Balancing the Act of Corporate Governance
The Last Quarter of 2016 was buzzing with the Corporate Governance Saga unfolding at India’s most Valued Brand “The TATA Group”. The TATA Group is an example of Management-par-excellence to an extent that almost all B-Schools and Management Colleges in India and Worldwide cite their example of Governance. The Brand achieved an almost cult status synonymous with the words of ‘Value’ and ‘Trust’. It takes immense efforts and time to build such brands and establish trust. The mud-slinging by the board members over governance issues and corporate personal interests raised numerous questions on the functioning and efficiency of a Board in large conglomerates.
A similar pattern was observed when there was a smell of dissent amongst the Founders and an outsider CEO being appointed at a world-renowned IT Services Company Infosys. The way a Founder sees the company will always be different from the way someone who manages sees it. The Factor of ‘Emotions’ and ‘Feelings’ influencing decisions are always strong when a Founder is running the show. There are times when decisions are taken in the larger interests of the Shareholders, Employees and the overall goodwill of the company. Some of the decisions may seem profitable in the short run but may prove to be loss making in the long run and vice-versa.
A Founder or a Family Heir running the establishment always knows and nurtures the contributions of all those smallest elements who have contributed in building up the Brand. He knows what it took to begin from nothing and build something. The feeling of ‘giving back’ to those people who trusted you when you were nothing is always strong in the Founder. In my years of dealing with numerous Brands I have come across Founders going the extra mile and running a show just because a few families’ survival and daily bread depended on the business though it was a loss making one. Assessing and judging this act as a mere Personal Corporate Interest or Bad Governance or an Illogical Business Decision by the Board Members is something that should be viewed in the larger human interests as well than only seeing the Numbers and Cash Flow Statements.
I fully stand with Mr. Ratan Tata, a Leader who has run the show at the TATA Group for decades. He has seasoned all ups and downs and steered the company to where it is now. The dream project of the TATA Group “The NANO Car” is something which really makes me respect Mr. Ratan Tata more. It was a dream project for Mr. Ratan Tata personally as well as it was a flagship project of the TATA Group. When news came out from the TATA Boardroom that the Project being commercially loss making, Mr. Tata continued to run it because of ‘Emotions’ being attached to it made me wonder had this project being shut, how many people would have lost their livelihoods?
I feel, yes, emotions would have been there of a dream being killed, of people losing their livelihoods and a brand losing the ‘Value’ and ‘Trust’. How do we balance this act of governance in the ‘Corporate’ dictionaries? When the Founding Members of any Brand appoint a CEO, the only expectation is to take the Brand from one level to the other and make it more profitable. How much is the person who is making his best to have great Cash Flows and Profit Numbers connected to the Brand? His Decision Making will always be influenced to keep the Board and Founders happy, but at what cost?
How do we balance the efforts of Founders to achieve a dream with the corporate governance guidelines of the Board? How do we inculcate a spirit of oneness with someone outsider managing the business to make it more profitable?
Corporate world needs to re-visit the standards which define Governance. That Governance which also sees the ‘Well-Being’ of the smallest person associated with the Brand or the Company and not just Profit Numbers and Cash Flows. The Words ‘Corporate’ and ‘Governance’ itself epitomize immense responsibility and the time has come when we should now move on to “Responsible Governance”.
Asterizk, a Start-Up to serve the Knowledge Management and Business Intelligence domain will be having Marathon Sessions with Top Business Leaders across different Cities in the World taking this message of “Moving from Corporate to Responsible Governance” through a Program titled “Modern Corporate Governance and Improving Board Effectiveness”.
Co-Founder and Director – Strategy, Branding, Content Development and Licensing
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