Saturday, April 30, 2011

Trinitarian Chair at Infosys

The three-member Nominations Committee has recommended that K.V.Kamath be the successor to N.R.Narayana Murthy as Chairman. Nothing surprising in this choice except that K.V.Kamath is also a member of the Nominations Committee. This is not the way corporate governance is practised. K.V. was earlier able to take the ICICI Bank to phenomenal heights through his able leadership though there are doubts about the way his successor at the bank was nominated which resulted in exodus at top management levels.

Kris Gopalakrishnan will be the Executive Co-Chairman of the company which will be renamed Infosys Limited. Narayanamurthy is to be Emeritus Chairman. Can a company be more top-heavy? It is a bit odd for a "global company" to be presided over by Trimurtys all from the same state. What kind of diversity is this? Some European companies no doubt have experimented with co-chairmen but not with remarkable success. When it is the turn of Shibulal to retire from CEOship, will Infosys have four chairmen? Concept of lean management ought to apply to the top also.

If all the chairpersons take their job seriously, there is bound to be continuing friction given their stature. If, on the other hand, they take it easy in the overall interest of the organisation, the multiple posts will be in the nature of sinecures. Either way, it is not the way to go forward.

Updated on 1st May: One is tempted to draw a parallel between Wipro's unsuccessful experiment with joint CEOs and Infosys' plan to have joint chairmen. It is true that jobs of CEO and chairman are not strictly comparable. Multiple CEOs are more likely to be dysfunctional than multiple chairpersons. Nevertheless, it is difficult to justify having more than one chairman on the grounds of either efficiency or governance. In the case of Infosys, the cause seems to be the imagined need to accommodate promoters' interests. This approach is not sustainable in the long run.

Thursday, April 21, 2011

Internal strife in The Hindu

It is not unusual to hear about the discord among the shareholders / directors of The Hindu. Bitterness has been simmering ever since N.Ram catapulted himself into the position of Editor-in-Chief.  Ram's contribution to The Hindu in terms of opening up the Bofors issue and publication of WikiLeaked documents is praise-worthy. His support (though justified at times) to communists and China on all occasions and his megalomaniac tendency have often violated the newspaper's constant claim of impartiality and objectivity. Those who have made "reading The Hindu" a life-long habit are pained at Ram's inability to carry the team along and his sinister tendency to present the skewed as the mainstream.

Here is a report from The Tehelka on recent developments at The Hindu:

"The Hindu family feud gets ugly, editor N Ravi thrown out

Ravi writes a damning letter against N Ram, questioning his silence on A Raja
Tehelka Bureau,New Delhi

The family feud of the owners of The Hindu daily has intensified further, with N Ram, the editor-in-chief of the newspaper, teaming up with some directors to keep his cousin N Ravi away from the post of the next editor-in-chief. Ram has appointed Siddharth Varadarajan in Ravi’s place, who till now was the strategic affairs editor of the newspaper. Varadarajan also headed the national bureau of the newspaper in Delhi.
Ram was supposed to have retired last May when he turned 65, and Ravi was to take over from him as the new editor-in-chief. But, now Ravi finds himself in the wilderness. He points out how Ram had earlier tried to remove another family member, N Murali, as the managing director of the company. Ravi also points out the Ram had thrown out another family member Malini Parthasarathy, who held the post of the executive editor, from the newspaper.
Ravi has shot out a letter to all employees of the newspaper, protesting against his removal by the board of directors in a “supposed” meeting held on Monday. Following is Ravi’s letter titled “The recent happenings in The Hindu” and written on April 20:

“Even as we are entering the second, and what might turn out to be a prolonged, phase of conflict and turbulence in the institution, I write to seek your understanding.
“In a shocking display of bad faith that has left me deeply anguished, N. Ram and some of the directors at the meeting of the Board on April 18, 2011 have sought to remove me and appoint as editor Siddharth Varadarajan who joined The Hindu in 2004.
You are all aware that I have been working in a wholly professional capacity for several decades ever since I joined the newspaper as a reporter in 1972. During this period, I have been fortunate to enjoy your cooperation and help in taking the newspaper forward. After 1991 when I took over as editor, our team transformed The Hindu from a Chennai-centred daily with just one page of local news to a well recognized national newspaper with extensive local and state coverage spread over four pages, and attractive features. We started a lively engagement with the leading issues of the day with extensive coverage and diverse viewpoints. We sought to uphold editorial integrity, seeking accountability from institutions and public officials without fear or favour.
“Though the economy then was not so buoyant as during the later period, between January 1991 and June 2003, the circulation of The Hindu increased from 4,52,918 copies (July-December 1990) to 9,33,458 copies (January-June 2003) or by 4,80,540 copies or 106.1%. In the more recent period, The Hindu has been losing market share, and from being level with the Hindustan Times, it has now fallen far behind that newspaper. Findings from the most recent market survey present a depressing picture of reader perception of unappealing content and a pronounced bias towards the left.
“It is a matter of public record that N. Ram, Editor-in-Chief, was to retire on May 4, 2010 on turning 65 and I was to take over as Editor-in-Chief under the arrangement agreed upon. However, in a shocking display of bad faith, Ram went on to renege on his commitment to retire and the whole process of editorial succession came to a standstill.
“During the conflict created by Ram’s breach of faith, Ram and a group of directors on the Board removed the powers and responsibilities of N. Murali, Managing Director in a vindictive move that was overturned by the Company Law Board, Chennai Bench that also came out with a severe indictment that their action was lacking in probity, good faith and fairness. Barely four months after the indictment, Ram and his group of directors have turned on me with the same lack of probity, good faith and fairness and have sought to remove me and impose a plan of editorial succession that is totally at variance with the longstanding tradition and practice in the institution and is also contrary to the directions of the Company Law Board.
“Almost a year past the agreed retirement date, his position having become untenable in the face of the Company Law Board order, Ram seems bent on taking all the editorial directors—most are in their 50s—into retirement with him with a scorched earth policy to ensure that no one in the family succeeds him. Instead of coming up with a succession plan, he and some of the other directors have come up with a plan of wholesale removal. In a sudden change of rules and under the specious plea of separating ownership from management, along with my removal as editor, Nirmala Lakshman is to be forced to ‘step down’ as joint editor and Malini Parthasarathy as executive editor.
“Apart from the basic unfairness of the removal, the move seeks to entrench several of the distortions that have crept into the editorial framework since 2003 when Ram was appointed Editor-in-Chief by stealth over the protests of four of us. Among the issues that I have raised with the other directors during the discussions in the Board and outside are: the unmerited coverage of certain political favourites on specific directions; excessive coverage of the activities of the left and some of its leaders; for reasons that are bound to emerge sooner rather than later, turning the newspaper into an apologist for A. Raja through the 2G scam coverage, remaining deafeningly silent on his resignation in the face of mounting evidence even when demanding the resignation of Suresh Kalmadi, Ashok Chavan and Yeddyurappa in similar circumstances; pronounced pro-China tilt, blacking out or downplaying any news that is less than complimentary to the Chinese Communist regime; and contrary to the practice in any mainline newspaper, the Editor-in-Chief indulging in an unceasing self-glorification campaign, publishing his own ribbon cutting pictures and reports of his activities and speeches with a regularity that would put corporate house journals to shame.

“The Hindu as an institution had in the past valued its editorial integrity over all else. In the recent period, editorial integrity has been severely compromised and news coverage linked directly to advertising in a way that is little different from paid news. A meaningless distinction has been sought to be made between walls and lines, and the walls between editorial and advertising are sought to be replaced by “lines” between them. Very recently, those of us who were not privy to the deal making learnt to our shock that a major interview with A. Raja in defence of the telecom licensing policy published on May 22, 2010—that was referred to by the Prime Minister in his press conference--involved a direct quid pro quo in the form of a full page, colour advertisement from the Telecom Ministry that was specially and hurriedly cleared by the Minister personally for publication on the same day in The Hindu. The contrast between such a deed and pious editorial declarations including the campaign against paid news cannot be starker. To continue with such practices, the editorial structure is sought to be changed, with the editor being made subordinate to an executive board comprising a majority of business side executives. The undermining of the primacy of the editorial function is an attack on the very soul of The Hindu. In the context of these distortions that have crept into actual practice, the high sounding code of editorial values that is sought to be publicized now would seem no more than empty rhetoric.

“This round of turbulence comes at a time when all manner of investors are looking to gain influence and control over the media, and competition is increasing with newspapers striving to attract the attention of readers through better, more contemporary and enriched content. As part of the journalistic team, all of you have contributed so much to the growth of The Hindu and are vitally interested in the task of moving forward in a highly competitive environment even while observing the highest standards of editorial integrity. I feel strongly that when a distorted picture has emerged based on selective leaks, information on the happenings cannot be restricted to the confines of the boardroom and all the journalists as stakeholders need to be taken into confidence.
“It is in this spirit that I am sharing my views with you all. I also write to you with the confidence that the unfair and untenable move will not be allowed to prevail. In the task of upholding the editorial principles that are so dear to all of us, I appeal for your support and understanding."

Monday, April 18, 2011

Search for successor to Ratan Tata (contd.)

In the post dated 7th April, a view was expressed that much ado is being made in finding a successor to Ratan Tata. Similar sentiments find a place in the Financial Express today (18th April). The article is reproduced here:

"At the outset let me announce my deep respect and professional regard for the four industry veterans—Ratan Tata, NR Narayana Murthy, AM Naik and YC Deveshwar—whose impending superannuation is creating much media noise of late. I have interviewed/met three of the four in the past, and have found them worthy of every bit of praise they’re generally heaped with—visionary leaders, business colossuses and all that.

Infosys’s Murthy has stridden the Indian IT industry like a tall statesman for close to three decades now, the time he saw his $250 fledgling morph into a $5.7 billion raptor. In the last 20 years he has been at the helm, Ratan Tata has transformed the $2 billion Tata Group into a $67 billion Indian multinational, with its corporate flag flying high in industries and geographies hitherto considered to be the sole domain of developed market transnationals. L&T’s AM Naik has led the $10 billion software-to-rigs behemoth from the front since 1999, and led it to victory in many a bruising battle. ITC’s YC Deveshwar took the reins of the firm at a far from favourable time—recollect the 1995-96 messy shareholders’ fight and ignominious departure of the then chairman KL Chugh—and turned the cigarette major into one of the country’s biggest, and most respected consumer goods & hospitality companies.

But, of late, word coming out from these hallowed organisations on how they view the current succession plans, and more importantly the current incumbent, should be cause for some concern for the yet to be identified/named new chiefs. “Our committee has come to the conclusion that we cannot find a replacement for Mr Tata!” And that the committee may have to “rearrange the model,” to make it easier for the new chief to manage the hydra-headed group. This from a senior group manager and a member of the five-member search panel mandated to find a successor to Ratan Tata. Dispensing the operating companies-specific part of the Tata chief’s job with that of being the principal shareholder (as chairman of holding firm, Tata Sons) is desirable and so is the search panel’s reported bias for young Tata-ites to be inducted in the Tata Sons board, and reducing the retirement age on non-executive directors from 75 to 70. But what I find hard to understand is the need to publicly pronounce the incumbent as a kind of a “super-human”—“we cannot find a replacement for Mr Tata”—the only one who could manage “an extremely large, complex and diverse” group, though surely the group will have a new chief come December 2012, as Ratan Tata has made abundantly clear that he is not hanging on beyond that. After all, with every passing decade, businesses are only getting more complex, diverse and large and the one Ratan Tata is leaving is surely more of all these than the one he inherited from the legendary JRD Tata. In 1991, when he took over from JRD, no one gave him half a chance to bring order to a chaotic organisation with prima donnas galore, but all credit to Ratan Tata for showing such a stupendous success. Is the intent here then merely to pay obeisance to one of India’s finest business leaders or does it tantamount to pre-judging the new chief, whosoever she/he may be?

Move over to L&T, where Naik has announced virtually splitting the company into nine entities, each with its own CEO, in an attempt to simplify management of the conglomerate. There has been persistent, though unverified talk of splitting the group-wide chairman & MD’s post, wherein Naik continues as chairman well beyond his September 2012 superannuation. Something similar is under way at ITC, where the incumbent chief Deveshwar is reportedly angling for an extension beyond April 2012, to see through the group’s initiatives in food and personal care. Although Infosys’s Murthy has long given up executive positions, and is slated to relinquish the non-executive chairman’s chair later this year, he will continue as chairman Emeritus even as a new non-executive chairman and CEO takes guard this August.

At the risk of being accused of being uncharitable to undoubtedly the finest business leaders that India has seen after liberalisation, is there a tendency here to hang on and/or create an aura of indispensability? The affliction of perennially being there in some role or another that characterises Indian politicians—when was the last time you heard a politician fade away voluntarily?—seems to have bitten businessmen too.

True, people like Naik or Deveshwar are super-achievers, and sometimes the organisation may need to turn back to them for advice and leadership even after the normal retirement age or the first innings—much like the case with Apple’s Steve Jobs or Coke’s Neville Isdell who came back from wilderness and retirement to lead their troubled companies back to glory.

But to have them back was the choice the new management and shareholders took, after much bungling by the new leadership. And Jobs’s and Isdell’s stature has only grown by quitting first, only to be back because the company needed them desperately. And coming back is not always the trend. Jack Welch, the most successful business executive in American history, retired at 65 years, after seeing GE’s market cap go up from $14 billion to over $410 billion in 2001, which has since tumbled to around $212 billion, without anyone even suggesting putting a call to Welch!"

Sunday, April 17, 2011

Manmohan Singh's unrealistic obsession

Most Indians are disappointed with Manmohan Singh's performance as the Prime Minister. He has consistently turned a blind eye to instances of corruption in various ministries. Some see Dr.Jekyll and Mr.Hyde in him. One reason for the prime minister's abysmal performance is his all-consuming urge to normalise relations with Pakistan. There is no doubt that normalised relations with all our neighbours would be great.

However, unrealistic obsession with normalising relations with the unstable neighbour is only a prescription for disappointment and worse. Pakistan is variously controlled and manipulated by religious fundamentalists, the army and the ISI. No one really represents Pakistan with any unambiguous authority. There are reports that ISI keeps printing fake Indian currency notes to destabilise our economy. Ofcourse, we should expect the government of Pakistan to deny this serious allegation outright.

Manmohan Singh must realise that Indo-Pak relationship is not the only issue that warrants his attention.

Wednesday, April 13, 2011

Cash for votes in Tamilnadu (contd.)

The Election Commission is happy that the Assembly election in Tamilnadu is now over. The Chief Election Commissioner stated the obvious when he said "Tamilnadu elections gave us sleepless nights". It is impossible to conclude how much cash and cash convertibles were used to bribe the voters unless the political parties themselves submit honest accounts (which will never happen).

In the normal course, the ruling party (DMK) would have been voted back to power on account of its performance in terms of delivery on its 2006 poll promises particularly those concerning the have-nots. The Spectrum scam obviously queered the pitch for the DMK and the party became a by-word for corruption. As if this was not enough, the Congress party as an alliance partner became more of a liability. The Congress party in Tamilnadu is a house divided against itself and it will be a miracle if this party is able to win even 10% of the seats it contested.

With its back to the wall, DMK started converting the entire state of Tamilnadu into Thirumangalam. (In an earlier bye-election in Thirumangalam in Madurai district, Mr.M.K.Alagiri was alleged to have distributed unprecedented amounts of cash to garner votes for DMK). This is not to say that other parties were squeaky clean. They had less financial resources. The ill-gotten wealth from the Spectrum scam enabled DMK to buy votes on a much larger scale. Deontologists might say that wealth obtained in unethical ways cannot be retained.

If the role of cash in elections is not arrested immediately, the evil will strengthen further in Tamilnadu and will spread to other states. Whichever party is now elected to power, it may be forced to indulge in a bigger scam if only to fund the elections in 2016. The Election Commission has a tough job on its hands.

Unfortunately there is an acute crisis of leadership in the country now. As Julian Assange pithily said, "Manmohan Singh has a habit of reactively covering up allegations of corruption". It is a tragi-comedy that he is the most honest politician around !

Friday, April 08, 2011

Cash for votes in Tamilnadu

Distribution of cash to voters to purchase their votes is rampant in Tamilnadu. More than Rs.50 crore has already been seized by the Election Commission. Unfortunately the matter stops there. No further step is taken against the violators of democratic norms. Unintercepted cash may run into thousands of crore rupees.
To start with, some penalties must be imposed on distributors of cash. For example, for every Rs.1 crore seized, the guilty political party should be made to lose one seat among the victors from that party. The loss must be in that constituency where that party has won by the narrowest margin. The person who has gathered the next maximum number of votes should be deemed elected in that constituency.
If deterrent steps are not taken, corruption to make up for cash distributed will snowball from election to election.

Thursday, April 07, 2011

Search for successor to Ratan Tata

R.K.Krishna Kumar, a director in Tata Sons, has said that the committee appointed in August last year to spot a successor to Ratan Tata who is likely to retire from executive chairmanship next December (2012) on attaining 75 years of age, has not been able to find a worthy successor so far.

Despite RKK's glowing tributes to his chief, one may say that the committee's failure is more on account of its own shortcomings, whatever they be, rather than non-availability of persons of comparable merit.

RKK has also made an obsequious remark to the effect that the committee might have to lower the benchmark to find a successor. The implication is that whoever is finally appointed, he or she is not a worthy successor and has been selected only by diluting the selection criteria. One does not expect such drivel from the House of Tatas.

If interested in the full interview, the following link will be useful:

Sunday, April 03, 2011

Takeaways from Cricket World Cup

The 2011 ICC World Cup has just got over. Victory celebrations in India have not yet subsided. State governments are competing with one another in rewarding the cricketers.

The SriLankans have accepted their second successive runner-up status with grace. Their team received an appreciative welcome when it landed in Colombo after losing to India in the finals at Mumbai. This was in welcome contrast to how Indians and Pakistanis treat their teams if they come back losing.

This tournament has again proved that cricket is a game of glorious uncertainties, a once-popular saying that is very rarely heard these days. Who could have imagined that Sachin would be let off four times in the semis ? This is perhaps what God does to the God of Cricket ! Muthiah Muralitharan going wicketless in the finals was unthinkable.

UDRS (Umpire Decision Review System) has come to stay in one-day cricket also though BCCI continues to be sceptical about it. This system has been utilised to a T by most of the teams in the World Cup. Interestingly, the UDRS option is exercised by keeping the hands to form the shape 'T'.

The confusion caused by the roar of the crowd during the toss was surprising. Had there been no controversy about it  and if India had won the toss, would the result of the finals have been different ? Such permutations and combinations continue to enthrall cricket aficionados.