairly complex. For people who are still used to thinking about their own business units to start thinking of the organisation is a complex learning process. But I think the new leaders have internalised the process. The EC structure will be expanded in time and more leaders will be inducted. Some of them might even have to step down because it is still linked to performance of the individual. All that will be part of the restructuring that is going on and will be clear once the process is completed.
With three people leaving the Infosys Board (K. Dinesh, Pai and N.R.N. Murthy) will there be new faces on the Infosys Board?
My personal view is that the Board needs to be smaller; we are a very large Board. 15 people on it. Part of it is historical - because there were seven internal members, there had to be an equal number of independent directors too. But in my view it should be more compact, about seven to nine. I have discussed this with the Board too. When the Board is too large, it means many more discussions, more handling etc. I personally think there should be not more than 2-3 people internally on it. It has pros and cons. There are a lot of people internally who have the aspiration to be on the Board and it is never easy to manage that. In this company there is also a lot of precedence to that. But the number of internal people will now come down to three, it is up to the Board to decide whether they want more people from inside or not.
Why did you resign?
I have been on the enterprise side for 17 years, so even though I’m not old in age I’m certainly old in experience. I strongly believe that we need to bring in the next generation of leaders now to take over our responsibilities. I could have stayed on as a Board member but there are people inside who have the aspiration to be on the Board and my staying on would have blocked that.
Plus when the Board draws up succession planning - they would have to consider me for the CEO and COO role. I don’t have aspirations to be the CEO, so if I had turned it down it would not have been right. If they didn’t offer it to me then it would be highly awkward for me.
So are you leaving because of your principles?
I wanted to see to a corporation which was run by younger leaders when the founders were still around. It has been my dream to see a non-founder run the organisation before all the founders retire. I have been saying this to the Board as well. I could have stayed on till 60, but I felt that was not right. My leaving now will accelerate the process for someone younger to take over my role and perhaps be in the running for CEO/COO.
There are four reasons why I am stepping down -
1. My personal desire to step down and make way for younger leaders.
2. Murthy is retiring in August, and it has not to do with my personal equation with Murthy. But when he leaves it will bring in a new management and a new era and I feel that other leaders should be part of that era.
3. My desire to stand for my principles. I strongly believe that every so often there should be a change in the organisation and that new blood should be inducted.
4. I have completed five years in my present role, I came to this new role (HR) five years ago and it is the right time to go.
It’s a combination of all the factors. Everything came together at the right time.
But Kris and Shibu are still here and they are older to you?
I can’t speak for anyone else, I stand for my principles. There is a view that handing over the corporation to someone younger carries a risk, and I don’t deny that. But 4-5 years later when the founders retire, this will be a bigger corporation and then the risk will be greater. The Board has to therefore start the process now and the person who comes in can then have a longer tenure.
When did you first tell N.R.N. Murthy?
I took this decision (to leave) one year ago, about nine months ago I told Murthy. We were talking about succession planning and talking about the next ten years at Infosys. I told Murthy that I do not have aspirations to be the CEO and that I wanted to leave. Murthy was very upset and very unhappy to hear that. He said, ‘Mohan, you have to stay to take Infosys to the next level’. He then informed the Board of my decision and I spoke to the head of the nominations committee who also told me that I should stay back. But I was firm. In January this year I told the Board that I was going to leave and that I had taken my decision. The Board left it to me to choose the time and the manner in which I wanted to leave. That was to be my decision entirely.
In January I had decided that I would step down by the next Board meeting which was to be on April 14th. I didn’t tell anyone, not even Murthy. Only my wife and two boys knew. I deliberately held it so close to my chest, because once I tell anyone then that leads to speculation, the news leaks and then the media comes to know. I didn’t want it to be this way.
On the night of 14th, I sent an email to Murthy, who is my mentor and Kris who is my reporting boss. Murthy saw it on 15th morning at 4.45 am. He called me at 6.45 am and asked me if I was certain, if I wanted to re-consider. I said no, my decision was final. At 7.45 am the Board met to discuss the quarter results. After the plenary session, Murthy announced that he had received my resignation, he applauded me, talked about what I had done for Infosys and then invited me to address the Board. As I started speaking, I choked. I started discussing the time I had come to Infosys, and how my father was in coma. But I gave all my time to Infosys, the guilt of that time and my emotions about my father washed over me and I couldn’t speak, It was a very emotional moment for me. After that Dinesh spoke about his resignation.
After which we had a 15-minute discussion on the salary increments that were to be given in this quarter. The Board had to be briefed about it. Which is why the results got delayed and there was a 15 minute delay in sending it to Exchange.
The decision to leave was not sudden, only the communication was like that. I had known all along that I will leave on April 15
What about the current restructuring? Were you offered a different role?
I was deeply involved in this restructuring. Shibu, me and Kris have been working on it for the past six months. At that stage they knew about my decision to leave.
There are concerns that Infosys performance is slipping....
The Board is concerned and watching the situation very closely. The last three-four years have been very challenging for us, there are competitive pressures on the leadership. The Board is asking why Infosys is slow in reacting? Our largest competitor is growing fast and smaller ones are also closing the gap.
Do you have any views on the choice of the next Chairman?
I’m fully in agreement with the Board on the next Chairman, I’ve been a part of that process. And I’m confident that the Board will select the best candidate. I have no difference in view over that.