Total breakdown

Mohan R Lavi | Updated on January 20, 2018 Published on April 07, 2016


Of flyovers and the corporate response

Many residents of Bengaluru are used to being stuck in their cars for hours on flyovers in bumper-to-bumper traffic. Quite a few of them worry whether the flyover would bear the weight of so many idle cars. The collapse of an under-construction flyover in Kolkata last week throws up oft-asked questions on the quality of some infrastructure projects in the country.

While the exact cause will be known later, it is apparent that there were many issues with the project; it was dangerously positioned between two buildings, there were the inevitable delays and clearances were awaited.

Knee-jerk response

The knee-jerk response of the contractor, IVRCL, drew flak from many. Initially, IVRCL made a bizarre statement that it was an ‘act of God’. When they were told that God has other things to do than bringing flyovers down, they said it was an accident. When they were told that everyone knows it was an accident, they came out with a stunner — they spoke about the possibility of a bomb blast causing the flyover to collapse.

Amidst this confusion, one would have expected the top management — the CEO or any of its six other directors — of IVRCL to make a public statement condoning the tragedy and assuring the public that they would do whatever it takes to determine the root cause and fix it. Instead, the IVRCL management deputed their head (administration and HR) and head (legal) to face the ire of the media. It is not that these persons are not qualified to talk to the public about the company’s response to the mishap.

However, one expects that in well-managed companies, the doctrine of ‘tone at the top’ would have mandated the top management to respond.

A response from the top management at a time of crisis sends out a signal that the company is taking the matter extremely seriously. If the top management does not respond, it is natural to conclude that the company can delegate even the most critical tasks to managers and not own responsibility if the execution goes awry — this can be an extremely uncomfortable impression.

Releasing information

Being a listed firm, IVRCL did issue a notification to the bourses in a press release. It said that IVRCL grieves the loss of precious lives and injury to people and will cooperate with the authorities in investigating this accident, and that this was the first such incident in IVRCL’s history.

In this, the Vivekananda Flyover project, 59 sections with a total length of about 0.9 km had been successfully completed with all necessary processes, clearances and quality steps. The section that collapsed was the 60th. IVRCL stated that the project designer, manager and engineers were highly experienced.

The press release gave just enough information for people to understand what had happened. The only problem was that there was no mention of any of the names of the top management of IVRCL, making one wonder who authorised the content of the release. Putting the name of the CEO would have been the right thing to do.

Such incidents hurt companies and their brands. The only way to prevent mayhem would be for the top management to be seen and heard till the issue is resolved. This could well be one of the new lessons in corporate governance in India — Who, How and When to respond to a crisis.

The writer is a chartered accountant

Published on April 07, 2016
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