September 7, 2025

Appointing a CEO is the biggest job for any company's board. It’s more than just a duty; it shapes the company's future. But history has shown us how quick, careless checking can turn this serious job into a disaster. Just this week, Nestle fired CEO Laurent Freixe after he hid an affair with a worker. Not far off, Astronomer's CEO Andy Byron quit after getting caught hugging a co-worker on a concert's 'kiss cam.' Before that, Kohl's CEO Ashley Buchanan was kicked out just four months in because of secret deals favoring a vendor linked to his ex-partner. Boards missed the hidden signs, letting small problems become huge scandals. Now, India’s Sebi has relaxed rules on related-party deals, a risky move Indian companies might regret. This change could hurt small shareholders, especially since India often faces problems like family-run companies without clear rules, secret loyalties, and unclear leadership plans. A 2018 study showed 97% of Indian family businesses don’t have formal plans for who leads next. When a leader leaves suddenly, boardrooms often turn into battlefields. Take Sona Comstar—the sudden death of Sunjay Kapur led his wife and mother to fight over control, leaving the board confused and the company’s future shaky. Indian boards struggle with five big mistakes when picking CEOs: 1. Forgetting to check online history: Boards must dig deep or journalists and whistleblowers will control the story. 2. Believing fake big claims: Like a former NSE official made a big boss without real checks, causing a huge mess. 3. Misunderstanding early warnings: Sometimes, red flags come from mix-ups, like a good candidate wrongly connected to crime because his identity was faked. 4. Blind trust in friends and family: Boards think knowing someone well means they're honest, but this often leads them wrong. 5. Ignoring hidden conflicts: Secret deals, confusing company links, and hidden loyalties are common and dangerous, as seen in the ICICI Bank-Chanda Kochhar case. India has seen too many boardroom goofs. NSE’s co-location scandal and the resignation of MD Ravi Narain highlighted weak succession plans. His successor Chitra Ramkrishna even got in trouble for consulting a mysterious 'Himalayan yogi!' Boards must stop thinking CEO change is just a formality. They need a gold standard: always check outside help—lawyers, risk experts, headhunters—to avoid falling for lies and false hopes. Thoroughly check a candidate’s social media, legal issues, and news. Dig into their real connections to spot secret business ties or family links that can cause bias. Verify their certificates and qualifications carefully. Come ready with plans to handle any trouble after hiring. CEO hiring should not be a gamble but a clear match of character, skill, culture, and values. The CEO tells the company’s story. Pick the wrong one, and you don’t just change the story—you destroy it. It’s a big problem in India, a ticking governance bomb. As Jon Lenzner warned, "Don't let your next CEO be your next crisis." With Sebi loosening rules, India Inc might be rolling out the red carpet for the next big scandal. (Disclaimer: The opinions expressed here are the writer's own and do not reflect the views of www.economictimes.com.)

Read More at Economictimes →

Tags: Ceo selection, Board governance, India inc, Sebi rules, Corporate scandals, Succession planning,