Axis Bank: The Succession Planning Fiasco


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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:

Price:

Case Code : HROB122 For delivery in electronic format: Rs. 400;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges

Themes

Succession Planning / Leadership development / Recruitment and Selection
Case Length : 26 pages
Period : 2004-2009
Pub Date : 2009
Teaching Note : Not Available
Organization : Axis Bank
Industry : Banking
Countries : India

Abstract:

This case discusses the issue of succession at Axis Bank Ltd. (Axis Bank), India's third largest private sector bank. The case details the growth of Axis Bank under Pangal Jayendra Nayak (Nayak) the CMD of the bank from January 1, 2000 to April 20, 2009. Analysts credited him with taking the bank to a new level during his tenure. However, Nayak also attracted criticism for his failure to identify and groom an able successor to lead the bank after the end of his tenure. In early 2009, the board of the Axis Bank initiated the succession planning process and hired a global HR firm, Egon Zehnder International to identify the new CEO. After many months of scouting and intense media speculation about Nayak's successor, the Axis Bank board zeroed in upon Shikha Sharma (Sharma), the then CEO and chairman of ICICI Prudential Life Insurance Company Ltd., as the new CEO and MD of Axis Bank.

The decision was opposed by Nayak as he reportedly wanted an insider to succeed him. According to Nayak, Sharma did not have the relevant banking experience to take up the position and in any case he felt that people who had been involved in building up the bank should be asked to lead it. The board, however, contended that the insiders who were front runners for the position were experts in their fields but lacked an overall vertical experience.

They also criticized Nayak for not grooming his successor. With the board deciding to go ahead with the appointment of Sharma, Nayak quit the bank well before his tenure was to end July 31, 2009. As Sharma joined in her new role as the CEO and MD of Axis bank in June 1, 2009, industry observers felt she had her job cut out, considering the succession drama that unfolded at Axis Bank after her name was announced as Nayak's successor. Another challenge before Sharma was to spur growth in the bank that had a culture that was in stark contrast to that of the ICICI Group.

Issues:

Understand the significance of succession planning and leadership development in large organizations.

Examine the impact of issues like corporate culture, leadership, and shareholder management with regard to succession planning.

Identify the problems an organization has to face due to the lack of a succession plan.

Understand the role of a CEO in the performance of a company.

Understand the challenges in bringing in a new CEO.

Contents:

  Page No.
An Unexpected Departure? 1
Background Note 3
Nayak's Reign at Axis Bank 4
The Issue of Succession 6
No One to Fill Nayak's Boots? 7
The Search for the Successor Begins 9
New Successor Amidst High Drama 11
Nayak's View 13
What Others Say 13
The Road Ahead 15
Exhibits 16

Key Words:

Succession, Succession planning, Leadership, Leadership development, Grooming, Recruitment, Selection, Shareholder management, Corporate culture, Empowering, ethics, Banking, Axis Bank, ICICI Bank

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