The founder's grouse

Both sides must work together to repair the damage caused by the bitter fracas at Infosys

I am particularly interested in the corporate and financial worlds, having tracked the evolution of India's securities and financial markets over two decades for some of the country's best-known business newspapers. I have also reported in depth on the maturing of the country's financial regulatory framework. But it's not all serious stuff, though. I enjoy following the latest developments in the world of show business, which is serious business too.

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The dramatic exit of Vishal Sikka as MD and CEO of IT giant Infosys has brought the focus sharply back on issues like culture and corporate governance. Sikka, the first outsider CEO at Infy, had been brought in with much fanfare just over three years ago in what was seen as a move aimed at giving Infosys, which was beginning to lag behind peers, new energy and direction. But his resignation after much acrimony between the Infosys management and, ironically, its iconic founder NR Narayana Murthy is a huge setback.

Sikka has said he was quitting following “false, baseless, malicious, and increasingly personal attacks”. Significantly, the Infosys board, led by chairman R Seshasayee and the recently-inducted co-chairman Ravi Venkatesan—both doyens of Corporate India—have stood stoutly behind Sikka and his vision of making Infosys more focussed on higher margin businesses, Artificial Intelligence and innovation.Venkatesan has said that the vision is no longer Sikka’s alone but that of the entire organisation. Murthy’s grouse against the Sikka-led management essentially stems from what he calls a lack of good corporate governance arising from the $200-million acquisition of automation tech firm Panaya and the severance pay to former CFO Rajiv Bansal which Murthy and some others thought was excessive. Murthy has been demanding the probe reports into the Panaya deal be made public, but the company has stoutly refused to do so, saying no wrongdoing was found.

The manner of Sikka’s exit has raised questions around whether founders or iconic leaders can ever really let go of the companies after they leave, and allow their successors to get on with their jobs. The inevitable comparisons with the Ratan Tata-Cyrus Mistry case apart, questions have arisen on whether Murthy was right in raising his concerns publicly in the manner in which he did, since the image of the company he founded has ended up taking a hit in the process. Sikka has put forward growth in revenue per employee and a decline in attrition as examples of how things have improved at Infosys since he took charge. But these pluses will hardly assuage Murthy’s concerns.

The Infosys episode also underscores the importance of a ‘cultural fit’ when selecting leaders. Murthy, who is known for his spartan thinking, has found it tough to come to terms with the manner in which the Palo Alto-based Sikka has been managing affairs at Infosys. The founders group had also questioned the compensation given to him. Sikka, on the other hand, feels Infosys needs to embrace the new realities in the world of IT if it has to stay ahead in the race. Details aside, at the core of this discord is a mismatch of cultures—of value systems—between the founders and the CEO.

For the Infosys management, the immediate task is to address this damage, restore shareholder value and to bridge the trust deficit with the founders so that the next CEO is allowed to function effectively. There are no easy solutions, but it is amply clear that conflicts such as these do little to enhance the image of the company in question.

There has to be a better way of resolving differences. And that is what both sides must focus on right away.

 

Best,
Sourav Majumdar
Editor, Forbes India
Email:sourav.majumdar@nw18.com
Twitter id:@TheSouravM

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