Decoding why Neil Mills resigned as SpiceJet CEO

If a company is witnessing high employee turnover at the lower or middle levels, nowhere else do you need to look for reasons but the immediate bosses. If it is the top level executives who are quitting, you can safely assume that there is something wrong with the management.

Should we apply this logic to SpiceJet, the low-cost carrier which witnessed two top level exits in a short span? Media reports suggest yes.

According to a report in the Times of India yesterday, SpiceJet’s expat CEO Neil Mills quit due to the differences with promoter Kalatnithi Maran.

[caption id=“attachment_985333” align=“alignright” width=“380”] Neil Mills. Reuters[/caption]

“Mills is a serious professional. He wasn’t too happy here…,” the report quoted sources as saying.

The slow pace of decision making in India had made Mills unhappy, said the report. (The company offered no comments for the report.)

While this seems to be the most likely reason for the sudden exit of Mills, there are indications that expat CEO resignations are a pattern in the Indian aviation.

Mills’ resignation from SpiceJet is not a one-off incident in the troubled sector, a report in the Business Standard points out today.

Earlier such instances are that of Alex Wilcox, Kingfisher’s first president and chief operating officer, Nigel Harwood, who had replaced Wilcox, Graham Williamson, who resigned from GoAir even before it was launched, and Edgardo Badiali, of the same airline.

Reading all these together, it is to be assumed that there is something seriously wrong with the Indian way of managing a company.

For most of the Indian companies, management means micromanagement. Coming from a different work culture, expat CEOs have a different style of functioning. This gives rise to frictions with the management.

According to the BS report, Mills was not given operational freedom.

“Indian promoters hire foreign CEOs because of their experience in aviation, but generally do not give up control of management,” Parvez Damania, promoter of Damania Airways, has been quoted as saying in the report.

The deep troubles in the Indian aviation sector only worsen the situation. Company managements are on constant look out for investors to overcome the funds constraint.

Each time a new investor comes in, a top-level churn takes place, the BS report says. A case in point is the changes that SpiceJet itself witnessed after Wilbur Ross invested in the company in 2008.

Sanjay Agarwal, who was until then with the US’ Flight Options Inc, joined SpiceJet on 20 October 2008, after Ross made its investment. He quit the company after serving nearly two years to join Kingfisher Airlines.

According to another report in the BS today, even Mills’ exit has given rise to speculation that SpiceJet may be paving the way for a new investor in the airline.

It has to be remembered that the company has been unsuccessfully trying to rope in a foreign investor for some time now.

Another reason for the frequent churn at the top level of airlines is the managements’ insistence on quick turnaround, which, in the given situation, is a tall call.

According to the ToI report, top executives of SpiceJet were held responsible for the company’s failure to catch up with rival IndiGo.

“SpiceJet has been struggling on both financial and operational fronts despite having a stable and deep-pocket promoter for the first time in its chequered existence,” the report quotes the sources as saying.

The changes at Kingfisher Airlines also had happened when the airline was going through a rough patch.

So the crux of the problem is the financial strain that the sector is currently in. Not even the new FDI norms have been able to change anything in the sector as the only investment that has happened is itself stuck due to controversy.

So expect more such churns at the top level.