The Hindu Business Line : Is there a Dr Faustus in your company?

PROMISES prove to be false. Trust gets violated. Operators fly off at night. And the world seems too suddenly too full of too many crooks. There is hope, and you can still find out whether an organisation is as credible and trustworthy as it seems. Saving the Corporate Soul by David Batstone, from Jossey-Bass (www.josseybass.com) talks about "eight principles for creating and preserving integrity and profitability without selling off". The author talks about the quarterly vision that almost blinds managers to "look for shortcuts to inflate short-term results at the expense of long-term sustainability". Sadly, it is also "the plumb line that the stock market uses to reward or punish" the companies. Here is some more of soul-searching:

The modern corporation does not live as an island unto itself. It swims within a sea of network-based enterprises that extend from manufacturing to distribution to marketing. As a result, many of a company's key relationship assets — the people whom it must trust to succeed — are located outside the corporate structure. Despite that fact, a firm is held accountable for every action that takes place in its name across the network enterprise. That fact alone should raise real concerns about the effectiveness of conventional structures of governance.

Leaders who have the ability to run a major corporation deserve to be compensated well. But talented executives are not that rare. Instead of going off on a costly search for superstars, corporate boards should be looking much more proactively for emerging in-house leaders who have proven themselves. Homegrown leaders tend to be better trusted within the company and will not command a king's ransom.

The character of the corporation takes shape first and foremost in the boardroom. Investors, employees, customers, and community groups are not privy to the confidential discussions that transpire behind closed boardroom doors. It is the board's duty therefore to ensure that the best interests of all stakeholders are honoured. That's the theory; in practice, CEOs are running the show. They orchestrate board meetings, handpick directors, and dole out bits of information. Sad to say, the directors usually put a rubber stamp on any proposal that comes out of the executive office.

People are imperfect and make mistakes. Customers seem to understand that fact and do not expect perfection as much as they do satisfaction. Contrary to popular belief, a company does not score big points with customers when it calls two weeks later with the message, "Sorry, we messed up, so we'll give you your money back." Customers are more inspired by workers who show responsibility and are willing to make decisions to resolve a problem.

No set of accounting mechanisms can overcome moral lapses, unfortunately. The transparent corporation relies on managers with integrity - leaders who can speak plainly about what the company has, and has not, achieved. Once top managers start playing games with the numbers, honesty becomes sparse all the way down the chain of command.

Save the soul, before they sell it off to the devil like Dr Faustus did!

Book courtesy: Landmark

BookValue@TheHindu.co.in

Article E-Mail :: Comment :: Syndication

Stories in this Section
Karnataka Bank's `Swarna Nidhi'

Touchtel cuts ILD rates

Big investments in mutual funds — Loaded against the retail customer

Why big investors bring in big risks

Will the November effect last?

Overseas acquisitions — Needed, information better and faster

Outsourcing backlash in the US — Time for a strategic rethink

Alliance Buy India: Sell