Wipro co-CEO: Satyam is a wake-up call
A top executive at the leading Indian IT company calls for 'a culture of corporate governance,' not just government rules, to prevent Indian business scandals.
BANGALORE†(Fortune) -- The last few weeks have led to the startling revelation of large-scale lapses in corporate governance by a leading India-based IT company. The disclosures have indeed been a wake up call for all stakeholders ≠-- companies, customers, governments and employees.
The important learning from this episode is that in business, it is easy to replicate style. However, without any substance, it is impossible to survive.
Survival requires deep commitment to business ethics and corporate governance. Principles such as transparency, ethical business practices, management's ownership of corporate actions, and upholding auditor and stakeholder interests are tenets of good governance that have to be followed on a non-negotiable basis.
A one-off example of a company that has lacked corporate governance integrity should not color the contribution of the Indian IT industry, which has been a role model for setting standards in corporate ethics and governance for the country. There has been no other sector that has pioneered the fundamentals of meritocracy like the IT sector in India.
This sector's push to create a corporate culture based on talent has led to a burgeoning Indian middle class that has advanced through the ranks with education and hard work. Companies like Wipro (WIT), for example, have ensured that the triumphs of meritocracy have also been accompanied by a strong sense of accountability. Accountability should remain at the forefront of all major decisions in order to have a clearly identifiable owner who takes responsibility for execution.
Management must continue to strongly convey the message that integrity and ethical values cannot be compromised. And customers, associates and employees must receive and understand that message.
Furthermore, executives should continuously demonstrate these values through words, actions and a commitment to high ethical standards. This can be done through a constantly upgraded system of articulated policies, employee confirmations, periodic training, periodic testing and taking action on default. Demonstration of quality of governance will help enhance the confidence of stakeholders.
Having said that, there is no dearth of regulations and norms that companies follow. Indian IT companies, in particular, compete in global markets and adhere to international benchmarks, norms and standards.
What is important is to to build a culture of corporate governance that is driven as much by external government regulations as by internal initiatives to maintain socially responsible corporate values. This episode may be a good opportunity for all of us -- governments, private sectors and individuals -- to self-reflect and continue to probe deeper internally about our business depth, governance culture, and sanctity of business.