CEO attrition in Indian firms at 84 percent

New Delhi: Whether it is an established MNC, aggressive start-up, a stodgy family-run business or a new-age retail business, CEO poaching has become the latest game in town, as a burgeoning economic recovery and intense competition turn them into high-value targets. Indian firms saw a staggering 84 percent rise in CEO attrition in just 10 months of the current calendar year.

Banking and financial services sector, alone saw its churn rate rise by 74 percent compared with the past year. "The churn in the CEO market was also because a lot of Indians from overseas came back. They were available at a lower cost with much higher experience. So, many CEOs were replaced with them. Going forward, we see a good recovery in CXO market, only by second quarter of 2010, when the U.S. firms chalk out their budgets," said GC Jayaprakash, Principal Consultant of Stanton Chase International.

Also, Redileon Search Partners, an executive search firm, surveyed around 1,000 CEOs from the top-listed companies on Bombay Stock Exchange, and found that almost 106 top honchos left their companies this year in order to seek greener pastures. "Faster churn is an empirical management barometer for economic growth, when the 2009 full-year tally is completed, the total will be higher than ever before," the search firm said in its findings. The survey also said that the CEOs who exited found a new job. And, about 12 percent of the CEOs who separated this year, are still looking for a job, the survey found out. Of the 106 CEOs who exited, about 33 were cases of involuntary exits. Apart from an improving economy, which triggered these exits, the top honchos also wanted to get back to their sectors of choice.

Banking and financial services, which is growing at a fast pace in the country, saw the highest increase in turnover, followed by the BPO sector. But, the IT sector, which is reeling under a flat growth phase, saw the least churn in CXO transitions. However, many CEOs who left large companies have joined smaller firms in emerging sectors.

The past year saw Axis Bank CEO PJ Naik joining as Chairman of Motilal Oswal AMC, while Fullerton India Managing Director and CEO GS Sundararajan joined as Executive Director at Shriram Capital. While Reliance BPO President Rajnish Virmani joined as Director of India operations at COLT Telecom, Satyam BPO Chief Venkatesh Roddam joined Taurus United, a Bangalore-based group. Grasim Industries President and Deputy CFO Sanjiv Bafna left to join Sivasankaran's telecom venture as CFO.

Also, according to the survey, overall job satisfaction is on the rise, as 67 percent of all 1,000 executives expressed that job satisfaction has improved, a sharp increase from 53 percent in January 2009. While CEOs are yet to gain prime assignments, companies are back to investing into acquiring leadership talent, the most visible tangible sign of positivity. The survey also found that pay-for-performance linkage is strongest for banking and insurance. This sector, along with BPO, is also the most upbeat regarding hiring for the next year.