“EVERY ATTEMPT MADE TO ELIMINATE THE GAP FAILED. AS THE PROMOTERS HELD A SMALL PERCENTAGE OF EQUITY, THE CONCERN WAS THAT POOR PERFORMANCE WOULD RESULT IN A TAKE–OVER, THEREBY EXPOSING THE GAP. IT WAS LIKE RIDING A TIGER, NOT KNOWING HOW TO GET OFF WITHOUT BEING EATEN.”
Whenever we talk about corporate governance, the above written words are surely to sound in your mind. Yes, these are golden words of confession of the CHAIRMAN, SATYAM COMPUTERS SERVICES LTD, B RAMALINGA RAJU.
If in near future, we want to prevent any other Chairman or CEO from saying these lines again, start investing in corporate governance now.
Corporate governance is currently the most talked about topic since the serious revelation by Ramalinga Raju. The same Ramalinga Raju was once hailed the leader of IT industry, but now has found his solace behind the bars.
The corporates need to understand that in order to work efficiently and in a transparent manner, it has to invest in corporate governance not only in monetary terms but also in moral and ethical terms. By corporate governance, i mean an unbiased administration, policy framing and execution of operations free from any sort of mal-practices.
An investment, in most cases, brings out profit to the investor, similarly a timely investment by the corporates towards administration certainly bear the sweetest fruits in terms of corporate image and business. If the corporates need to march ahead in their respective fields and earn a brand name, then transparent corporate governance is the key to that lock.
Corporates always have a responsibility towards the society, its employees, customers and investors. The above mentioned individuals (society, its employees, customers and investors), will always have questions for the corporate:
SOCIETY - whether the corporate has done anything towards the welfare of the society as a whole or for the most down trodden members of the society?
EMPLOYEES - why they are not being rewarded their dues inspite of achieving their targets or how the decision making can be made more transparent from the employee’s point of view so as to avoid any sort of in-fights?
CUSTOMERS - a customer shall always question about price, quality, advertising and other promotional activities.
INVESTORS - What has the corporate done with the money invested by them?
The answer to all the above questions or other related questions can be given only if the company has a transparent style of governance.
The devil of corporate malpractices can find its roots in its own way of functioning. In today’s corporate world, the working styles have changed drastically. Now they follow ‘PERFORMANCE BASED INCENTIVE’ work culture. Annual targets have been defined at the start of the financial year and should be clinched, as instructed by the senior management. The work force has no option but to take every possible route to clinch those pre-determined targets, be it working with unethical means. Moreover if at any point the workforce tries of quitting these mal-practices, the lure of the incentives offered always fuel the desires of the workforce to take that unethical path. So, the corporate administration should always keep a check on such bogus works, detect it before it happens and severely reprimand the guilty & for this proper, clear guidelines should be laid out. The buck does not stop here, even the works of senior-most administrators should be scrutinized at times. The corporates should have an autonomous body which will look not only into the style of functioning of the company but also the operating pattern of the entire industry also.
The topic reminds me of my school days. In junior school, i studied through the NCERT books. When you flip through some initial pages, i remember, one can find an Index, Foreword and a message. The message is titled as “GANDHI’S TALISMAN”, which summarizes as “WHEN YOU ARE CONFUSED AND UNABLE TO DECIDE, THINK WHETHER THIS DECISION OF YOURS IS IN ANY WAY GOING TO HELP THE DOWN TRODDEN.” This message when applied will help in better governance in corporate decisions and everyday life decisions.
Some of the form of investments in corporate governance can be listed as:
· Corporate Social Responsibility(CSR)
By this type investment, the corporates can be made more reliable and responsible towards the entire society. The best example of an amalgamation of CSR and ethical administration can be the TATA Group. The Tata`s are known for their social work. Most of their earnings are always donated to the NGOs or directly to the needy section of the population. The corporates can invest in the CSR sector and help the society in a better way. They believe that they owe their success to the society and hence should always return something to the society.
· Include Spirituality in corporate decisions
It is a general belief that an individual is most afraid of the religion. Come what may, he/she shall never go against own religion. So when we try taking a corporate decision, the religion may always show a difference between the ethical and unethical. The best example here would be the common rule amongst the Hindu population in India ie a Hindu will never eat non-vegetarian food on all days, except Tuesdays. Can he/she go against it?
The answer is certain, no.
· Investments in Moral Education
Educational institutions should take the lead in this matter. The educational institutions can play a vital role in churning out morally, ethically fit future managers and administrators. These institutions be it at the school level or graduate level or post-graduate level should teach a compulsory subject on ethics and morals. Such type of investment once made would always bear the fruit throughout the lifetime. As a result, the tendency to achieve results through the unethical routs would be reduced.
· Re-Audits
Recently the Govt of India’s Department of Telecommunications had ordered re-audit of the accounts of all the telecom operators in India, for the fiscal 2007 and fiscal 2008. The case started with so called under-reportings from Reliance Communications and was later the audit was applied to all telecom operators. Such surprise audit can be done by an independent body or a body appointed by the Company Law Board or by the Central Government, as the case may be. Such surprise audits would instill a fear of getting caught among the corporate administrators, thereby discouraging all sort of mal-practices. After all no corporate would like to be blacklisted by the Govt or revoking the licence.
· Social responsibility
The social responsibility is very much different from corporate social responsibility. Social responsibility always talks about an individual, about his/her own responsibilities towards the society, on the other hand CSR always takes into consideration the industry/company as a one entity. The theory of social responsibility can be drawn from a small tale in Hindi which can be interpreted as ‘small small droplets come together and finally result in the formation of a large ocean/sea’. Try bribing a Army soldier to betray his own motherland, the answer one gets is social responsibility. When each individual is socially responsible to his job, company and industry, there are very rare chances of mal-practices.
·Amendments to the Corporate laws
The Government of India should further make stricter amendments to the existing company laws. Its time now that Govt should act strict, such strictness would discourage corporate frauds.
As a conclusion to this article I’d like to end by a small saying “INVEST TODAY, REAP TOMORROW”. If the corporates start investing today, they’ll certainly reap a sweet fruit in future. Hard work, be it in any form, never goes waste, it is bound to give results. Therefore efforts put in this field will atleast bring out minimum result, if not the desired one.
NOTE : this article was submitted for my college magazine HARMONY and is the original work of the writer. The writer does not, in any way, wants to hurt the feeling of people and even if they r hurt, i`d like to apologise from the bottom of my heart. Thank you