Good Governance – Going Beyond the Statute

Over the last two weeks or so the flamboyant liquor baron, with a failed airline adventure provided the media with much spice and sensational fodder.  Bytes form ex-employees, legal experts, NGOs and the self-proclaimed ‘know-all’s’ added to the flavor as well as the TRPs. With politicians not wanting to miss out on the opportunity, the contentious issue of crony capitalism was raised yet again. Various e-posts, some of them with a sense of humour, went viral with ‘Twitter’, Facebook, Whatsapp initiators only interested in the number of likes or shares. The noise continued to become shrill, reaching a crescendo and then suddenly dying.  

This is not a one off case; we see it oft repeated these days. And, in each case as the noise becomes shrill and serious issues of national importance get painted with the same brush, we tend to loose sight of the real challenges facing us. In fact the public discourse begins to center around ‘Corruptions’ of all kinds, with the flogging boys being ‘Businesses’ at large.


In all this eye ball grabbing din, the positive events get drowned. What got completely ignored over the last ten days, for instance, was that WIPRO was named the most ethical company in the world by Ethisphere Institute for the fourth consecutive year, being listed amongst the top companies from 21 countries. This is an honour that we must all be proud of, in as much as we must be proud of the Indian exemplars whose ‘Brands’ inspire trust – ITC, Tatas, Godrej to name a few.

Did these companies become exemplars by just complying to the rule book? Not in the least!  Such pinnacle is not achieved only by adhering to the Statute – complying to rules, regulations, laws set in place by regulators must be adhered to in any case. These are ethical companies that walk the extra mile, beyond compliance. Ethics or moral servitude is what builds ‘Trust’ with all stakeholders; the all encompassing principles adhered to by a belief system. Mr Y C Deveshwar, for example, has set global benchmarks in going beyond the statute. Following the triple bottomline approach, he has led ITC, a tobacco company, to being considered as one that is doing good work for the society.

The Cost of non-conformance to Ethical Standards can be disastrous. The Volkwagen Scandal brought to the fore the weaknesses of Volkswagen’s internal control and governance issues and challenged the company’s competitive position.  There was also the Siemens probity case in 2008, which set the company back by 2.5 billion Euros. They have been made to commit 100 million Euros to support anti-corruption work as atonement.

It is SMEs and the frontline managers who often face the biggest challenges in following the ethical path. They feel the pressure from the ecosystem and sometimes falter in the decision making process.  This is often an outcome of the lack training or of an Organisation Culture, that becomes the guiding force in such circumstance.

Times have changed and so also must the lens with which we view the concept of Corporate Governance. For Companies today, it is an imperative to focus on inculcating and practicing a value system and building an Organisation Culture that would enable good governance.

This Organisation Culture is not built outside the four walls of the company. It is not only defined by the Code of Conduct and Ethical Practices followed; it is also defined by the responsible behavior of all key stakeholders i.e. investors, management, workforce, customers, suppliers, society and Government. The Code of Conduct should not only hold members to standards of professional integrity, accountability, fairness, open communication, respect for intellectual property and ideas of others, fair competition, privacy and avoiding conflicts of interest. The members have to “be it” – they have to reflect it in every detail and in every action and the organization has to “become the culture itself.

The bottom-line benefit comes in translating these values into behaviors. The Sigma is the Organizational Culture. There is no single answer to an ethical orgnaisation culture. It is not a ‘One Size Fits all’ kind of situation.

On its part the Government has taken some key steps to curb corruption. The Corporate Governance Act, the Anti Corruption Laws and various other regulatory bodies are maing conerted efforted in this direction. The Government is making every effort to digitize the processes making them enablers in achieving higher levels of Corporate Governance. Aadhar, automation of gas booking, appointments of passport renewals are only some examples where the impact is already visible with reduced Government-Citizen interaction.

The changeover to a digitsed world is a lengthy process and will take its own course. Amongst others, the biggest roadblock is the mindset; the industry and the citizens both need to come forward and support the government in this endeavor.

With this kind of Good Governance environment developing in the country the industry would do well to answer some very pertinent questions – Are the sporadic cases of poor Governance reflective of the entire Corporate India? Does heightened integrity deliver higher profits and provide a competitive edge?  Do Indian corporates by and large believe in integrity? Are they developing an Organisation Culture that will spur a culture of Good Governance?

The views expressed are personal.


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