When the in-house India expert becomes a risk
A true story about addictions, loss of control and the comeback through crisis management
It’s a true story – but not a unique story. Rather, it is a story that we have come across time and again in different companies in recent years and could happen to you too…
The perfect man for India?
He was charismatic, assertive and hands-on. Spoke the language of the customers – and that of his Indian colleagues. Jokingly called himself Mr. India – and was perceived in the same way from the outside: as a bridge builder, facilitator, intercultural translator. He quickly and seemingly effortlessly built up structures in India, established a growing team and was the point of contact for demanding international customers.
Apparently the perfect employee for the India business…
The initial situation:
A European industrial company with ambitious plans in India recruited a former expat who had worked for several years in India as an expat CFO for German SMEs. The employee therefore had experience of India, spoke convincingly about the culture and processes, presented himself as a pragmatic doer – and quickly gained a great deal of trust internally.
Charismatic, confident and assertive as he seemed, he delivered results: A branch was set up, the local team grew, processes were adapted in a “typically Indian” way and customers praised the rapid response.
The management in the home market was delighted – finally someone who knew their way around and didn’t have to ask about every detail. A stroke of luck. They thought. Someone who would take responsibility and “just do things” operationally. And because everything happened quickly, because results were achieved, for a long time nobody fundamentally questioned how these results came about.
But this is where the real story begins.
Phase 1: Success through operational strength – with blind spots
What nobody saw was that the entire structure in India depended on one person. Decisions were barely documented, local employees were effectively bound by the instructions of the local manager. Queries or insights were blocked with reference to “Indian customs”.
Internal reporting? Was “discussed verbally”, “I’ll take care of it quickly”, “we simply implemented it quickly and pragmatically”.
What worked on paper was in reality an informal, opaque parallel structure – supported by the trust of the head office, nourished by the self-image of “Mr. India”.
Phase 2: First cracks in the image
The first indications of irregularities did not come from the industrial company’s internal audit department – but from customers. Deviating price agreements, unclear processes, “But Mr. XYZ had promised us that”. At the same time, more and more employees in India were complaining about the communication style, decision-making processes and “internal power games”.
But nobody at the parent company wanted to shake up the supposedly successful model. Until sensitive information suddenly emerged from India in a foreign market.
The suspicion: someone could be pursuing their own interests beneath the surface – with resources and knowledge from within the company.
Phase 3: The reappraisal – and the shock
An external compliance check revealed what hardly anyone would have thought possible internally:
- Hidden networks: relationships of trust with external service providers with economic ties.
- Disregard of corporate governance principles: Payments without approval, personnel decisions without transparency, the use of risky “alternative channels”, breaches of code of conduct, legally dubious behavior.
- Establishment of an informal power system: decisions were deliberately made without a central office, documentation was avoided, an “inner circle” of a few employees who benefited personally through a non-transparent bonus system was established in the Indian company and dependencies were created.
- Suspicion of data transfer: Content in the hands of third parties whose origin was not traceable.
A structural risk had established itself – protected by charisma, operational speed and the myth that “India is different”. Our case study on the topic of “loss of control” describes
Phase 4: The liberation blow
The company pulled the ripcord. The manager in question was let go, an external crisis team was set up and the entire India organization was restructured. In a process lasting several months:
- Operational management replaced by a neutral COO model
- Introduced a multi-level control system with local responsibilities and reporting obligations
- Streamlined the service provider structure and carried out new tenders under compliance supervision
- Established a preventive escalation system that also takes local indications seriously
An unpleasant but sustainable learning process for the company.
Lessons learned from the incident – relevant for every international company.
What sounds like an isolated incident is a typical risk in international markets: People rely on “key people” who mediate culturally and make decisions quickly. And you realize too late that these very structures are susceptible – to abuse of power, lack of transparency and self-empowerment.
The most important lessons learned:
- India needs leadership – not by individuals, but by systems
- Control is not mistrust – but an entrepreneurial duty
- Cultural characteristics must not be a shield for a lack of transparency
- Governance must be anchored locally and monitored globally
- Responsibility and decision-making power must be separated
Conclusion: The price of carelessness – and the power of professional crisis management
Today, the company in question is stronger than ever before in India. The organization is more resilient, the team more motivated, the management more transparent. Not least because external support was sought – from consultants who can not only analyze crises, but also solve them operationally.
Because sometimes sustainable strength only comes from a crisis.
Do you suspect risks in your foreign units or do you need structural resilience for your India organization? We can help you – with the experience of over 20 years of business in India and the knowledge gained from real crises. Get in touch with us now.