![]() Financial Daily from THE HINDU group of publications Monday, Jul 01, 2002 |
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Opinion
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Corporate Governance Corporate - Accounting Standards Columns - American Periscope Wanted: A corporate clown C. Gopinath
YOU might well ask, "What? Another one!" But I was reminded of the old era of monarchs who would be entertained by an in-house clown. Apart from keeping the king in good humour, the clown played a useful task of being the only one who could oppose or criticise the king with impunity. They would clothe their criticisms in good humour so as not to irritate the monarch, yet would say things to bring down the lord by a peg or two. If you are familiar with Shakespearean drama, you would have come across many of these clowns. Recall `Dogberry,' `Falstaff,' `Bottom,' and others? They would change the mood of the moment by lightening or deepening the atmosphere, mediate between the audience and the cast, and often their comment would signal a turning point in events. Appropriately, one clown was called `Touchstone.' In the play, they would be addressed quite directly as `Fool!' The Lords, in whose courts they operated, came to recognise their role in speaking the bitter truth when sycophants were more interested in currying favour. Our own Tenali Raman stories illustrate how homilies can be embedded even in cheeky behaviour. Clearly, monarchs need such a person around. From sunrise to sunset people who hang on their every word surround them. A person would wake the king to pleasant music and keep him in a good mood till the affairs of the day engaged him. The ministers would walk in and bow low before saying anything. People speaking to the king would refer to him in the third person. When they left his presence, they took a few steps backward first before turning around symbolic of not showing their back to him. The effect of all these rituals and ceremonies ensured that the king felt he could do no wrong, and was perfect. Could you blame them for being such idiots?! The story of the `Emperor's new clothes' captures this situation. None of the courtiers had the courage to tell the king that he was not wearing any clothes, till a little boy called out from the street, watching a naked monarch lead the parade. The situation in Pakistan now seems a closer parallel. The leader is a Chief of Army, Head of State, and Head of Government. He can wear his army fatigues and beret and look fierce. He can change into a regal sherwani and wear a cap, like a true successor of the Quaid-i-Azam. Or he can don business suits and look benignly at the western media, like a friendly neighbourhood CEO. But who around him has the courage to say he is wrong? Well, it says a lot for the courage of the journalists of Pakistan, who still manage to write critical reports of his government. But then, no one knows if the people around him have the courage to give him the daily paper. Thiruvalluvar advised: "The king may be one who, ignorant himself, also refuses to listen to wisdom from others. But it is the duty of the minister to speak out what he deems to be true and good." Corporations are no different. The Chief Executive Officer/Managing Director is all-powerful. When the CEO and Chairman is the same person, all the power is concentrated in one individual since he rules the management and the board. He is the ultimate decision-maker and hands out favours to all around him. Quite often, such a person can fall into the same trap as rulers into believing his view of the world. There are three reasons why a leader gets isolated from opposing opinions. One, the leader draws towards him persons who think similarly, and with whom he can have a good working relationship. Thus, there is a process of `groupthink' at work here, and those who surround him are temperamentally incapable of voicing an opposite opinion. Two, the leader may have a reputation for shooting the messenger. That is, his interpersonal style may be to identify the bad news with the person who delivers it, and thus dislike the person. Rather than stick to the issues, conflict gets identified with the personality. This would result in a reluctance among the employees to share bad news or give an opposite point of view to the leader. Third, the layers of people who surround the leader may actively prevent conflicting information reaching him. They see it as part of their role to act as filters and prevent bad news from reaching the leader. Thus, we need to institutionalise opposition. In parliamentary democracies, there is the ruling party and there is the Opposition. This nomenclature has resulted in the Opposition party opposing anything and everything that the ruling party does or proposes, even if they secretly think it is a good idea! And that gets quite tiring when we open the newspaper everyday and have to read the inane ideological position taken by an `opposition.' It may not be such a bad idea in the corporate world. And that is what I meant when I began by saying that we need a corporate clown. Well, if you don't like that term, you could call him the `official devil's advocate'. But that title does not sound very appetising either. So I leave it to you to find a better term. This person can be one member of the board who is nominated by the other members to serve in this role for a given period of time. Thus, his (or her) position will be secure and it will be clear that it is a role and not a personality trait! The duty of this person will be to raise all the possible things that can go wrong when an issue is being discussed or a decision is being made. Thus, when an acquisition is being planned, this person will highlight why it does not make strategic sense, or how projections can fail. The board may still make the decision in favour of the proposal, but at least the opposite point of view would have been aired and considered. Similarly, before a senior manager is fired, this person will provide all the reasons why this person should not be fired. If only some of the major corporations had such clowns. Kenneth Lay, former CEO of Enron, may not have merrily approved all the shady deals his finance director was entering into. At the very least, the other directors would not have been able to use the excuse `We did not know.' (The author is a professor of international business and strategic management at Suffolk University, Boston. His e-mail address is cgopinat@suffolk.edu)
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