Air-India: Get The Right CEOs
The Government has appointed Rohit Nandan as Chairman of Air India, a bureaucrat from the Ministry of Civil Aviation with no seeming experience of ever having run a corporation, leave alone an airline. Nothing unusual because in Air-India's long history, this is sorts who have been appointed to this position and arguably the reason for many of the airline’s problems. The lesson and the solution should apply not just to Air-India but all such Government-run corporations.
Since his appointment in early August 2011, Mr. Nandan has made all the right noises. Be that as it may, he’s perhaps not the best qualified person for this job at this perilous time. As an example, in the decade before he joined the Aviation Ministry (in a bureaucratic role), his responsibilities in Uttar Pradesh state ranged from running general administration to the welfare of the disabled and handicapped. And finally rural development. The table below breaks it up (Note: First 5 positions are in the state of Uttar Pradesh so total of 2 years of aviation experience).
Smart Suitors Exist
We don't want to get into the economic and social climate of Uttar Pradesh or take you back further in the gentleman's career, the details are all in public domain and mostly insignificant. At least for the role we are examining. Incidentally, Mr Nandan did do a 1-year MBA from the University of Hull in 2000. It’s possible he's a smart bureaucrat who has been unfairly kicked around by a vengeful political administration. But that too does not wash when it comes to being the guy trying to save a sinking airline.
SPR Foundation feels the Government could find suitors in the public sector (which is government owned too) as well. People who can run real businesses in real market conditions. Most C-suite executives in the state-owned oil and power companies (ONGC, IOC, NTPC) qualify. And there are others. Coal India Limited just became the most valued company on the Indian bourses (Market cap: Rs 246,780 crore ($55 bn).
So, what if the Government called upon N C Jha, the Chairman of Coal India, congratulates him on the good job done and offers him a real challenge. Of turning around a company that is not in a monopoly space anymore. Or, additionally, call upon someone like D K Sarraf, Director (Finance) at ONGC to take charge of finance. He was recently adjudged Best CFO in the Public Sector, an award instituted by magazine Business Today. And importantly give them the kind of freedom (its relative) they are used to now.
The Good Guys
As many of us know, Government organisations are not run badly because there is no talent within, but it’s just the wrong guys get chosen the most often. There are many bureaucrats who have run 'corporations' successfully too, including later in the private sector. R C Bhargava and Jagdish Khattar are good examples. Both joined car maker Maruti Udyog (now Maruti Suzuki) in the role of Director (Marketing) before going on to head it. Bhargava was earlier a Director at Bharat Heavy Electricals while Khattar held the CEO's position in several state-level corporations and India's Tea Board.
So, if you want to move from an administrative function to a corporate function, start a little lower. Air-India is a classic case where the totally unqualified usually land up right at the top. The Government of India must forget internal turf battles and look at calling in leadership with business experience.
Accumulated losses as we said are at Rs 22,000 crore ($4.8 bn) as of March 31 this year. Annual revenues are only around Rs 13,000 crore ($2.8 bn). Salaries are behind by several months for many employees. The other and perhaps unkind view is that this is truly a job for someone with experience running a department for the disabled.