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Companies must prevent good talent from leaving and not so good talent from staying: Harsh Mariwala

21 Feb 2022

Release on Mariwala session

When business founders face the choice between retaining senior managers who have built the business in the past and installing new leaders who can take the business to the next stage in growth, they must deal with the situation head on, says Mr Harsh Mariwala, Chairman Marico Limited.

"If an organization tolerates people who cannot perform, it demotivates others...Good talent may leave and the not so good talent will continue," he said in a conversation with Mr CK Ranganathan, President, AIMA & Chairman & Managing Director, CavinKare Pvt Ltd during AIMA's 66th Foundation Day programme.

Mr Mariwala was honoured with AIMA Life Time Achievement Award for Management on the occasion.

Mr Mariwala said that every company faces the dilemma about loyalty to old managers during its growing years and he himself had asked many people at Marico to go because they were not relevant anymore. "Organization's interest comes first and then of any stakeholder," he said.

Talking about choosing between promoting potential leaders from within and hiring ready leaders from outside, Mr Mariwala said that it entirely depends on the person under consideration. Unless the internal candidate suffers from some fatal flaw, according to him, it is better to opt for the known because it carries less risk and the only bet is on time it would take for the internal person to mature.

However, while selecting people to lead digitalization, companies must have experts instead of hoping that their people will learn. Company must look at digitalization from the opportunistic lens, he said.

On the issue of board composition, Mr Mariwala said that board is a source of competitive advantage and the chairman should first identify the required competence and find matching people. After that, he said, the board must be allowed to focus on strategic issues. He said that currently the three most important issues for corporate boards are technology, ESG and inflation.

Regarding his experience in building corporate culture, Mr Mariwala said that when he founded Marico and hired a large number of senior managers, each came with own beliefs and style. To build a unified organization culture, he said, it took him 3-4 years of intensive work with the senior leadership. He said he focused on trust and innovation in the culture, as it allowed experimentation and risk taking. "A competitor can copy your innovation and you need to do something new perpetually," he said.

On the issue of succession planning, Mr Mariwala said that it was his belief in the perpetuity of organization that made him step down and promote a professional to the CEO role. "The organization needed fresh thinking to look at opportunities from a different mindset," he said. He pointed out that in the past 7 years, the market capitalization of Marico has gone up 4-5 times, which has vindicated his decision to undertake planned succession.

Commenting on his social responsibility activities, Mr Mariwala said that he believes in personal social responsibility in addition to corporate social responsibility. He said that he does not want to give donation and instead he wants to be actively involved in his chosen social projects. He said that he had picked mental health care and entrepreneur mentoring as his personal social responsibility.

Recalling his battles with Hindustan Lever, Mr Mariwala said that around the time Marico went public in 1996, HLL had acquired Tomco from Tatas with Nihar coconut oil brand which was a competitor of Marico's Parachute. He came under pressure from investors and bankers to sell Marico to HLL but he decided to take HLL on. Ultimately, after about five years, HLL gave up on the coconut oil category and they put Nihar brand up for auction and Marico went all the way to acquire it. That acquisition created a very good feeling in the Marico organization, Mr Mariwala said.

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