Article: 'Short-termism' plagues Indian companies: Rajiv Kumar


'Short-termism' plagues Indian companies: Rajiv Kumar

Need to set up a policy framework for whistle-blowers
'Short-termism' plagues Indian companies: Rajiv Kumar

It is all very well to say that anyone can lodge a complaint against anyone who engages in misconduct, however that is not practical


Need to set up policy framework for whistle-blowers says Rajiv Kumar

The market introduces the worst kind of behaviour that is extreme ‘short-termism’. Everyone is worried and thinking about the market value of the company till the next quarter. While it is prevalent across the world, it seems to be more prominent in India both in the government and the organisations. No one is worried about the long-term impact.

Where to start

Organisations cannot have standards of behaviour, ethical norms and corporate governance that are ahead of what we as individuals and as a nation practice because this is the ecosystem in which the organisation functions. What I mean is that people are inherently scared and suppressed in the country, especially in the political sphere. Everyone wants to peacefully get by. Also there is no stringent law in the country that ensures that people who speak up will not face any retaliation.

That is where we must begin. It is all very well to say that anyone can lodge a complaint against anyone who engages in misconduct etc, however that is not practical. We need to have a law, a framework which defines the reporting mechanisms and ensures zero retaliation for people who speak up. And we need to start with the politics and bureaucracy before having it for the corporates. Norms must be set in the political and bureaucratic domains to begin with.

The second point is that a policy framework for whistle-blowing is good for organisations themselves because it helps them improve their corporate governance, enables transparency of data and creates an environment for better behaviour in organisations. They can start even before the government because it will help them enormously. The fact however remains that the culture in India is far away from it and so voluntary adoption of whistle-blowing policy is not going to be easy.

The real concern

While we will have the policy sooner or later, it will perhaps be one more regulatory burden on the formal sector (Larger organisations). However, the real concern is in the informal, unorganised sector where even the basic compliances are not followed. Implementation is another concern in India. We have numerous polices but minimal enforcement. In fact, policies have become a medium to extract rent. Creating one policy will then solve no purpose if it is not implemented. And this one is prone to misuse, so what is the safeguard against misuse for this policy?

When someone decides to speak up against authority, they are putting everything they have at stake and therefore it is incumbent upon the state to protect the whistle-blower, even to the extent of ensuring that he will be placed somewhere provided he finds it difficult to continue working in the organisation he is working with.

A collaborative effort

The ethical environment in India is getting worse and messier not because of the industry alone but also because of the government and the bureaucracy. And companies alone can do precious little except try to lead by example. It has to be a collaborative effort and the onus lies on all of us i.e. individuals, firms, industry organisations and the government.

Let us accept the fact that none us, neither individuals, nor organisations readily adhere and accept policies. Firstly, there is inordinately large number of statutes governing the corporations, which really makes it impossible for them to adhere and implement. It just is an enormous administrative burden. For example a manufacturing organisation needs about 70 clearances to start operations. And second is the inability of the government to implement and enforce. We are in a business of tokenism, we pass a statute and we think that the work is done. The work actually starts there.

The government needs to rationalize and simplify the statutes that currently govern corporate behaviour, bring it down to the minimum and that will make organisations more amenable to compliance. The second step would be to enforce the minimal set of statutes rigorously both in the formal and informal sectors.

Industry organisations also have a key role to play. They must start introducing minimal acceptable ethical norms among the members. Industry organisations do this across the world, unfortunately in India they don’t. With 17,000 small and large industry associations in India, they can make a big difference if they work in this direction.

As told by Rajiv Kumar, Senior Fellow, Center for Policy Research and Former Secretary General, Federation of Indian Chambers of Commerce and Industry.

Topics: C-Suite, Strategic HR, Culture

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