The Hindu Business Line : Return on value

RETURN on value (ROV) is fast becoming the vogue word in corporate circles in the US as a more significant replacement of return on investment (ROI), and as a measure of the social and ethical conscience of an enterprise.

This new sensitivity to the role of values in business is directly traceable to the series of scandals rocking the US for the past five years or more in which household names — Enron, Worldcom, Sunbeam, Tyco — have become bywords for financial skullduggery and outright cheating of stakeholders, many of whom have been tragically ruined in the market crash that inevitably followed.

Rubbing salt in the wound was the greed of a number of CEOs and high-level functionaries who siphoned off for themselves billions of dollars belonging to the companies whose interests they were supposed to protect.

What made the situation intolerably worse was the negligence or connivance of many of the well-known audit firms, financial institutions and investment banks, which led to the further ballooning of misdeeds. The latest example is of Morgan Stanley, which has been asked to pay punitive damages and fines of the order of $1.4 billion for its complicity in artificially jacking up the net worth of Sunbeam.

No wonder, then, that there has been a mushrooming of conviction that laws alone would not be enough to stem the tsunami of degradation, depravity and deceit, and that they would have to be buttressed by a steadfast adherence to values.

Drawing up and displaying explicit, written values statements, akin to vision and mission statements, is now becoming established practice. They emphasise not only time-honoured values like honesty, accountability, transparency, trust, keeping promises and so on, but also present day imperatives relating to protection of environment, conservation of natural resources, attention to human capital and social dividend, and the promotion of public causes by setting apart a proportion of earnings for philanthropic activities. Here is an area in which the new Chairman of SEBI, Mr M. Damodaran, can provide the lead to companies in the private sector to ensure that the compulsions of money-making by whatever means do not drag India Inc. also into the same kind of recurrent disasters as in the US.

B. S. Raghavan

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