Governance: how should we think about ‘perfect’?
- Opinion
- August 29, 2022
The fall of Enron in 2001 – a Wall street darling and hailed as America’s most innovative company for successive years in the 90s – was my first exposure to a corporate governance failure, especially of a boardroom and audit committee. The Enron Scandal, as it came to be known, shook the world and made corporate governance a subject of discussion, and a lesson to be taught to managers and professionals. The Sarbanes-Oxley Act of 2002 redefined corporate accountability and responsibility for organisations, the world over, with debilitating consequences for those who faltered. But, even so, transgressions continue.
Going forward, for some time to come, students will learn from case studies of ‘failures’ through Tata and Infosys – two institutions that were bellwethers for benchmark corporate governance, ethical business practices, values – and promoters who were an embodiment of these principles. Is that how it should be?
The storyboard for both these cases follows a similar and, now familiar, script – Cyrus Mistry and Vishal Sikka were handpicked after extensive search, outsiders taking charge of institutions stewarded until then by a trusted few; started with the blessings of the promoters and the larger-than-life Indian corporate ‘Bhishmas’ – Ratan Tata and Narayana Murthy; analysts and the Board sought to defend their performance citing improvement in the company’s valuations and growth path; promoters were worried, however, about a decline of values, vision and governance; each ended in a bitter battle of the old and the new, showcased on front pages and primetime, raising concerns about the independence of board members and promoters’ ability to let go.
What went wrong with Tatas has been speculated, debated and written about extensively, and the script is following its course with Infosys, even as we write this column. Like with every recent issue in recent memory, media and critics have been quick to crucify Ratan Tata, Narayan Murthy and their institutions – for resisting change, and dealing with the situation rather poorly, and unprofessionally.
None of us, I am confident, disagree with the fact that we must continuously aspire towards better governance, stronger corporate ethics, benchmark professionalism, and good behaviour. But the question is ‘what should model governance, behaviour and the ideal promoter/Board look like?’
Is there a leader, an institution or even kingdoms and countries which have unblemished records on any of these fronts? Should a record of good practices and behaviour over an extended period give an individual or an organisation some leeway before they are declared ‘failures’? At the end of the day, it’s about people and human beings don’t come ‘perfect’. The study of psychology or philosophy will tell us that ‘perfect’ includes ‘imperfect’. Can we then continue to think of the Tatas and Infosys, and their leaders, as ‘perfect’ and the benchmark, despite recent events?
Memories are short and history will be kind to these people if Tata and Infosys bounce back to grow further, deliver better value to their shareholders eventually and continue to uphold their business practices – N. Chandrashekaran has started asserting his influence in a shared vision with its promoter, and Infosys has already announced a Rs 13,000 crore share buyback.
We should be kind too, an error (which is also debatable!) must not rob 30+ years of what we have heralded as ‘model’ governance and values. That’s me, and how I feel minded to record this ‘blip’.
But, what do you think?
– with Sabarathinam Selvaraj
Anuradha Das Mathur, Editor, CFO India
Going forward, for some time to come, students will learn from case studies of ‘failures’ through Tata and Infosys – two institutions that were bellwethers for benchmark corporate governance, ethical business practices, values – and promoters who were an embodiment of these principles. Is that how it should be?
The storyboard for both these cases follows a similar and, now familiar, script – Cyrus Mistry and Vishal Sikka were handpicked after extensive search, outsiders taking charge of institutions stewarded until then by a trusted few; started with the blessings of the promoters and the larger-than-life Indian corporate ‘Bhishmas’ – Ratan Tata and Narayana Murthy; analysts and the Board sought to defend their performance citing improvement in the company’s valuations and growth path; promoters were worried, however, about a decline of values, vision and governance; each ended in a bitter battle of the old and the new, showcased on front pages and primetime, raising concerns about the independence of board members and promoters’ ability to let go.
What went wrong with Tatas has been speculated, debated and written about extensively, and the script is following its course with Infosys, even as we write this column. Like with every recent issue in recent memory, media and critics have been quick to crucify Ratan Tata, Narayan Murthy and their institutions – for resisting change, and dealing with the situation rather poorly, and unprofessionally.
None of us, I am confident, disagree with the fact that we must continuously aspire towards better governance, stronger corporate ethics, benchmark professionalism, and good behaviour. But the question is ‘what should model governance, behaviour and the ideal promoter/Board look like?’
Is there a leader, an institution or even kingdoms and countries which have unblemished records on any of these fronts? Should a record of good practices and behaviour over an extended period give an individual or an organisation some leeway before they are declared ‘failures’? At the end of the day, it’s about people and human beings don’t come ‘perfect’. The study of psychology or philosophy will tell us that ‘perfect’ includes ‘imperfect’. Can we then continue to think of the Tatas and Infosys, and their leaders, as ‘perfect’ and the benchmark, despite recent events?
Memories are short and history will be kind to these people if Tata and Infosys bounce back to grow further, deliver better value to their shareholders eventually and continue to uphold their business practices – N. Chandrashekaran has started asserting his influence in a shared vision with its promoter, and Infosys has already announced a Rs 13,000 crore share buyback.
We should be kind too, an error (which is also debatable!) must not rob 30+ years of what we have heralded as ‘model’ governance and values. That’s me, and how I feel minded to record this ‘blip’.
But, what do you think?
– with Sabarathinam Selvaraj
Anuradha Das Mathur, Editor, CFO India