T he flavour of the times has been board effectiveness. Having myself run programmes on this theme in Delhi and Mumbai, I am witness to the enthusiasm with which the crème de la crème of the Indian corporate vied for a seat in the events. Amen!
The bald truth is that notwithstanding so much of drumming and enthusiasm the concept of board effectiveness as a regulatory frame and format appears not only flawed but consisting of loop holes in the Indian context. Not so long ago, the Tata soap opera provided unmitigated entertainment with the return of the Mohican to the helm of affairs of the vast conglomerate and making one more nomination to the Chairmanship of the conglomerate. No prizes for guessing, his choice was hailed, dutifully, with the same enthusiasm and roughly the same people who had hailed the then nomination of Cyrus Mistry. So be it.
The ink had not yet dried on pages of the new testament of the Tata Son's redone gospel, when an equally powerful Satrap resurrected himself with commentaries on the working of another Board. This time, in Bangalore.
There can be no prizes for guessing the name of Infosys. Thereby hangs a sorry tale and Shri Narayan Murthy with his penchant of moving back and forth from page 1 to 3 and back, is again the toast of the season. His reported letter to the Infosys Board will be read in years to come as an instructive text in board training games. Of course, the regulatory agencies are behaving with much caution and seem to have concluded that nothing much needs to be done; indeed, apparently to their judgement, nothing 'big' is happening.
For those who came in late, a quick recap would help. N R Narayan Murthy has charged Vishal Sikka (whom he had ushered in with much fanfare three years ago) with various defaults of omission and indeed some of commission.
All the charges cannot be listed here but the key ones have to do with payments (sikka). NRN went to war with the pay hike of 55% which Vishal Sikka received in February 2016 raising it to US$ 11Million. He had strong sentiments on the severance pay of Rupees 17.38 corers given to ex-CFO Rajeev Bansal. Further the Panaya deal of US$ 200Million was according to NRN bad investment and more. When such serious money matters (Sikka - pun unintended) several other minor ones arose. Why does Vishal Sikka charter private planes to meet clients? How could Vishal Sikka get a hike when only 23.75% of promoters supported it? etc., etc., etc.
Of the several institutions which have sprouted making a killing on board level training, many of whom have multiple publications of newsletters and none have even touched this topic. On 18th August, 2017 I attended a big do of one such agency. There the purpose seemed to be to lionise a NRI from Middle East along with some powerful designation holding Indians. Obviously, there was no reference to it. In fact this NRI made a profound statement, "In my considered opinion, the present vibrancy and dynamism of Indian Boards will no doubt convert the demographic dividends of this country to powerful employment generators". I am not quite sure what it meant. I did recall reading part of it as a governmental blurb in advertisements. What was remarkable was how one of the key persons of this organisation demanded and received a thunderous applause from the audience for this' profound' statement of the NRI.
To get back to the kissa sikka ka, the board of Infosys has reportedly replied, in good measure, to NRN's accusation and this is reportedly available in the Board's six page communication to the Stock Exchange. NRN is accused of "writing factual inaccuracies, already disproved rumours and statements extracted out of the context for his conversations with board members". NRN according to this reported Board letter has launched a misguided campaign. Is any of the regulator listening to all this?
As for the institutions which have become printing presses of opulence, through board related skill formation interventions, there seems to be no visible concern. No analytical, diagnostic or applied research efforts are on to aid responsible interpretation and solution finding. If such efforts are on, it must be one of the better kept secrets of the corporate world.
Irrespective, Vishal Sikka is reportedly, now willing to work for the coming few months with a new designation for a literally token honorarium, foregoing his millions. The Board has, reportedly, further accused NRN of demanding operational and management changes under the threat of media attack. The play is still on.
A fundamental question remains unanswered. What caused the change of heart of NRN on Vishal Sikka? Surely, from Vishal Sikka's appointment to now, it couldn't have been all milk and honey. There are, reportedly, other facts about Infosys that nobody has seriously doubted in the period preceding Vishal Sikka. Reportedly there were gender related issues, innuendoes on promotions, with of course, one of the promoters, overnight, becoming a specialist in HR from being a Finance man. These were seen as understandable state of affairs by an indulgent Infosys watcher's group. Infosys was doing far too well to be held to task for what some woman reportedly claimed she suffered, or if someone was reportedly playing favourites. So much was made of recruitment of non- Indians, as if each of them was a corporate prize. It was not just NRN but a whole group of people around him, with him, who reportedly provided patronage for loyalty. Their connections were reportedly their safety net. They walked through the corridors of power from Bengaluru to the capitals of J&K. Drums were brought in and clarinets played to their humanism, generosity and philanthropy. Legends sprang up far too many to bear recount.
However, the theme of this enunciation is to focus on board effectiveness. This is not the first time an Indian board of a lionised company has taken issues with a venerable figure of a fabled past. Some will recall the grief that met some of the leading names of the Indian corporate world serving on the board of India Hotels Ltd when the heat of the Tata Sons- Mistry skirmishes were on.
The writer of these lines cannot arrogate a moralistic stand on issues which many in the corporate world and elsewhere are viewing as the 'normal' going on. The writer has been on the board of private companies in sufficient large measure to have an experience of diversity of business houses. Some of them have worked splendidly, others it was doubtful. In such cases he quit. In one case, when as a so called Independent Director, he pointed out a lacuna he was told by a co-founder of the group who was not the Chairman of the Board, in the said meeting: "That's the way it is here".
The message is so simple as to be put on the back of a postage stamp.
India is not the only country of powerful corporate satraps and some very indulgent public figures. The serving government at the centre should be complimented at allowing some of the skeletons prone to tumbling out from the almairah, to let them fall out.
In the meanwhile, some in the media, regulatory bodies, academia and elsewhere need to recognise a simple law of life. The law is that the forces of nature create change, but the initiative and efforts of the caring alone, institutionalise the change.
Board effectiveness cannot be viewed only as an appraisal design of performance which needs to be filled. If the so called enterprising institutions are striking it rich, doing training programmes and riding the wave of board effectiveness, who can grudge it? After all, these are the market forces.
Applied research and professional commentary are tools to be used to design architecture of boards which can deliver. They need to be insulated against any manipulation, of any variety which could be suo moto termed irregular.
In the absence of this approach, coming in here and now, the path of incrementally improving board effectiveness many also be a factor of, which way sikka plays. It should not be lost sight that Sikka's NRI credentials also helped to give him an aura. Unfortunately, the Co-founder of the firm found himself riding a Tiger. The coming days will show whether the technology oriented NRI could prove his point or the Co-founder claiming to be a believer of "compassionate capitalism" ultimately got the better of the tiger.