Showing posts with label CEO. Show all posts
Showing posts with label CEO. Show all posts

Saturday, February 09, 2013

Hayward’s wayward BP ways?

B&E’s Steven Philip Warner talks to various global oil & climate experts from the likes of Goldman Sachs, Credit Suisse, Standard & Poor’s, Argus Research, JBC Energy & Varda Group to find out what awaits BP’s fate? Will BP, which as recently as two months back was the second most valued oil major in the world, disappear?

“You need to go to jail, Hayward!” These were the loud words heard moments before the publicly accused CEO of BP, Tony Hayward, began his validations before the US Congress’ Energy and Commerce Subcommittee on Oversight and Investigations in Washington on June 18, 2010. The heckler was a woman, with black tar smeared all over her hands and face. She was angered at the BP Chief for the oil spill at the company’s Macondo project deepwater rig in the Gulf of Mexico – the very reason which caused BP’s shareholders to lose $93.4 billion in just 59 days, also considered the most ignominious retreat by any non-banking & financial stock within a span of two months! The cynic was hurriedly removed from the room. Given a chance, many say BP’s shareholders would have done the same to Hayward.

But Hayward didn’t budge during the seven hour-long humiliation session, during which, the beleaguered executive was found to be at his diplomatic best, making his way clean around all the queries. [He used lines like “I don’t know”, “I am not comfortable answering...” and “I was not in the decision making process” about 70 times during the session!] Quite a contrast to the manner in which the four CEOs of Exxon, Conoco Phillips, Shell and Chevron unanimously agreed to the Congress in the same meeting that the prime reason for the BP disaster was the company’s failure to implement industry best practices during the Macondo operation. BP used six centralisers, while Halliburton (BP’s cement contractor), had advised it to use 21 to prevent proper and safe channelling during the cement process. BP also did not test the cement, which gave way under the high water pressure, 5000 feet below the surface. The engineers ignored the need to circulate gas-bearing muds out of the well and to secure the wellhead with a lockdown sleeve before allowing pressure on the seal from below. In short – it opted for lower costs over safety. But Hayward was not broken.

The US Congress members however left home satisfied. They had made up their minds before they walked in. No matter what Hayward replied, they were prepared to leave with much the same opinion. The BP chief was placed there to act out a soliloquy on a ‘high-gentry’ stage, where the script was designed to humiliate the might of a British company, which two months back was the second-most valued oil company in the world with an Mcap of $188.32 billion (only behind Exxon, the most valued in the world today)! Hayward on the other hand had reasons for much discomfort.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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Monday, February 04, 2013

Rick swings, GM misses

...and the shareholders get their pants walloped!

Rick Wagoner during his 8-year term as the CEO & Chairman of GM has oft been described by industry experts as a leader who lacked the “ruthless streak” needed to make the tough decisions... Well, allow us to be crude. Many do claim that he tried his best to revive the lost glory of the wounded auto-maker. Sadly, his best wasn’t enough, and today, his successor, Fritz Henderson, is fighting hard to present a viability plan before the Senate, by June 1, 2009. There is no denying that GM has proved to be Detroit’s biggest blunder in these recessionary times, and all because Wagoner behaved like the wicked kid who skipped classes at Harvard (by the way, he’s an HBS Alumni) and played baseball, trying to hit home runs every ball; but he failed [And guess what, many are blaming the recession for GM’s miserable state]. So here are the bull-headed swings that failed to deliver the so-called homies and which make up for one of the biggest business blunders in the past 100 years.

Swing & Miss #1: Being the CEO of a First World brand, his ‘American legacy’ ego prevented him from shifting units to emerging nations. Swing & Miss #2: Axing of the EV1 electric car project in 2003, which Wagoner admitted was one of his “greatest blunders.” The product, which was the world’s first electric car, could well have become the future of GM. But then again, isn’t GM all about brawns and hefty Hummers? What Wagoner forgot was that fuel-efficiency is something that leaders like Toyota and Honda have focussed on besides offering powerful engines... [Rick, you skipped your market segmentation lessons too?]

Swing & Miss #3: GM’s premature focus on hybrids cost the company too much. Despite being in the news for over 15 years now, hybrids only contribute to about 2.15% of all vehicle sales! Then there are reports which prove how by 2020, oil production will cross a smashing 1,600 million barrels annually – 6667% more than what was produced in 2003! In other words, hybrids are not required in the near future year, but Wagoner still believes it, for he has to swing!


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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Saturday, November 10, 2012

Patented out, legally redeemed

As lawyer Kindler loses court battles, army man Clark strengthens his defences with a flanking strategy

Every time a new face takes on the mantle of a CEO in a pharma company, bold promises and impressive statements are the order of the day, giving aggrieved shareholders assurance of better times ahead. But perhaps, deep inside, every incoming CEO of a pharma company is well aware that he could be in for several sleepless nights ahead, as he simultaneously keeps track of expiring patents, lawsuits, litigations, et al, not to mention sluggish sales volumes and increasing generic competition. Some make the cut and some don’t and the story of the head honchos of Pfizer & Merck illustrates this perfectly.

When Jeffrey Kindler took the helm of the $139.5 billion Pfizer Inc. in 2006, he dauntlessly proclaimed to completely transform virtually every aspect of doing business with concrete, hard-hitting action plans. The appointment of Harvard Law School alumni Kindler reflected the Board’s decision to elevate a relatively new employee and to reiterate the dominance of legal issues in the pharma sector. In a similar vein, Richard T. Clark, an ex-Lieutenant in the US Army, announced on his appointment as CEO of the $88.7 billion worth Merck & Co. in 2005 that his top priorities would be “meeting needs of patients and building shareholder values.” So here we had two CEOs taking over the helm of two iconic US-based pharma companies facing not-so-iconic prospects. But that’s where the similarities pretty much ended.

Merck & Co. was reeling in the face of litigations against its painkiller Vioxx (introduced in 1999), after receiving complaints of increased heart attacks and strokes from customers. The lawsuits were seriously undermining Merck’s future prospects. Understanding this, Clark ensured that Merck increased its legal reserves for the litigation to $858 million. The reserve, which was set up with an estimate of potential legal cost throughout 2008, finally bore sweet fruits, when over 44,000 plaintiffs got themselves enrolled in a proposed $4.85 billion settlement. In doing so, Clark has set an example for other pharma players. A stiff price to pay, but it has left Merck in a better position to chart its future course; which is exemplary, considering it had been all but written off when the Vioxx imbroglio first reared its head.

On the other hand, Kindler has begun to lose the support of Pfizer’s shareholders. Even after 20 months in office, Kindler has done little to make the shareholders believe that he would “virtually transform every aspect of doing business,” as was stated by him. He has, until now, not been able to find a solution to overcome the impending loss of $13 billion of annual revenue from the cholesterol drug Lipitor, which is slated to lose its patent in 2010 and face competition from generic drugs, apart from simply stating that Pfizer will file for approval of 15-20 products between 2010 and 2012.


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
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Friday, November 09, 2012

PROFILE: MEG WHITMAN/JOHN DONAHOE

Donahoe has his own ideas to take Whitman’s legacy to the next level

John’s has a more customer focussed agenda, which includes upgradation of the site, revision of fee structure (he wants to lower the fees paid by people to list items & raise commission that eBay would earn on successful sales), and increasing search exposure for sellers with best buyer-satisfaction ratings. John prophetically commented, “Sellers that describe items accurately, ship on time & ship at a fair price will enjoy preferential pricing & discounts... this will significantly improve the buyer’s experience overall.”

Even the much praised Whitman has had her share of gut hits, notable being her open gamble to acquire Internet telephone service Skype last year for $2.6 billion. Skype did not generate expected revenues; worse, as its value fell, eBay had to write down a killing $1.4 billion. In fact, despite eBay seeing profits rise radically from 2004 to 2006 ($7.84 to $11.26 billion), Morgan Stanley quoted to B&E that the Skype acquisition was one of the chief reasons for a tremendous fall in eBay’s 2007 profits of $3.48 billion. Even Skype’s user and operating metrics decelerated across the board for the fifth consecutive quarter on December 31, 2007. Still, as Whitman announced her exit, eBay’s share value dropped almost instantly, dropping 6.1% to $27.18 before closing on January 25, 2008 at a 52-week low of $26.83, though Whitman did say of the new CEO Donahoe, “I’m extremely confident in John’s skills and the abilities of his veteran management team.”

They say it’s tough to become number one, but tougher to stay there! While Whitman has already showcased her cutting edge competitive skills to bring eBay to numero uno position in e-commerce, one wonders how much ‘tougher’ will John allow it to get to keep hold of that position! We don’t think it’ll take a decade for us to know that, eh!


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM : The B-School with a Human Face
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Wednesday, August 08, 2012

"We Need Hunters, not Farmers"

LIVE AND EXCLUSIV: NFOSYS TOP BRASS TALK TO b&e ON LIFE AFTER DEATH AND ON THE ROAD AHEAD. deputy editor Virat Bahri GIVES THE INSIDER ON THE STRATEGIC LESSONS FROM INFOSYS!

“Our growth has significantly come down – from 35% to 7% to much lesser. It is a failure in some sense, since the opportunities are there, we have customer relationships, so I do feel we could have done better.” We’ve met S. Gopalakrishnan (Kris, for everybody), CEO and MD of Infosys, previously too, but perhaps this is the first time we sense his dejection that things could have turned out better for Infosys.

Factually, it’s not as if things are that bad. For starters, they’ve been rated India’s 7th most profitable company in the 2009 B&E Power 100 listings. The five year CAGR for revenues, till the month ending June 2009, was 32%. At the same time, the five year net income CAGR stood at 34%. Market capitalisation was screaming at $21.08 billion in July ‘09. Now it’s screaming better. The number of clients contributing to business has grown from 141 in 2004 to 330 this year. Since Kris took over, the revenue per client has regularly increased, Infosys has gone into newer services, entered newer markets, hired more people, consolidated existing clients, won a few awards, and a lot more.

But Kris comes from a world, where Infosys – under Murthy – was used to growing at rates close to, and sometimes beyond, 100%. Even Nilekani sailed around the 50% figure for long. Compare that to the fact that Kris ended last year with 29.5% growth. “In good times, high repeat business is a very good strategy; in bad times, bad!” says Kris on a Monday afternoon to us, “We need a lot more hunters (who get newer businesses) than farmers (who maintain current businesses).”

The first quarter of FY 2010 hasn’t been too kind. Infosys’ revenues actually fell by 2.9% quarter on quarter, in rupee terms. For the same quarter, as per Angel Broking, “Infosys’ IT Services Business was largely flat in US dollar terms on a sequential basis, while on a yoy basis, a fall of 2.8% was witnessed.” Further, onsite volumes declined 2.1% qoq (0.6% decline yoy) and offshore volumes slipped by 0.6% qoq (but grew by 9% yoy).

The top management at Infosys has been preparing double time for the economic slowdown since the 15/9/2008 debacle. “I predicted the collapse of Bear Sterns six months before it actually occurred,” says Chief Financial Officer, S. Balakrishnan (Bala, for friends). And once Lehman collapsed, the world – as Kris tells – changed for Infosys. And not because Lehman was a big client for Infosys (rather it was a bigger one for Wipro & TCS), but because the American financial industry – including companies like AIG – formed (and still do) an incredibly large part of Infosys’ earnings (more than 60%). Things were changing too fast at that time, and Infosys decided to change faster. And the hero, creditably, in the bloodied times, was not marketing, but finance, whose six strategies are the reasons Infosys today remains the most profitable IT corporation in India...

Strategy #1: Forget the long term; at least when it comes to your money!

Driven in a warlike fashion by CFO Balakrishnan, Infosys rewrote process orientation and risk control like never before. Realising that the war would be played on cost rather than price, Bala opened up a new battlefront, “I realised volaltility of foreign exchange was going to be the key issue as 98% of our revenues is in foreign currency; 62% from North America.” The dual reporting mechanism in both dollar and rupee terms made handling finances a supremely complicated Pythagorean conundrum for Bala and his team. Bala had already implemented the long term hedging route much earlier for Infosys.

Strangely, that was what was turning out to be the biggest headache for Infosys, which decided to shut down long term hedges & convert all exposures to a maximum of two quarters. This saved Infy from getting massacred.


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Friday, July 27, 2012

“Our Bfsi Clients are now Focussing Less on Costs’’

Kris Gopalakrishnan, CEO & MD, Infosys, talks to Virat Bahri on The Company’s results and The Management Changes

B&E: What is your outlook for the coming year in terms of topline and customer wins? What are the trends in client spending in the coming quarters?
Kris Gopalakrishnan (KG): We expect the next fiscal to be a normal year for the industry. We have given a guidance of 18-20% growth for the next fiscal. The previous quarter was good for Infosys with respect to large and transformational deals. Infosys closed four transformational deals and six large deals in the previous quarter. After the big recession in the US, clients have started to fine-tune their spending based on what is happening in the macroeconomic environment more quickly than in the past. This is what had impacted Infosys in the last quarter. Today, we have much more clarity on what they are going to spend on but whether they will actually spend that money is a concern. If clients face further challenges in the economic environment, they may fine tune their spending more.

B&E: Infosys, as a company, has been known as a founder-run corporation since inception. How will the entry of K V Kamath as Chairman help the company to achieve its strategic objectives?
KG: The recent developments in management ensure a seamless transition from founders to the next generation of leaders. This will prepare the company for the future as well. K. V. Kamath is experienced and is an expert in corporate governance. His role is to chair the board and oversee governance.

B&E: We have hardly seen a trend of cross-industry CEOs & Chairmans in India so far while there are many global examples like Alan Mulally, Dan Akerson, Jeff Kindler et al. According to you, how does it help to rope in an executive in the top management from a different industry?
KG: Every successful corporation needs to transform itself periodically to remain relevant to its stakeholders. The recent change in Infosys’ leadership team is a planned effort by the Nominations Committee to ensure smooth transitions within the company.


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Wednesday, July 25, 2012

A Change in The Infosys DNA?

Besides The Upheaval at The Top, it has been a Defining year for Infosys, which saw some Welcome Growth in Revenue Terms. However, Rupee EPS Guidance is a Concern

On certain critical counts, it has been a defining year for Infosys, in good ways as well as not-so-good ones. The exit of T. V. Mohandas Pai, member of the board and Director - HR, who had served the company for 17 glorious years, was a setback enough. Matters became worse when Pai began to talk about the preference of Infosys for experience over professionalism when it came to hiring people or moving them up the ladder. For a company where the founders hold hardly around 10% of the shares, it was a serious allegation indeed. That was like suggesting that Infosys wasn’t the ultimate case study when it came to successful separation of ownership vs management, at least not to the extent to which it is perceived to be.

On the financial front, the company posted revenues of Rs.275.01 billion, which was a growth of around 20.9% yoy. Net profits grew by a far more modest 9.7% yoy to reach Rs.68.23 billion. In particular, the company missed its estimate for the fourth quarter, wherein revenue grew by 1.1% sequentially in dollar terms to reach $1.6 billion. The company still faces some instable conditions in the US market and revealed that clients were slow in taking decisions especially in the fourth quarter. There is a disappointment with the rupee EPS guidance as well, which is between Rs.126.05 and Rs.128.21, a growth of 5.5-7.3% yoy. In a statement during the conference call, CEO Kris Gopalakrishnan commented, “Rupee guidance is muted as it is a reflection of the dollar guidance. We look at the appreciation of the rupee and then we translate that.” In addition, the company has hired some 43000 employees this fiscal. Administrative expenses rose by a significant 21.07% yoy to Rs.19.71 billion for the past fiscal. Mostly though, Infosys has had a much better growth compared to last fiscal, when revenue grew by just around 3.5% yoy and net profit grew by 3.6% yoy. In terms of shareholder satisfaction, the company ranks 6th in B&E ‘s list of India’s top wealth creators in terms of absolute increase in mcap of Rs.325.44 billion yoy. But since April 15 when the quarterly results were announced, the company’s share price has been severely hit. Infosys opened April 15 at Rs.3,296.15 and closed 9.67% lower at Rs.2,980.70 on the same day.


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Tuesday, July 24, 2012

JV ‘ex’Ercises of Futility?

After burning his hands with The Failure of Logan, Carlos Ghosn is again Grappling with Issues related to his ultra low-cost Car Project with Bajaj Auto. While The Automotive veteran has been able to turn around The Fading Fortune of Renault-Nissan globally, his India Journey has been full of hurdles so far.

When Renault opened its India office in 2005 in the financial Capital Mumbai, its intentions were clear – forge a JV with Mahindra to become a part of the growth story in Asia’s second-fastest growing automobile market. Analysts then opined that it would herald the beginning of an era in which French carmakers would soon come to dominate the Indian market, pushing aside the American and Japanese who had been running the show till then.

Mahindra Renault’s Logan attracted decent numbers in the early months but the high price of the product failed to hold customers in the showrooms for long. Within just six months into the launch, the product was lagging way behind its counterparts in the entry-level sedan segment. The product sold just 351 units in March 2010, a month before Renault opted to move out of the JV. Clearly, the Rs.7-billion JV investment was not working as planned and the ‘Indo-French’ car failed to meet the expectations of the JV partners. However, the failed attempt did not dampen Carlos Ghosn’s (CEO, Renault-Nissan) ambitions to strike gold in the Indian automobile market again. At the time when Logan was struggling (“Logan failed to deliver mainly because of its high price point” said Alex Mathew, Head – Research, Geojit BNP Paribas), Renault had already inked a deal with Bajaj Auto for the Ultra low-cost car (ULC) project and was confident of making a breakthrough in the domestic circuit taking this route. However, to Ghosn’s woes, that project too has been mired in trouble in the recent past.

It may be recalled that the project was already running behind schedule even as Ghosn was in India last year to discuss the branding and production plans for the product with Bajaj Auto’s Managing Director Rajiv Bajaj. The Renault-Nissan chief might have wished that his visit would bring to an end the controversies surrounding this ambitious project, but that has surely not been the case. In fact speculation surrounding the car has only deepened further with Bajaj saying recently that Renault has still not made up its mind on the matter of branding and the company (Bajaj Auto) will be selling via its own distribution network, if required (“We will never partner with someone who has the right to walk away. We will sell it through our network if they are not happy with the design,” Bajaj said). On its part, the Renault management is of a view that it will finalise its decision only after examining the car developed by Bajaj Auto. “We will take a call on the Bajaj ULC only after we see it and are confident that it will fit the needs of the Renault brand,” said the spokesperson of Renault India.


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Saturday, July 21, 2012

The new age Commercial Plane was not Airbus

The Worst start to building The new age Commercial Plane was not Airbus’. It was Boeing’s. Its biggest project – The Dreamliner 787 – has turned a Nightmare. There are other problems too. What went Wrong with Boeing? & can CEO Jim McNerney play Captain America?

What caused Boeing’s health to deteriorate? McNerney has forever been known as a game-changer – a CEO whose radical change ways revived a corporation like 3M (it was under him that the company slimmed down, returned to profit-making and even dropped its old name – Minnesota Mining and Manufacturing). He tried the same at Boeing. To ensure that bottomlines improve, he adopted the outsourcing model. The idea was that instead of working with the traditionally accepted manufacturing practices, Boeing would work with engineers and labourers outside the company. It first started with the 787 program in 2005 and was then replicated on the 747s & 777s families. That meant trouble. A typical 787 (& 777) has 70% of its parts manufactured in Japan, Korea, Sweden, Canada, Italy, Australia, France, Germany and 15 other locations in US, that Boeing workers in Seattle put together. The entire exercise was destined to end up as a fragmented engineering act and a complex set of 50 confused suppliers, with minimum check on quality and overstretched supply-chain. McNerney took the big risk, Boeing took the beating. While its reputation & revenues did fall, the associated R&D costs have not only hurt bottomlines in the past year by up to $4.1 billion, but also threaten to erode the same in the years to come, as Robert Spingarn, analyst at Credit Suisse tells B&E, “Many bullish analysts and investors have been relying on declining 787 and 747-8 R&D to allow for meaningful earnings growth. But, even as these development programs inch closer to completion, the prospect of new R&D for a refreshed or new 777 and a clean-sheet 737 may offset any benefit. Either way, upside could be an issue if R&D cannot be tamed and if Boeing’s Defense business weakens beyond expectations.”

So what can Boeing do to expedite the process and ensure that cost control (outsourcing) and timeliness go hand in hand in future? Airbus, which contracts 52% of its aircraft body-making, is the answer. It assembles parts (in France & Germany) manufactured in 12 locations in the four nation cluster – Britain, France, Germany and Spain. And if cost reduction be the prime condition, Airbus’ assembly line for the smaller A320s in China is quite an example. The solution to convert Boeing’s global outsourcing mess into a strategic geographic advantage lies in creating regional assembly hubs. Like Airbus, it could begin with an assembly station in China for the new planes, to cater to the demand in the Asian region (like the $10 billion order from Air China & HNA Group for 5 747-8s, 6 777s & 32 787s received in March 2011). And considering that Boeing has to fast increase delivery pace in order to cater to a fresh demand, the newer assembly stations will only reduce its order-delivery lag. The question now is not whether it can cultivate a conservative approach to outsourcing or not. Rather, it is how Boeing can learn fast and act. Airbus, despite a more calculated approach saw its jumbo A380 suffer a couple of initial delays, resulting in $24.8 billion in added costs & lost orders between 2006 & 2009. Boeing has already lost many times more. Question is – will the hole in its pocket get bigger?

Fire on board, to software integration issues, to discovery of weak points in the composite metal used, to an in-flight engine shutdown, the Dreamliner has been more of a ‘nightmare’liner for Boeing. Though experts are of the opinion that this is not the end of the road for Boeing, and that revenues will continue flowing despite the fires and engine malfunctions of the 787s & 747s. The hefty order-log already recorded and expectations of huge demand from Asia and replacement orders in US & Europe will help its cause, as New York-based Alexandria Carroll of Goldman Sachs tells B&E, “For the near term, 787 & 747 challenges have the potential to create further volatility. However, we expect very strong new aircraft order demand, strong global air traffic, and the company’s supply restraint through the last cycle to all be larger positive drivers of the stock than challenges, which are a negative. The associated R&D tailwind catalyst are likely to be realised over the next few quarters.” Adds S&P’s Tortoriello, “Emerging economies in Asia and the Middle East will continue to improve, which should sustain demand for narrow-body aircraft, supporting Boeing’s total backlog of about 3,400 aircraft as of December 2010. In addition, US airlines continue to take deliveries to improve fuel efficiency of aging fleets. Further, the third-quarter 2011 delivery of the 787 should act as a catalyst for the stock, with about 850 aircraft recently on order.” While Goldman Sachs estimates revenues for Boeing in FY2011 to to touch $67.97 billion (a y-o-y rise of 5.69%), the figure as per Credit Suisse stands at $69.76 billion (rise of 8.48%).

Having said thus, McNerney has to realise that the storm will only gather over the coming quarters, faster and stronger than it did in the three years gone by. It’s more than half of his company’s revenues at stake (assuming that the Pentagon will continue to patronise Boeing’s Defense business as EU does to EADS-Airbus), and the clock for him is running backwards. He’s done nothing to make investors smile (Boeing’s Mcap has fallen by $2.13 billion since he took over in June 2005) and McNerney might be out before Boeing even gets out of this rut. In short, he has little time to prove that an intergalactic outsourcing strategy can work. If it hasn’t in seven years, it perhaps never will. Many airlines have bet their future on Boeing, and this equation can turn turbid sooner than expected, irrespective of how many dollars and elbow grease the new projects have called for. And it is already showing signs of that.


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Friday, July 20, 2012

As Shatter-Proof as Ever!

Women have broken a lot of Gender Barriers in Society, But The Glass ceiling is not Exactly in that List Yet

When a movement gathers pace, it can change an existing status quo that is years, even centuries old, and unleash a new paradigm. By that yardstick, the women’s liberation movement was started in the US in 1964 in the US and spread across the world. Obviously, a lot has changed since then when it comes to acceptability of women in corporations and in various positions, but when you look at upward mobility for women in the corporate world, you will be surprised at how little has changed.

At the outset, women CEOs head only 15 companies out of the Fortune 500, which is a representation of just 3%. A look at the results of a survey by US non-profit organisation Catalyst for 2010 provides deeper insights. Only 15.7% of board seats in Fortune 500 companies were occupied by women as compared to 15.2% in 2009. Only in their share of nominating/governance committee chairs do women beat that figure with 16.9% share, as compared to 16.8% in 2008. The board chair, on the other hand was occupied by a woman in 2.6% of Fortune 500 companies in 2010 as compared to 2% in 2009.

In India, the situation actually happens to be significantly better. A survey by EMA Partners International in 2010 covered 240 large corporations in India, and found that 11% of them had women CEOs. There were other differences. For instance, in India, 54% of women CEOs were in the BFSI sector, followed by media and life sciences at 11% each and FMCG and consulting at 8% each. In the US, FMCG and consumer durables accounted for 48% share of women CEOs and financial services accounted for 7%. But in terms of directors, India is worse off, since only 5% of seats for women directors in the BSE 100 are occupied by women, as per a report by Standard Chartered.

By all yardsticks, these aren’t indicators of a shattering glass ceiling for women. Simultaneously, there is definitely a wealth of academic research being done on issues of relative competitiveness, opportunities available, leadership styles, et al. Justin Wolfen of Wharton made one such study of S&P 1500 firms from 1992 to 2004, and concluded that there was no significant difference in returns to holding stock between female led and male led firms. A report by Lee and James in 2004 concluded that hiring a female CEO leads to negative abnormal stock return of 3.7% as compared to a negative 0.5% for a male CEO during the announcement window. A B&E 2007 study concluded that some 50% of the women CEOs under study eroded shareholder’s wealth. In addition, a huge 75% of companies led by woman CEOs underperformed the Sensex. On the other hand, a report by Catalyst cites that companies with higher representation of women on management teams provide 34% better average shareholder return than those with low representation.

A 2004 research by Michelle Ryan and S. Alexander Haslam of the University of Exeter pointed to the possibility of an even more dangerous trend after women CEOs shattered the glass ceiling – that of a glass cliff. Their research concluded that women appointed to leadership were more often put in situations where the chances of failure were high. Evidences cited in subsequent reports are are CEOs like Carly Fiorina of Hewlett Packard, Patricia Russo of Lucent and Alcatel-Lucent, Kate Swann of WHSMITH, Lynn Elsenhans of Sunoco and Carol Bartz at Yahoo!. But then, there are also surveys that concluded later on that this could not be generalised. There are a number of celebrated women leaders in US as well as India like Irene Rosefield of Kraft Foods, Indra Nooyi of PepsiCo, Chanda Kochhar of ICICI and Shikha Sharma of Axis; who defy the assumption that women CEOs necessarily underperform.

Or does the verdict even lie in statistics? Poonam Barua, noted economist and Founder Chairman of the Forum for Women in Leadership (WILL), comments to B&E, “There is no clear data that women CEOs get better business performance – simply because there are not enough women CEOs over time to make this static trend available. However, it is clear that having a woman CEO does not lead the company to financial disaster like Lehman Brothers, AGI, Chysler, or RBS.” Diversity in the work place at all levels is certainly a valuable end for the corporate world, and all possible efforts need to be done to provide equal opportunity to reach the top.

Through interactions undertaken with some select Indian and American CEOs and entrepreneurs, we give you exceptional insights on how they are leading their companies into the next growth orbit and the challenges they face in this special issue of B&E. Are they indeed getting the better of all the ‘glass’ on the way? Well, that judgement cannot be made in a haste.



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