Giants trip, but 'browning' of global boardroom to continue

Vikram Pandit's and Rajat Gupta's exit do not represent a larger pattern. Instead, companies still need to add diversity

Amid a protracted global slowdown, Indian-origin top management goliaths have stumbled out of US boardrooms. Vikram Pandit, Citibank’s CEO for nearly five years, resigned last week. With the October 24 sentence, former McKinsey managing director and Goldman Sachs board member Rajat Gupta’s dramatic fall from grace will find some closure. And, Chennai-bred PepsiCo CEO Indra Nooyi’s attempts to restructure the food and beverage giant still haven’t delivered results, irking investors.

All this a time when multinational corporations (MNCs), haemorrhaged by the slowdown, are putting the brakes on years of unbridled expansion in emerging markets, and choosing instead to refocus on their core businesses and constituencies. So, is the Indian summer in major global boardrooms finally drawing to a close?

Observers feel otherwise — and there are enough numbers to back the logic that the proverbial “browning” of foreign boardrooms, as London Business School (LBS) professor Nirmalya Kumar describes it, is unlikely to stop anytime soon.

In 2011, for instance, there were nine (including Pandit) leaders of Indian origin who were either president, vice-chairman, CEO and/or chairman of Fortune 500 companies, according to analysis by US non-profit LEAP, with a total of 37 Indians on the boards of these firms, second to only Chinese board members with 45 seats.

Yet, this is nothing new. In 2010, there were five Indians as Fortune 500 president, CEO and/or chairman, according to LEAP, and 34 Indians serving on the boards of these companies. Back in 2008, executive search firm Egon Zehnder found that in the boardroom of Standard & Poor’s 500 index companies, too, Indians comprise 4.2 per cent of all non-US national board members, ahead of China (1.4 per cent) and Australia (3.9 per cent).

Indian directors who served as president, (vice) chair, and/or ceo of a Fortune 500 company in 2011

Indra K Nooyi
Chairman and CEO, PepsiCo

Vikram S Pandit*
CEO, Citigroup

Ajaypal S Banga
President & CEO, MasterCard

Francisco D'Souza
President & CEO, Cognizant

Lakshmi Narayanan
Vice Chairman, Cognizant

Sanjay Mehrotra
President and CEO, SanDisk Ravichandra Saligram
President & CEO, OfficeMaxRakesh Gangwal
Chairman, OfficeMaxSurya N Mohapatra*
Chairman, President & CEO, Quest Diagnostics *Since stepped down Source: Leadership Education for Asian Pacifics, Inc. (LEAP)

Across the Atlantic, the Indian C-suite clan includes Deutsche Bank co-chairman Anshu Jain, Unilever COO Harish Manwani and Reckitt Benckiser CEO Rakesh Kapoor. Closer home, Piyush Gupta currently helms Singapore’s DBS Bank as its CEO, after a long stint at Citibank.

That is probably why Yale School of Management’s senior associate dean Anjani Jain doesn’t “see much evidence of ground being lost by people of Indian origin in the C-suites or corporate boards”. Although incidents surrounding prominent CEOs prompts speculation about the underlying causes, Jain holds that much of it is the result of “particular organisational circumstances and interpersonal dynamics” rather than nationality.

“Even if national origin or ethnicity are factors in a few of these outcomes,” says Jain. “I do not think there is a larger pattern related to the waxing and waning of optimism about India’s economic prospects,” he adds.

Instead, LBS’ Kumar believes C-suite talent from India and other emerging markets are under-presented in the top management of global firms and that the recent string of events do not constitute a pattern.

“Companies still need to add diversity,” he explains, “They still need people who intuitively understand emerging markets. That requirement hasn’t changed because these are the growth markets of the future.”

Although former Procter & Gamble India CEO Gurcharan Das doesn’t deny that the re-focusing of multinational corporations, from driving growth in new markets to consolidating core markets, are functions that could require differently tuned talent. He says the “smart companies are still chugging away in emerging markets”, still.

“But companies always take the best talent available regardless of nationality,” Das adds, “That’s the thing about MNCs.”