Mahindra board relies on veterans to lead change
MUMBAI: Mahindra & Mahindra’s board is betting on tried and tested leaders from within the group to take over key positions to lead it in a market that is undergoing transformation.
The maker of sport utility vehicles and tractors announced more names on Monday to head its second rung of top management, relying heavily on internal roster.
The developments are part of the second phase of M&M’s succession plan, following last week’s announcement that Anand Mahindra would step down as executive chairman of the board, but continue as non-executive chairman, effective April 1.
The company said on Friday that Pawan Goenka would be re-designated managing director and take additional charge of CEO with effect from April 1, till retirement in 2021. Anish Shah will succeed Goenka after April 1, 2021.
In fact, the top-level management at the auto maker has hardly relied on lateral hires even as the group went global, making acquisitions and entering foreign markets with products made in India.
Analysts tracking the developments said the company may be taking one risk too less in the everevolving market space by promoting in-house talent. Rival
, for instance, had brought in a globally proven talents like Carl-Peter Forster and Guenter Butschek to take its brand forward. Truck makers
, too, have relied on a leader from outside to chart its future course.
VG Ramakrishnan, managing partner at consultancy firm Avanteum Advisors, “Mahindra is a well-oiled organisation with a solid governance structure in place. An outsider may be needed to change the culture, but Mahindra is not at a stage of such transformation, hence they don’t need a radical change. Plus, where is the talent in the automotive industry today? It is better off to reward internal talent even though they may face challenges in retaining volumes or market share.”
M&M cannot be faulted for not participating in future disruptions like shared, electric or autonomous vehicles, but experts say there is need for a fresh approach or a set of young leaders — dynamic, aggressive or risk-takers — to pursue an approach different from its conservative, long-haul perspective.
An outside view may be missing, but at least key roles have gone to young talent from within the group.
BUILD VERSUS BUY
Most organisations have an explicitly defined build versus buy philosophy. Typically, mature organisations work on an 80:20 ratio — meaning most senior positions are placed from within the organisation. A higher build also signifies a sign of maturity of succession planning practices and drives a structured plan for providing career visibility to internal, high potential talent, said Anurag Malik, Partner – People Advisory Services, Ernst & Young.
The auto maker has started implementing recommendations by management consultant BCG on a Simplicity project it undertook more than a year ago, but the results have yet to show.
Whatever the management changes, industry experts said the company should get back to its winning ways, especially in the utility vehicles space where its market share has dipped to less than half, compared to eight years ago.
The three automotive products it launched recently have not been too successful. Additionally, strain of its two-wheeler and electric vehicles business, both of which have yet to see healthy growth, and a painstaking endeavour by subsidiary Ssangyong Motor Company to build scale and get back in the green, too, has not borne fruit.
Given the competitive scenario, regaining past glory is challenging for M&M, especially in utility vehicles, Ramakrishnan said. “It still needs a steady pair of hands to move the company in a direction that has been defined,” he reasoned.
Goldman Sachs said in a note to clients that M&M’s underperformance in various auto and non-auto businesses in the last few quarters has pulled down its consolidated results despite the solid performance of the domestic business.