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Why this leader deserves her success

March 24, 2007 11:21 IST

Indra Nooyi's selection to lead PepsiCo is a cause for celebration not only for Indian Americans, but for all communities. There are many reasons for this.

She is an Indian woman who immigrated to the United States, and who has been chosen to shape the future of one of the largest branded companies in the world. Her achievements along the way have been well chronicled by a series of awards and recognition from a number of premier sources: Fortune magazine recently named her the Most Influential Woman in Corporate America; she is the recipient of the Padma Bhushan Award by the President of India, and she has been singled out as one of the top ten most influential Asians. The list goes on.

This tribute by the leading weekly for the Indian Diaspora in North America, India Abroad, as Person of the Year, is both exquisitely timed and well deserved.

Being named chief executive officer of a mega-sized, global company is a huge accomplishment anywhere in the world. The fact that Indra is also an immigrant South Asian woman is noteworthy. The fact that she has been chosen because she is the best person for the job, regardless of gender or ethnicity, is the greatest accomplishment of all. Her success, therefore, is reason for people from all walks of life and all ethnic groups, to take pride in her accomplishments -- not just Indian-Americans.

Let me explain: since 1999, I have had the honour of serving as chairman and chief executive officer of Rohm and Haas Company, an $8 billion global specialty chemicals and materials firm. I have served on the boards of three public companies: Airgas, Technitrol and Unisys, and am currently a director of Tyco International and the Vanguard Group. I cannot help but view Indra through the prism of the profound obligations on the shoulders of all boards of directors during these tumultuous times.

The last decade has witnessed a sea change in the global business environment, largely driven by globalisation and geopolitical uncertainties. These external challenges, combined with high profile cases of corporate misconduct (accounting irregularities, excessive executive compensation, back dating stock options), have tarnished the public trust, and brought forth a dramatic escalation in the oversight of publicly-owned enterprises. Quite rightly, all stakeholders (investors, the general public, business and general media, government regulators, employees and customers) have raised the bar of expected performance. Boards today are held to account as never before and their expectations of a chief executive have been raised even further.

As a consequence, the selection criteria for a chief executive are manifestly more stringent and broad, not only in the US but around the world. Gone are the days of an imperial CEO who could stack boards with friends and influence compensation. This was always wrong. Today, boards are increasingly independent and genuinely focused on their single most important responsibility - looking after the long-term interest of shareholders. The four most important aspects for them to deliver on this responsibility are: Selection of the CEO, ensuring a credible strategic plan for the company, ethical behaviour and ensuring comprehensive tracking of all aspects of compliance.

Every board today has CEO succession as its highest priority. I cannot be sure what specific factors PepsiCo sought to fill during its deliberations, but generally speaking, boards seek a candidate who demonstrates the highest level of integrity, knowledge of the industry (and the culture of the firm), a record of superior achievement over a long period of time under different circumstances, the ability to build strong teams, and an appetite for high performance. Well-known and high profile companies like PepsiCo surely also require a chief executive who will lead from the front of the enterprise, accept the responsibilities that go with the public spotlight, and possess the presence and communications skills to excite the passions and support of all of its business partners. Indra clearly met all of these criteria.

US public company boards are leading the way in selecting the best candidate they can find as their CEOs, either inside or outside the organization, irrespective of ethnicity, geographic origin or skin colour. This reflects the US focus on merit as the prime differentiator among aspirants. Among Fortune 500 companies, you will find African Americans leading major companies like Time, American Express and Merrill Lynch. You can find women leading successful and large companies like Pepsi, ADM, Xerox, Avon, Sara Lee, Kraft, E-Bay and others. Asian men are at the forefront of Schering-Plough, Hartford Insurance, Quest Diagnostics, Sigma-Aldrich, Rohm and Haas, and more.

Of course, there is still a way to go to achieve real diversity among CEOs of major companies. Today, approximately 5 percent, or 25 of these positions, are occupied by women (both Americans and Asian), African-American, Asian and a few Latin men. Progress has been tangible, but corporate leadership in America does not yet reflect the demographics of its population.

The very good news is that just below the very top are an enormous number of senior positions occupied by a diverse slate of incumbents. We hope they will earn their way to the very top. Those who do will demonstrate that extra spark, talent, resilience and tenacity are essential to overcome any final barriers.

Indra Nooyi has scored many firsts through her performance, perseverance and leadership skills. Her greatest achievement will be the inspiration she provides to others who have the passion and the hope of rising to the top of corporate America. I am thrilled to celebrate Indra Nooyi's success and sincerely hope this celebration is shared equally not only by Indian Americans, or Asian Americans, but by all. We extend our congratulations and very best wishes for a long and highly successful tenure as the chief of Pepsi. 

-- Raj L Gupta is Chairman, President and CEO, Rohm and Haas Company, a Fortune 500 company

Raj L Gupta