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Posts Tagged ‘Corporate Governance’

ashokbhatia

This is the most commonly found breed of CEOs. They are crazy about getting results. They plan well. They execute even better. People rank high amongst their priorities. They protect them much like a tigress would shield her cubs. But when it comes to ethics, values and systems, they could not care less. Auditors cannot be faulted for labelling them as arsonists.

Managements love them. The efficient ones amongst their team members adore them. The sloppy ones dread them. Their Concern for Production is invariably high. They are often sharp when it comes to adapting newer technologies in the organization’s processes. Their Concern for People is also high. They can be found praising their people in public while ruthlessly ticking them off in private.

However, when it comes to Concern for Ethics, they rank very poorly. Their value systems are driven by commercial goals alone. Systems and procedures are merely the…

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ashokbhatia

One of the relatively rare species of CEOs is that of the Sponge Comforters. These are hapless souls who are gifted with too much of the Milk of Human Kindness sloshing about within them. They happen to be compassionate by nature. People are their first priority. It is easier to persuade them to buy excuses.

Their key strength is their Concern for People. In their value paradigm, Concern for Production and Concern for Ethics take a back seat. In terms of the modified Blake Mouton Grid, they happen to be in the 1,9,1 slot.X Y Z upgraded

Their people just love them. The loyalty they command is often exemplary. Even though the feudal spirit prevails, their style of functioning is democratic in nature. People working with them are invariably happier. Work gets done in a calmer and more relaxed atmosphere. Physical activity does not get confused with efficiency. Their planning is excellent. Their…

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This is the most commonly found breed of CEOs. They are crazy about getting results. They plan well. They execute even better. People rank high amongst their priorities. They protect them much like a tigress would shield her cubs. But when it comes to ethics, values and systems, they could not care less. Auditors cannot be faulted for labelling them as arsonists.

Managements love them. The efficient ones amongst their team members adore them. The sloppy ones dread them. Their Concern for Production is invariably high. They are often sharp when it comes to adapting newer technologies in the organization’s processes. Their Concern for People is also high. They can be found praising their people in public while ruthlessly ticking them off in private.

However, when it comes to Concern for Ethics, they rank very poorly. Their value systems are driven by commercial goals alone. Systems and procedures are merely the dust beneath their chariot wheels, leaving Finance honchos as well as auditors aghast and exasperated.

In terms of the modified Blake Mouton Grid, they rank at 9,9,1.X Y Z upgraded

Under them, short-term and medium-term goals get achieved. In their heydays, the Goddess of Success courts them. But harsh arrows and slings of an unforgiving commercial world bring about a day when their Guardian Angels are no longer in a benevolent mood. Regulatory agencies catch up with them and demand their pound of flesh. They get trapped in the intricate web of deceit, evasion and non-compliance they have woven around themselves. Brand image of the organization takes a hit. Competitors swiftly move in to occupy the mind-space of customers. Market valuations drop. Stakeholders and employees start seeking greener pastures.

Gradually, they start getting transformed into CEOs whom we could classify as Charmless Charlies.

A deeper malaise

A charitable way of looking at Arsonist Achiever CEOs would be to say that they happen to be the product of a system which thrives on greed and avarice. When they get results by using unfair means, managements feign to be in a state of blissful ignorance.

In general, the business world does suffer from this omnipresent affliction. When it comes to perpetrating a fraud on unsuspecting stakeholders, human ingenuity has never been found wanting.

If America had Enron, Lehman Brothers and Tyco, UK had Barclays. If Norway had Nortel, Portugal had Banco Espirito Santo. If Switzerland had UBS, India had Satyam and Kingfisher Airlines. Germany has just had Volkswagen.

No specific industry could lay an exclusive claim on such man-made disasters. Be it banking, insurance, mining, automobiles, energy, commodities, IT or real estate, all have set examples of devious plans to deceive the gullible stakeholders.

Human greed and avarice are obviously the root cause. The sheer pleasure derived by a minority in making some extra gains at the cost of a silent majority apparently has a sense of gratification which surpasses all else.

CEOs of the kind discussed here symbolize this deeper malaise. However, this does not mean that their acts of omission are worthy of being condoned. Apparently, there is a flaw in their innate character – they accept cheating as a way of life.

Correcting the myopic vision

What is it that makes a business owner or a CEO to put his conscience to sleep and take a decision which could impact the whole organization a few years down the road?

There could be several factors at work here. A trade-off between extraordinary gains in sight and the risks involved. A hope and a prayer that a deviation would never get caught. A major investment that cannot be written off merely to make a process legally compliant. A gut feel that the regulatory agencies are invariably open to manipulation. The need for a tight squeeze on costs which makes them shift a part of their operations to distant but cheaper pastures, at times ignoring the interests of the local community. The option of using speed money to get the necessary approvals from concerned government agencies.

More often than not, continued success in meeting business goals proves to be their undoing. Arrogance creeps in. Self-confidence brims over. Few Yes-men around them add fuel to the fire. In their relentless pursuit of business results, they develop a myopic vision. Everything else becomes the last priority.

Smarter ones, however, would take a longer view of things. They would have a 6/6 vision. Their decision-making models would invariably take into consideration the moral and the ethical aspects of a situation at hand.

Yet another solution could be to support them with a Conscience Keeper!

Note: Inputs from Ms Somali K Chakrabarti are gratefully acknowledged. She can be found at Scribble and Scrawl (https://prepforum.wordpress.com)

(Related Posts:

https://ashokbhatia.wordpress.com/2015/12/24/looking-for-ceos-inspired-by-the-yuletide-spirit

https://ashokbhatia.wordpress.com/2016/01/07/ceos-who-happen-to-be-charmless-charlies

https://ashokbhatia.wordpress.com/2016/01/14/ceos-who-end-up-becoming-road-rollers

https://ashokbhatia.wordpress.com/2016/01/22/the-sponge-comforter-ceos)

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One of the relatively rare species of CEOs is that of the Sponge Comforters. These are hapless souls who are gifted with too much of the Milk of Human Kindness sloshing about within them. They happen to be compassionate by nature. People are their first priority. It is easier to persuade them to buy excuses.

Their key strength is their Concern for People. In their value paradigm, Concern for Production and Concern for Ethics take a back seat. In terms of the modified Blake Mouton Grid, they happen to be in the 1,9,1 slot.X Y Z upgraded

Their people just love them. The loyalty they command is often exemplary. Even though the feudal spirit prevails, their style of functioning is democratic in nature. People working with them are invariably happier. Work gets done in a calmer and more relaxed atmosphere. Physical activity does not get confused with efficiency. Their planning is excellent. Their execution is often tardy.

Such CEOs add value to their organizations by being great ‘Demo Versions’. They handle Public Relations with much aplomb. They are the first contact for professionals who aspire to make a career with the organization.

This breed thrives in an organization where the top boss happens to be unduly aggressive by nature. Employees often face an identity crisis. The CEOs offer a crying shoulder to those who feel harassed and victimized. After meeting them, a depressed employee entertaining suicidal thoughts could come back revived and invigorated – much like a watered plant. They are supreme comforters who are forever ready with a sponge, nay, even a bucket and a towel, to wipe off the tears of those who rush to them for solace.

Another designation that fits them is that of a Chief Listening Officer.

Featured Image -- 2827Their ability to convince top performers to not to seek greener pastures at the drop of a hat is unparalleled. So is their proficiency in the realm of grooming and mentoring.

Seniors from the realm of HR, who have decided to come out of their comfort zones and have started grasping the nuances of the core business process of the organization, could gradually evolve into Sponge Comforter CEOs. Externally, they sound like communists. Internally, they happen to be true blue capitalists.

Managements are often sceptical about such CEOs. To ensure that results keep coming in, they get some tough-as-nails managers to support them. Or, they are made to handle portfolios which keep them at an arm’s length from marketing and production.

Managements who excel at running their businesses without much regard for the norms of statutory compliance are desperately on the lookout for this species of CEOs. Members of this breed discharge their obligations with a misplaced sense of loyalty, often getting lynched in the process. An acrimonious parting of ways follows.

Note: Inputs from Ms Somali K Chakrabarti are gratefully acknowledged. She can be found at Scribble and Scrawl (https://prepforum.wordpress.com)

(Related Posts:

https://ashokbhatia.wordpress.com/2015/12/24/looking-for-ceos-inspired-by-the-yuletide-spirit

https://ashokbhatia.wordpress.com/2016/01/07/ceos-who-happen-to-be-charmless-charlies

https://ashokbhatia.wordpress.com/2016/01/14/ceos-who-end-up-becoming-road-rollers)

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If you happen to be a professional to whom the allure of becoming a director on the board of a company is irresistible, here is a confidential note written by the Chairman of an imaginary company to one such aspirant, listing out the unstated terms and conditions of the offer.

From: The Chairman, XYZ Ltd.
To: A wannabe Independent Director

“Dear Aspirant,

I am happy to know that you aspire to be an independent director on the board of our company. Whereas a formal letter of appointment would soon follow, I write to you in my personal capacity to explain the real rights and responsibilities of an independent director.

1. You shall be hired only for your fame, your excellent contacts and your eminence. Your subject knowledge, competence and seriousness of participation in the meetings are important but secondary to the scheme of things.

2. Our company believes that machinations of the management (read “real owners”) are supreme. Our business is run on a quarter to quarter basis. PROMOTIONSAny talk of business strategy, etc, happens against this background. You shall always remain an embellishment on the board and shall conduct yourself with grace and equanimity accordingly.

3. Please appreciate that the Chairman and the President/CEO are advised by the best brains in legal and accounting matters. Their word is final and binding.

4. For the sake of excellent PR, as also to keep our market image shining and bright, the company has a set of clear guiding principles, a sparkling vision document, an exemplary code of conduct, a well spelled-out corporate philosophy, a robust governance framework, a sound CSR policy and a clearly articulated intention of zero tolerance to graft, corruption or sexual harassment. However, based on exigencies faced in the business environment or the seniority of the person involved, the management reserves the right to be flexible in its approach towards enforcing the aforesaid.

5. During your tenure, you may discover some creative accounting practices resorted to by the company. You may come across audit notes which point out the calculated risks we take while planning our direct as well as indirect taxes. You may also discover highly ingenious ways in which we interpret the laws of the land. You shall be expected to put across innovative suggestions to further refine such practices. You shall not be expected to raise any objection to the same, whether in private or in public.

6. You shall be encouraged to represent a group of shareholders, or appear to be partial to a group of stakeholders of the company; provided, of course, that your performance shall always be evaluated based only on the key deliverables – namely, towing the line of the management and ensuring that the company’s image is protected and its business interests advanced at all times.

7. Should you become involved in any legal hassle owing to having not registered a dissent on issues of either corporate governance or legal compliance by the company, an issue-based support may be provided. In such an eventuality, the company reserves its right to publically disown you and terminate its association with you forthwith.

8. Any attempt on your part to form a group of Independent Directors shall be treated as an act of dissidence and betrayal by management. As a matter of corporate policy, we do not encourage dissent, whether expressed or otherwise.

9. In respect of any matter pertaining to the operations of the company, you shall never take a moral high ground and start teaching us ethics and value YES-MENsystems. The last thing we need is a lecture from a glorified employee, the real capacity in which you shall serve the company.

10. The company expects you to observe complete confidentiality even after the end of your term as an Independent Director.

11. Post-retirement, you shall undertake not to become a whistle-blower and seek protection under any such scheme offered by the government of the day.

12. Advances, affiliations and activities of an amorous nature attempted by you towards directors from the other sex shall be frowned upon; unless, these happen to be dictated by the business needs of the company and have prior tacit approval of the management.

Even if you do not appear in the database of prospective candidates maintained by the Ministry of Corporate Affairs, we trust that you have so far been smart enough to ensure that your legal record is squeaky clean. We are sure that you shall continue to be vigilant on this score.

We look forward to a long-term mutually beneficial association with you. We welcome you as a part of the growing tribe of (perceived to be) independent directors in the country. We have no doubt whatsoever that you shall conduct yourself in a manner which would enhance the prestige and influence of this newly created labor market.

Yours truly, etc”

Background note:

Indian companies having a paid up capital of more than INR 100 millions and those whose aggregate outstanding loans, debentures and deposits exceed INR 500 millions are now required to have at least two independent directors on their respective boards. The new rules notified by the Government of India come into force from the 1st of April, 2014.

Likewise, some companies are now required to have at least one woman director on their board. For some, it is now mandated to spend 2% of their profits on CSR activities.

Hopefully, in the days to come, the newly emerging tribe of Independent Directors would play a far more effective role in ensuring that more companies conduct their affairs with better attention to transparency, ethical standards, gender diversity, environment protection measures and socially relevant investments.

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