Copyright 2016, Forbesindia.com

In the old days, you could buy talent with money: Damien O'Brien

Damien O'Brien, chairman of executive search firm Egon Zehnder, talks about the evolution of company boards and identifying new leaders


g_103693_damien_o_brien_280x210.jpgImage: Amit Verma

Last August, when Vishal Sikka, CEO of India’s second largest IT Company, Infosys, resigned abruptly, the company had a tough task at hand—to quickly find a replacement. To do that, Bengaluru-based Infosys had turned to Zurich-headquartered Egon Zehnder, an executive search firm established in 1954 and ranked sixth among the US’s best recruiting firms by Forbes. Egon Zehnder didn’t disappoint, and soon helped zero in on Salil Parekh as the new CEO.

The firm has been in India for 22 years, with offices in Mumbai, Bengaluru and New Delhi. In the past it has helped companies including Infosys, Wipro and Microsoft find their top leadership.

In an interview with Forbes India, Chairman Damien O’Brien, who is based in Zurich, talks about what makes successful leaders, the evolving role of company boards, and how they identify leaders. Excerpts:  

Q. What are some of the trends you see emerging out of India?
What we are seeing in India is in line with what we are seeing around the world. That is, the emphasis on leadership development and developing a pipeline of leaders.

When I had joined our firm in 1988, 90 percent of what we did was executive search. These days a large part of what we do is working with companies to develop their future leaders. That is what we are seeing here in India, and globally too, because of the shortage and complexity of leadership.

Q. A lot of companies still look outside when they have to find their leadership. Is that trend changing now?
CEO succession is often a two- or three-year project, sometimes even longer. We work with the top leadership team to develop future options and there are various interventions that we make in terms of identifying, assessing and developing leaders. But, usually, at the time of the decision to appoint a CEO, the board requires an external search to validate the decision they are going to make or to benchmark it.

Statistically, when at least half of the work for a CEO succession project is undertaken, it is more effective when an external view or perspective is added to that process. Often, we look externally to complement the process, even if there are strong internal options.

Q. India has a lot of family-owned businesses. Do you think leadership across them is changing?

Yes, I do. We are deeply involved in advising families on leadership transitions, particularly when the second or third generation of families are at a point when they want to professionalise the company. Often, they are interested in doing two things: Building boards in line with global corporate governance standards, and appointing and developing leaders that are outside of the family.

Q. What are the traits you look for in a leader?

For years we looked at experience as the basis for predicting future success. What we have come to understand is, in today’s world, given the speed of change, given the complexity of leadership, it is actually the potential and the ability to adapt and learn, and engage with diverse constituents that are actually more important ingredients than specific sectoral experience. And so we are looking to identify individuals with these characteristics. We have a model for identifying these characteristics in individuals.

Q. What are the components of that model?
We look at four characteristics. One is determination or resilience. Because you need to be able to push through in the face of a lot of resistance. Second is insight. There is a tsunami of data in today’s world. So you need to have the ability to distil and draw insights from that data quickly; you don’t have the luxury of time anymore. The third is engagement. That is the ability to engage with diverse stakeholder groups, and engaging emotionally as much as intellectually. The fourth is curiosity. If an individual is not curious about themselves and the world, they will fail as a leader because the world is changing rapidly.

But even more fundamental is what we call identity. You really need to identify as a leader, and what we have discovered over many years of assessing executives is that even at a young age, executives identify as a leader and those individuals are more likely to go on to become CEOs than individuals who don’t. Identity is partly connected to motivation, and being motivated by purpose, by the opportunity to make a difference, is really important.

[qt]In today’s world, the ability to adapt and learn is more important than sectoral experience.”[/qt]
Q. Does that mean domain experience isn’t much of a necessity?
In some areas, domain expertise is necessary. But it is not sufficient in today’s world. There are situations when clients say they are happy to recruit from a different domain. A pharmaceutical company might be prepared to recruit someone from consumer products because a big part of their business is related.

Q. Are the mindsets of companies and boards changing with the times, then?

Historically, one of the primary duties of boards is to manage risk and appoint CEOs. So boards have approached the recruitment and appointment of CEOs with quite a risk-averse mindset.

Boards are now much more prepared to consider creative options in a way they never used to in the past. For instance, Novartis has appointed an Indian [Vasant Narasimhan] as CEO. This is a creative option, in the sense that he wasn’t an obvious candidate at the beginning of the process.

In my first 10 years with this firm, there was a big focus on identifying qualified individuals. These days, our engagement with boards is about understanding the challenges of the company, the agenda, the culture and helping the boards marry these insights with candidates.

Q. Are firms working with companies such as yours to build talent?

Yes. A very important part of our global practice is helping clients identify and develop future leaders. Normally that involves assessing executives, providing insights and working with those individuals to develop and address opportunities in terms of their personal development or gaps in their experience. Firms are adapting big time as far as growing within is concerned.

Q. Is the composition of boards changing?
Boards in big companies have particular challenges in terms of compliance, complexity and risk management. Boards in family companies have different challenges. The most important thing is the diversity of talent that we are seeing appointed to boards. So you aren’t getting the 55-year-old males sitting around the tables, as much as you did in the past. You are getting a much more diverse group. A lot of our clients are prepared to appoint much younger directors than in the past.  

The digital sector is a classic example. We are seeing a diversity of board candidates in many dimensions, and boards are becoming more effective. But the big challenge is they are overloaded with compliance requirements. So freeing up boards to becomed engaged in the value-added leadership of the company is really the challenge.

Q. But wouldn’t compliance help, such as having women on boards?
It’s interesting that India has chosen to mandate a number. A lot of markets, such as France and Norway, have such quotas. Australia has decided that quotas are not necessary, but there is demand to increase gender balance at the board levels.

As an advisor, we are conscious of our responsibility to present a slate of candidates that represents a diverse option. We are very involved in helping companies attract and appoint women to boards globally.

Q. What are the challenges in finding leaders today?
A lot of talent these days is motivated by purpose. In the old days, you could buy talent with money. Increasingly, for really strong leaders, money is like a hygiene factor. It needs to be appropriate. However, really talented individuals at the CEO level and below are looking to work in a purposeful environment where there is an inclusive culture and emphasis on sustainability.

That is a wonderful development, but it makes finding leaders more challenging. That’s why cultivating the next generation of leaders is so important; because we need individuals who align with these values. And the younger generation is closer to them than perhaps my generation. I think money is never going to go away because we are human. But I’ve got four adult children and they are all working and their motivation is very different from what my motivation was. My motivation was to find a job that would offer me the security that would provide for my wife and family. This generation doesn’t look at life, my children at least, with that long-term view. They are looking at jobs where they feel they are doing purposeful, meaningful [work], and they are only interested in working in an environment that is diverse and believes in sustainability.

Q How does that change the future of a company?
Our perspective on the challenge is to adjust. We had a very linear view of career development. I personally did, too. You had to do certain things to move up the chain. And I think we are recognising now that with this generation, with women coming in and out of the workforce, that linear view no longer holds. People will come in, they may leapfrog several moves and come back and do something else. So we need to be much more creative and clients need to be too, when thinking about what a good career looks like. We looked for commitment over time; that was a measure of application and focus. These days we are not discounting talent for moving after three years. Often it is a sign of curiosity and a sign of being prepared to seek out and do new things, take risks; it is a sign of actually backing themselves up; we were less secure. So, the whole template is looking different than it used to.

Q. And that changes the template for companies too?
Companies have the same challenge as we do. These things don’t change quickly. It’s a mindset and systems thing. The human resources function that we partner with in many situations has to also think outside the box. And in some respects it makes their jobs and our job complicated because there is no algorithm for these things. We just need to be creative in identifying the individual who has the potential to lead.

Q. What are Egon Zehnder’s plans for India?

We are growing rapidly and will ramp up our team from 16 to 25 in the next three years.