Who’s who in global ranking of India’s best CEOs?

Friday, 20 January 2012 00:01 - - {{hitsCtrl.values.hits}}

Business Today, India’s most read business magazine; INSEAD, the leading international business school; and Harvard Business Review today announced the results of the first-ever global ranking of India’s best performing CEOs. INSEAD professors Bala Vissa, Morten T. Hansen, Herminia Ibarra & Urs Peyer conducted the exclusive study.

INSEAD’s ranking of Indian CEOs, based on the long-term shareholder returns they generate, builds on Hansen, Ibarra and Peyer’s pioneering article in the January 2010 issue of the Harvard Business Review, which ranked 1,999 corporate leaders from 1,205 global companies on the shareholder performance they delivered over the course of their tenure.

The period taken into consideration for the India rankings was 1995 to 2011. Initially, CEOs from companies that had been in the S&P CNX 500 for at least four consecutive years were included. Their financial performance was measured until the last day of the CEOs’ tenure or until June 30, 2011, if they were still in office. The ranking combines three measures: country-adjusted shareholder return, industry-adjusted shareholder return, and change in market capitalisation during tenure. In total, 374 CEOs from 202 companies were ranked, of which the Top 25 CEOs’ names were revealed.

The study also revealed several interesting insights. For instance, CEOs with an MBA degree did much better in the ranking, showing that the degree did help people run Indian companies. While CEOs of private companies and those leading foreign multinationals operating in India did equally well, the leaders of state-owned companies did not fare as well. Also, CEOs who took over from unsuccessful predecessors produced better results, suggesting a “runway effect”. Finally, CEOs of telecommunication companies and those in the information technology sector fared less well than CEOs who ran companies in infrastructure-related sectors.

In an essay articulating the methodology and findings of the survey, the authors write: “Our long-term focus and analysis of Indian companies is particularly timely. Indian companies have been exposed to serious foreign competition only since the economic reforms of 1991, and that decade saw many of them improve their game significantly to emerge stronger and grow rapidly in the 2000s. The question of what makes for good executive leadership takes on increased importance as these companies face new challenges resulting from this rapid growth, as well as a possible cyclical slow-down in the Indian economy in the next few years.

“The overall image that emerges from our data is one of hope and optimism: A crop of relatively young CEOs armed with MBAs, often from top Indian business schools, are delivering shareholder performance in an economy where it is a challenge to sustain competitive advantage. A number of these high-quality CEOs are able to perform extraordinarily well in any type of private enterprise – firms linked to Indian business houses or to foreign multinationals. This suggests that traditional Indian business houses are successfully professionalising their upper echelons.” (’Article from INSEAD Knowledge http://knowledge.insead.edu’) For the full essay, a more detailed ranking, and articles on the CEOs, read Business Today’s issue dated February 5, 2012 or go to www.businesstoday.in/bestceos.