After a two-year stint, Flipkart CFO Sanjay Baweja has put in his papers. He is one more among the long list of people at the management level who have quit the company since the beginning of this year.
The churn at Flipkart will continue for some time and some more heads will roll, said an analyst. India will continue to be the most important destination for e-commerce for some time and until the space gets consolidated with foreign players tying up with existing majors in the country, this churn as seen with the CFO leaving Flipkart will continue.
Most experts who have been keenly watching the e-commerce churn and development in the country feel that a CFO leaving a company should not be given too much emphasis as it is par for the course. Employees leave for myriad reasons, says Ankur Bisen, Senior Vice President of the Retail and Consumer Products division at Technopak Advisors. “What is important to watch out for is if these movements impact the business.”
The Bansals have long been sidelined and are not calling the shots at Flipkart, a source close to the development said. “Kalyan Krishnamurthy (of Tiger Global, a key investor in Flipkart) is the man at the helm now,” he said, adding that Krishnamurthy is letting go of people who he finds are short on performance.
Though Walmart and Japanese and Korean firms are interested to make an entry into India through investing in Flipkart, the issue is that the management is putting restrictions. “It is like putting gold handcuffs even before negotiations are complete,” a source pointed out.
The investors in Flipkart want to shed the excess strength that the e-commerce major has acquired through its early hires. When the performance and job delivery do not match their high salaries, they have no choice but to leave, said an analyst.
There can be forced exits like what happened with Cyrus Mistry, former chairman at Tata Sons or there can be graceful exits with the man or men being given an option to resign and leave. But the message is clear: Top heavy talent that does not deliver is no longer needed at the firm.
“The e-commerce company is looking out for funds and at the current level of cash burn, the funds can be sustained for a year only. The management at Flipkart is top heavy with most people at this level taking home hefty salaries. Their salaries have been pruned by 40 percent with stock options. So, if a senior management employee was paid a crore, he now gets Rs 60 lakh and 40 percent stock options. There has been 30 percent cut in salaries at mid-level and 10 percent at lower levels across the organisation. Obviously, there will be a lot of churn and people will be looking out for better opportunities,” an analyst said.
Prior to Baweja, Flipkart's head of commerce and advertising business Mukesh Bansal and Chief Business Officer Ankit Nagori had resigned in February this year. Nagori quit the firm to start a venture in the sports domain where Flipkart's Co-Founders Sachin and Binny Bansal are the first investors. Later in April, Flipkart's Chief Product Officer Punit Soni and Vice President and Head of Seller ecosystem Manish Maheshwari resigned (Full disclosure: Maheshwari is now with Web18). In July, Flipkart lost two more senior executives -- Payment product head, Lalit Sarna and product lead for marketplace division, Sunil Gopinath.
People leaving an organisation also indicate that the organisation has enough talent and can do without them. “When any senior management employee leaves an organisation, it does not mean things are coming to an end for the firm. It indicates that the organisation has a structure in place and is not dependent on few individuals for its survival. The ecosystem is robust to sustain it,” says Harish HV, Partner, Grant Thornton.
Flipkart cannot be compared to a startup where it is dependent on a few key individuals for its survival, says Bisen. “There are people leaving at senior levels in key IT firms too. But that does not impact the businesses as this churn is expected with employees looking out for better opportunities or getting better positions.”
There has been a large churn though at Flipkart for some time. “There are many senior level people who have posted their resumes with hiring firms and are looking out for better opportunities,” says Kris Laxmikanth, Chairman & Managing Director at The Head Hunters India; and visiting faculty, Institute of Management, Ranchi. “There is performance pressure at Flipkart and it is leading people to look out,” he said.
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Updated Date: Oct 26, 2016 13:43:10 IST