Question

Do you think that recent leadership change in Infosys is a question of governance? Comment on this
case of leadership change in Infosys in view of corporate governance.

Answer 1

Infosys has been the crown jewel of the Indian corporate sector, a mascot for growth driven by values. The story of how the founders and particularly N R Narayana Murthy built Infosys and gave the company its unique culture and status in the Indian mind-set has been told again and again. It has inspired a new generation of managers and leaders, and remains living proof of the fact that it is possible to build a world class enterprise in India by doing business the right way.

So the events at Infosys and the noise created by the sudden exit of its CEO should bother us all. At one level, the events challenged the promise that companies built like Infosys can grow and thrive. At another, the conflicting signals emanating from within the corporation raised doubts in many minds, particularly when the dissonance was presented in the frame of the old versus the new, or the founder(s) versus change, dynamism and innovation. At a deeper level, the huge questions on governance signal just how soon even a corporation cut in the mould of Infosys can slide. The return of one of the founders and the former CEO, Nandan Nilekani, as the non-executive chairman should bring some comfort but it cannot wish away the many questions raised by the sordid drama that has played out over the past several months.



But away from the noise, it should now be clear to everyone that Narayana Murthy has been consistent in his observations and positions on many of the issues he has chosen to raise on Infosys and its path and functioning under its first non-founder CEO. In fact, these are the very issues that contributed to the iconic status of the company. Murthy has always come across as a voice for transparency and is known for going the extra mile in releasing information. This has been captured in an iconic quote from him dating back several years: “When in doubt, disclose.” The words represent a philosophy that is an intangible asset; it builds wealth at Infosys.

In this light, take the demand for the release of the report of investigations into Infosys's acquisition of the Israeli software company Panaya, Inc, a provider of automation software, in March 2015 for 200 million USD. Infosys denied “malicious allegations” flagged in a letter by an anonymous whistleblower that came to light in February 2017. It would be fair to accept and believe what the company has stated in its defence, given the robust internal systems that Infosys is reputed or believed to have had. But no one can question, doubt or suspect the motives of Narayana Murthy’s demand that the report of a company-ordered investigation into the acquisition be made public.



This is perfectly in sync with what Murthy has always stood for and stated often. In fact, it is a principle that no one should have any doubt adopting. What was praised and promoted as good governance for the Murthy-era cannot today become undesirable just because Murthy speaks from outside the company. The same can be said about Murthy’s position on the “huge” severance package (reported at Rs. 23 crore) offered to its CFO and his questions about why such a package was offered when the culture of the company has been very different. In fact, no one in Indian corporate history has been paid 30 months of severance pay, as Murthy has pointed out. This is again a classic-Murthy stance. Way back in 2012, Murthy has been quoted as saying: “The board should decide the compensation…based on three factors: fairness, transparency and accountability. Fairness in deciding the compensation of the CEO with respect to the compensation of the lowest level professional is very important.”

These are strong value positions that needed to be debated and discussed and cannot be dismissed lightly as the board under the previous chairman sought to do. The answer cannot be, as was being suggested in some quarters, that Murthy and his ilk wanted to hold on to power, that they could not let go or that they were unsuited for change and caught in a time warp. These are distractions that have taken away from the very strong, powerful and valuable positions that Infosys has been built on and indeed every Indian, let alone Murthy, has a right to ask these questions and seek answers.

They go at the heart of not only the way the India growth story must evolve but also the purpose and meaning of an accelerated growth trajectory in a country where the vast majority are still poor. The question on whether these are the ways Indian corporate leaders must function and reward themselves points to the larger worries on growth going haywire, benefiting a few at the cost of many. This builds a culture of greed and triggers behaviour of a kind that has eroded the trust of ordinary citizens in modern day business empires. Infosys does not belong there. The worry is how close the company came to being taken over by a culture that was alien to it and in fact alien to all that the Indian corporate sector must stand for.

Answer 2

Let me try help you in handling this out;

• There must be a  change of governance for the change of leadership to be attained by any ordinary developing state.
• The governance entail the general management activities that takes place in a given nationality to ensure that there is smooth flow of activities in that particular country or state.
• In our case there was  a total change in the management and allocation of resources in Infosys that has led to the recent leadership change.