Did NRN Give Corporate Ethics The Short Shrift?

by L Subramanyan    Apr 03, 2017


I hugely admire Mr. Narayana Murthy (NRN) for many things – creating Infosys, setting an example for the entire Indian IT industry to emulate, for the ethics he preached and practiced while he was heading it and finally, for being the moral voice of an intensely competitive and (still) rapidly growing industry, ad nauseum, ad infinitum.

Which is exactly the reason why I was (once) again dismayed to read about his missive in the newspapers about his dissatisfaction with the Infosys’ Board, on the COO pay hike. My reaction is due to many reasons:

One, he is a member of the board of a public company. Consequently, he has to keep the confidentiality of the board proceedings uppermost in mind. A board comprises people who bring in several skills to the table. While NRN is the founder of the company, he (with the agreement of his other co-founders), rightfully decided to bring in an outside (professional) management with the induction of Seshasayee and Sikka. Once that is done, the founder-director(s) job is to represent a shareholder interest, nothing more and nothing else. By disclosing (a part) of the board proceedings, he has violated one of the cardinal principles of professional ethics – you run as a team.

Two, going to press: Post Infosys, that seems to be the leitmotif for some of the founders of Infy – NRN, Pai, etc. While the latter can justify it to some extent since he is not a member of the board, for NRN to do so, is untenable. Whatever views he may have reg any issue within Infosys, HAS to be conveyed at the board meeting. What NRN appears to be saying is ‘if you ignore me or my views, I will go press’. There is another word for this kind of behavior, it is called ‘blackmail’.

Three. NRN wants Infosys to practice ‘compassionate capitalism’. That’s a noble pursuit and it is possible that NRN did practice it, while he was heading the company. To expect senior professionals in the company and the board to follow suit is probably not realistic. NRN ran the company at another time. Today, the board is perhaps seized with several other issues, which may not make ‘compassionate capitalism’ practical.

Worse, the board and the majority shareholders of Infosys may not “WANT’ to pursue ‘compassionate capitalism’ – the NRN way. If he so violently disagrees with the board, he should step down from the board and then air his views as a shareholder of the company. To sit in the board and dictate his views to run as a diktat, is unfair to the board, the chairman, the CEO and just about every shareholder of the company. It is a my-way-or-highway-or-i-will-go-to-the-press highhandedness.

Read more: Vishal Sikka vs Infosys: Corporate Governance In Question

Infosys’ mandate is to create the maximum wealth for its stakeholders (not just shareholders). It includes customers, employees, government authorities in the geos that they operate in and so on. The Board, we must assume, is equally seized of the mandate, as we assume, is NRN.

There is absolutely no question in my mind about the relevance of the issues raised by NRN. My only peeve is the methods being adopted by him to push his agenda. By raising it in the press and making it a public discourse, NRN has, deliberately, created a huge amount of pressure on the board of directors of Infosys, the CEO and on the COO in question, Pravin Rao. That, like I said before, is patently unfair to the individuals, institutions and the company itself.

By doing what he has done, NRN has subverted the communication hierarchy in the corporate world. He has enabled the programmer in Infosys to question the COO’s pay and start drawing comparisons – in public. He has put Pravin Rao in an unenviable situation of having to defend his salary – the COO of a Ten billion dollar company has to defend his two Million dollar compensation – in public and private. He has questioned the authority of the chairman of the company in running the board. He has also questioned the CEO’s authority in terms of his team selection and structure..

That finally also does not mean that he is right in a professional sense. While it may not happen, the best course for the Infosys board would be to quietly ignore his diatribe and not engage in a public defense of the compensation or try and prove that the company is indeed a ‘compassionate capitalist’. The best course for Infosys is to do what it does best – deliver the world’s best solution with a world class workforce. Everything else is just a distraction, even if it comes from the corporate socialist God.

[‎L Subramanyan is Founder & CEO Trivone Digital Services]