Soon after joining as the chief executive officer (CEO) of Infosys Ltd, Vishal Sikka hired senior executives from SAP AG, where he had worked earlier. We ask experts whether a departing leader should hire people from his previous team to the new company and its possible implications.
There is no ethical implication
Vidyanand Jha, professor of behavioural sciences, Indian Institute of Management, Calcutta.
When a departing leader takes with him some of his employees to a new organization, it does not have any ethical implications, says Jha. “This happens in most companies and will not have any ethical implications since the relationship between employees and an employer is that of performance and not of loyalty,” he adds.
If people see a better role or a greater opportunity for themselves in the place where the leader is going, it is natural for them to move too, according to Jha
Rather, the company which is seeing the exits (SAP in this case) should treat its ex-employees as alumni who have moved to good places, which would add to the company’s overall brand value, Jha believes.
From the point of view of the new team or company where these executives have joined, some changes are inherent, he says. “Whenever a new top executive comes in, obviously some heads will roll either in function or in some other symbolic manner,” he adds.
However, the incoming executive has to believe that the existing team members are good and make them believe it too. Jha says the new leader should be quick in reshuffling and then start making a positive change, so that existing employees feel comfortable.
“He or she should also signal continuity in some old practices or show that there are enough people from the past in the organization to increase the comfort of existing employees,” says Jha. The incumbent leader should create a safe environment and safeguard employees’ interests, he adds. There is always some degree of uncertainty in these new relationships, according to Jha. Especially in a company that has seen turbulent times, there will be anxiety among existing employees with the new leader, so that should be taken care of, he adds.
There should be no bad blood
Vinamra Shastri, partner at Grant Thornton India
There is nothing wrong in a person leaving a company taking his peers along, says Shastri. “I do not consider this wrong from any perspective,” he says.
Why does it happen? “There is a team concept which works very well in corporate India,” says Shastri. People will be inclined to leave with the leader because they work well together, they understand situations better, and they know their strengths and weaknesses, he says.
Personal loyalty is another key reason. “People leave with the leader because they feel that he or she is a successful leader and that they have a better chance working with them,” says Shastri. The current organization may be unable to translate this personal loyalty into organizational loyalty.
However, such a process should be conducted ethically and in a completely professional way, says Shastri. “One should ensure that there is minimum disruption at the place you are leaving. The exits should be properly planned, communicated and transparency should be maintained. People should not burn their bridges. There should be no bad blood,” he says. It should be like a well-planned divorce, Shastri points out.
The company from where people are departing can learn a lot at such a time. “Companies should think what they could have done differently so that these people did not leave the company, so that second time around such a thing does not happen,” says Shastri. He also feels that companies which are losing people should look at this as an opportunity to promote their second line of leaders.
New people must fill a skill gap T.V.
Mohandas Pai, chairman of Manipal Global Education Services and co-founder of Aarin Asset Advisors Llp
It is always a source of comfort and a confidence booster to have colleagues whom you know well. But a new chief executive officer bringing in his old team from his previous organization is an exercise that needs to be handled with care as it is full of nuances, says Pai
First, the new members ought to be brought in only if there is a shortage of people in leadership roles, he says. Second, the kind of people the leader brings into the organization need to fill a specific skill gap and they need to be best-in-class, else it will cause resentment among existing employees, says Pai. “When you are bringing people with expertise, they should be able to hit the ground running, and demonstrate to the rest of the team that they deserve to be there in the first place,” he adds. “If none of them have the relevant experience or capability, the strategy won’t work well.”
Third, it is important that a new leader does not create cronyism by bringing his former colleagues and create a clique, warns Pai. “To avoid this, a leader must have an open style of leadership where all ideas are considered and everyone is treated well, and decisions taken on merit so that the team feels united,” he adds.
This also includes salaries paid to the new members, Pai says, and adds: “There should be fairness in the salaries being given to all members in the team if you want to create a level playing field and a new sense of purpose.”
At the end of the day, people appreciate good performance and if the new team members are able to demonstrate the value they bring with them, it won’t create any discord among the old and new team members, believes Pai.
The article appeared in the Mint. The article can be found here.