Boards fail in their duties when they allow CEOs to dominate, says Indra Nooyi

Indra Nooyi worked at PepsiCo for 24 years, 12 of them as CEO, before stepping down in 2018. (Illustration by Suneesh K)

When companies' boards allow the CEOs to be imperial, set the agenda to dominate and manipulate them, they fail, said Indra Nooyi, former PepsiCo CEO, on February 18.

“There are many CEOs, mostly men who are imperial, because somehow the belief is that when you become CEO, you've been anointed kind of king. That's not what people expect from the CEO. The people around them, including the board has to keep them under check. When boards allow CEOs to be Imperial boards have failed in their duties,” said Nooyi at the NASSCOM Technology and Leadership Forum 2022.

She was in conversation with Wipro Executive Chairman Rishad Premji. The three-day NTLF is being held from February 16-18. She was responding to Premji's question about leadership.

According to her, the consequence of having imperial CEOs, who think of themselves as kings, is that the model starts to transmit itself down the chain. “So the next level behaves in an imperial way and the next level behaves in an arrogant way. Pretty soon, the company is just not a place where you want to come to work,” Nooyi explained.

Nooyi pointed out that with the world changing, companies will have to move from hierarchical to networked model, where there is no room for someone to be superior to others, and it is about competence. “So, CEOs of today have to be lifelong learners. That's the biggest change,” she said.

Nooyi, who recently authored the book My Life in Full, also spoke about the importance of driving diversity and inclusive behaviour in an organisation. “Diversity is a numbers game. If you don't have 20 percent of your employees, at least women, or 20 percent of your senior managers diverse, you can't train your people on inclusive behaviour,” she said. To drive this, one needs to start with the critical mass of diverse talent, even if you need to do forced hiring, and then put inclusive behaviour on top of that.

Failures are another area that leaders need to get accustomed to. “I had my share of failures all the time, from the time I entered my corporate career and at home,” Nooyi said, and recalled the time when they pulled out of the new marketing programme, Pepsi Refresh, which critics thought was inconsistent with the brand, which she agonized over.

“But as long as the cost of failure is low, and you learn something from the failure, it's okay. Life's about failures,” Nooyi said.