Technical Knowledge Drives Hiring CXOs
Knowledge of new era digital technologies is becoming indispensable for senior executives of Indian companies across all sectors. Whether it’s manufacturing, e-commerce, or financial services, the demand for CXOs who have a good grasp of technology is preferred over those who have spent more years in a field.
According to HR consultants, more than length of experience, diversity and breadth of experience is what drives the hiring of the top management layer. The need is due to the increased requirement for agility in the functioning of leaders, so that they are able to adapt to a rapidly changing, volatile and highly uncertain business and economic environment since the start of the pandemic. of Covid-19.
Roopank Chaudhary, partner and commercial director, India and South Asia at Aon, told FE that instead of looking to have 10 years of experience in manufacturing, or eight years in telecommunications, or nine years in services financial companies now prefer to have someone with maybe six years of experience, but having worked in banking and technology or worked in a startup and fintech, or say in automotive manufacturing and technology.
“What the pandemic has taught is that you have to work in different fields and jobs, and if you’re stuck with just one type of experience, that actually works as a disadvantage. It is the diversity of skills and experience that is valued more than the length of experience,” Chaudhary said.
He added that with the dynamic business environment, companies are looking for candidates who can adapt to rapid changes in case the company wants to change its business model or drive technological transformations.
CXOs with experience and capability in agile working are also seeing higher demand and bigger salary increases, HR consultants said.
With the environment becoming very fluid, there has also been higher than usual CXO movement since the pandemic recovery. Rajul Mathur, India Consulting Leader (Work and Rewards), WTW said the volatility and churn in CXO nominations has affected most sectors in the country. “The most notable moves are in the startup ecosystem, in technology and e-commerce organizations. While CXO moves can be noticed across all functions – sales, marketing, technology, business functions, supply chain sourcing, manufacturing, HR and finance, the gap between demand and supply remains higher for roles such as chief digital officer and head of business development,” he said.
In fiscal year 2021-22 compared to 2018-2019, salary increases were also highest for chief digital or technology officers with a median increase of 14% and 13%, respectively. This is followed by chief risk officer at 12% and others in the 8-9% range, according to Aon.
In a recent executive compensation survey conducted by Deloitte India, the average compensation of Indian CEOs reached a three-year high in FY22 at Rs 11.2 crore and the median at Rs 7.4 crore. This includes compensation for promoter CEOs as well as professional CEOs and takes into account long-term incentives.
In FY21, the average CEO salary was Rs 9.4 crore and the median was Rs 6.4 crore, which was slightly subdued compared to 2020 when the average salary with long-term incentives term was Rs 9.8 crore and the median was Rs 6.9 crore.
According to Aon’s Chaudhary, there is also a shift in incentives from ESOPs (employee stock option plans) to RSUs (restricted stock units) that companies now offer to senior management. “People are switching from stock options to RSUs because in ESOPs a person has to buy that option. Also, because the markets are volatile, people don’t make money in ESOPs and they’re not really a favorite flavor anymore,” he said.
However, RSUs are becoming increasingly popular to attract CEOs and CXOs. “The person has to pay a face value. So let say if the stock price is Rs 2,000, in an ESOP you will have to pay Rs 2,000 and if it becomes Rs 3,000 you make money and if it drops to Rs 1,000 you lose it. In RSUs, you pay a nominal or face value amount which could be Rs 100, and if the stock goes down to Rs 800 from Rs 1,000, you have still made money. The only downside is that the stock price doesn’t go up as much, so the upside is limited, but there’s no downside,” he said.
According to Chaudhary, in an ESOP, although there is a very high upside, but in the last three years, there has also been a very high downside.