Professional Documents
Culture Documents
INFOSYS
&
CASE STUDY OF PHANEESH MURTHY
Presented By
Sl. No. Name Roll Number
1 PUPUN
The practice of CSR is subject to much debate and criticism. Proponents argue that
there is a strong business case for CSR, in that corporations benefit in multiple ways
by operating with a perspective broader and longer than their own immediate,
short-term profits. Critics argue that CSR distracts from the fundamental economic
role of businesses; others argue that it is nothing more than superficial window-
dressing; others yet argue that it is an attempt to pre-empt the role of governments
as a watchdog over powerful multinational corporations. Corporate Social
Responsibility has been redefined throughout the years. However, it essentially is
titled to aid to an organization's mission as well as a guide to what the company
stands for and will uphold to its consumers.
Development Business ethics is one of the forms of applied ethics that examines
ethical principles and moral or ethical problems that can arise in a business
environment.
The term CSR came in to common use in the early 1970s, after many multinational
corporations formed, although it was seldom abbreviated. The term stakeholder,
meaning those on whom an organization's activities have an impact, was used to
describe corporate owners beyond shareholders as a result of an influential book by
R Freeman in 1984.[2]
ISO 26000 is the recognized international standard for CSR (currently a Draft
International Standard). Public sector organizations (the United Nations for
example) adhere to the Triple Bottom Line (TBL). It is widely accepted that CSR
adheres to similar principles but with no formal act of legislation. The UN has
developed the Principles for Responsible Investment as guidelines for investing
entities.
Approaches
Another approach to CSR is to incorporate the CSR strategy directly into the
business strategy of an organization. For instance, procurement of Fair Trade tea
and coffee has been adopted by various businesses includingKPMG . Its CSR
manager commented, "Fairtrade fits very strongly into our commitment to our
communities."[5]
Taking responsibility for its impact on society means in the first instance that a
company accounts for its actions. Social accounting, a concept describing the
communication of social and environmental effects of a company's economic
actions to particular interest groups within society and to society at large, is thus an
important element of CSR.[6]
• The Fair Labor Association conducts audits based on its Workplace Code of
Conduct and posts audit results on the FLA website.
The FTSE Group publishes the FTSE4Good Index, an evaluation of CSR performance
of companies.
In some nations legal requirements for social accounting, auditing and reporting
exist (e.g. in the French bilan social), though agreement on meaningful
measurements of social and environmental performance is difficult. Many
companies now produce externally audited annual reports that cover Sustainable
Development and CSR issues ("Triple Bottom Line Reports"), but the reports vary
widely in format, style, and evaluation methodology (even within the same
industry). Critics dismiss these reports as lip service, citing examples such as
Enron's yearly "Corporate Responsibility Annual Report" and tobacco corporations'
social reports.
The scale and nature of the benefits of CSR for an organization can vary depending
on the nature of the enterprise, and are difficult to quantify, though there is a large
body of literature exhorting business to adopt measures beyond financial ones (e.g.,
Deming's Fourteen Points, balanced scorecards). Orlitzky, Schmidt, and Rynes[7]
found a correlation between social/environmental performance and financial
performance. However, businesses may not be looking at short-run financial returns
when developing their CSR strategy.
The definition of CSR used within an organization can vary from the strict
"stakeholder impacts" definition used by many CSR advocates and will often include
charitable efforts and volunteering. CSR may be based within the human resources,
business development or public relations departments of an organisation,[8] or may
be given a separate unit reporting to the CEO or in some cases directly to the
board. Some companies may implement CSR-type values without a clearly defined
team or programme.
The business case for CSR within a company will likely rest on one or more of these
arguments:
Human resources
Risk management
Managing risk is a central part of many corporate strategies. Reputations that take
decades to build up can be ruined in hours through incidents such as corruption
scandals or environmental accidents. These can also draw unwanted attention from
regulators, courts, governments and media. Building a genuine culture of 'doing the
right thing' within a corporation can offset these risks.[10]
Brand differentiation
In crowded marketplaces, companies strive for a unique selling proposition that can
separate them from the competition in the minds of consumers. CSR can play a role
in building customer loyalty based on distinctive ethical values.[11] Several major
brands, such as The Co-operative Group, The Body Shop and American Apparel[12]
are built on ethical values. Business service organizations can benefit too from
building a reputation for integrity and best practice.
License to operate
A wide variety of individuals and organizations operate in between these poles. For
example, the REAL Leadership Alliance asserts that the business of leadership (be it
corporate or otherwise) is to change the world for the better.[15] Many religious and
cultural traditions hold that the economy exists to serve human beings, so all
economic entities have an obligation to society (e.g., cf. Economic Justice for All).
Moreover, as discussed above, many CSR proponents point out that CSR can
significantly improve long-term corporate profitability because it reduces risks and
inefficiencies while offering a host of potential benefits such as enhanced brand
reputation and employee engagement.
Some critics believe that CSR programs are undertaken by companies such as
British American Tobacco (BAT),[16] the petroleum giant BP (well-known for its
high-profile advertising campaigns on environmental aspects of its operations), and
McDonald's (see below) to distract the public from ethical questions posed by their
core operations. They argue that some corporations start CSR programs for the
commercial benefit they enjoy through raising their reputation with the public or
with government. They suggest that corporations which exist solely to maximize
profits are unable to advance the interests of society as a whole.[17]
Shell has a much-publicised CSR policy and was a pioneer in triple bottom line
reporting, but this did not prevent the 2004 scandal concerning its misreporting of
oil reserves, which seriously damaged its reputation and led to charges of
hypocrisy. Since then, the Shell Foundation has become involved in many projects
across the world, including a partnership with Marks and Spencer (UK) in three
flower and fruit growing communities across Africa.
Critics concerned with corporate hypocrisy and insincerity generally suggest that
better governmental and international regulation and enforcement, rather than
voluntary measures, are necessary to ensure that companies behave in a socially
responsible manner. Others, such as Patricia Werhane argue that CSR should be
looked more upon as a Corporate Moral Responsibility, and limit the reach of CSR by
focusing more on direct impacts of the organization as viewed through a systems
perspective to identify stakeholders.
Ethical consumerism
The rise in popularity of ethical consumerism over the last two decades can be
linked to the rise of CSR. As global population increases, so does the pressure on
limited natural resources required to meet rising consumer demand (Grace and
Cohen 2005, 147). Industrialization in many developing countries is booming as a
result of technology and globalization. Consumers are becoming more aware of the
environmental and social implications of their day-to-day consumer decisions and
are beginning to make purchasing decisions related to their environmental and
ethical concerns. However, this practice is far from consistent or universal.
Increasingly, companies are becoming interested in processes that can add visibility
to their CSR policies and activities. One method that is gaining increasing popularity
is the use of well-grounded training programs, where CSR is a major issue, and
business simulations can play a part in this.[citation needed]
One relevant documentary is The Corporation, the history of organizations and their
growth in power is discussed. Corporate social responsibility, what a company does
to in trying to benefit society, versus corporate moral responsibility (CMR), what a
company should morally do, are both important topics to consider when looking at
ethics in CSR. For example, Ray Anderson, in The Corporation, takes a CMR
perspective in order to do what is moral and he begins to shift his company's focus
towards the biosphere by utilizing carpets in sections so that they will sustain for
longer periods. This is Anderson thinking in terms of Garret Hardin's "The Tragedy of
the Commons," where if people do not pay attention to the private ways in which
we use public resources, people will eventually lose those public resources.
Denmark made a law on CSR. 16 December 2008, the Danish parliament adopted a
bill making it mandatory for the 1100 largest Danish companies, investors and state
owned companies to include information on corporate social responsibility (CSR) in
their annual financial reports. The reporting requirements became effective on 1
January 2009[21].
CSR/SRI is still voluntary in Denmark, but if a company has no policy on this they
must state their positioning on CSR in their annual financial report.
Often it takes a crisis to precipitate attention to CSR. One of the most active stands
against environmental management is the CERES Principles that resulted after the
Exxon Valdez incident in Alaska in 1989 (Grace and Cohen 2006). Other examples
include the lead poisoning paint used by toy giant Mattel, which required a recall of
millions of toys globally and caused the company to initiate new risk management
and quality control processes. In another example, Magellan Metals in the West
Australian town of Esperance was responsible for lead contamination killing
thousands of birds in the area. The company had to cease business immediately
and work with independent regulatory bodies to execute a cleanup. Odwalla also
experienced a crisis with sales dropping 90 percent, and the company's stock price
dropping 34 percent due to several cases of E.Coli spread through Odwalla apple
juice. The company ordered a recall of all apple or carrot juice products and
introduced a new process called "flash pasteurization" as well as maintaining lines
of communication constantly open with customers.
Stakeholder priorities
Sustainability
Infosys employees actively participate in the welfare of the local community. Our
Development Centers (DCs) in India make a difference through several Corporate
Social Responsibility (CSR) initiatives.
Banglore DC:
Rakum School for the visually challenged: Mitr, our local CSR team, visited the
Rakum School for the visually challenged. Mobility, an exercise in which team
members walked blindfolded using canes, helped them empathize with the children.
The team organized games and distributed chocolates and stationery.
Notebook distribution: The Infynite Smiles CSR team has been distributing books
and stationery to underprivileged children across Karnataka since 2001. In 2009,
the team touched more than 45,000 lives, including the tribal community. We
collected donations amounting to Rs. 10,00,000. Our drive has been actively
supported by the Dream School Foundation, Ramana Clinic, Sri Vivekananda Youth
Movement, Chrysalis and other NGOs.
Bhubaneswar DC:
Project Genesis: This initiative of the Infosys Affirmative Action Program (IAAP)
prepares students for a career in the Business Process Outsourcing industry. The
project was launched in Orissa in 2007 along with the state government to enhance
the skills of academicians. Till date, 515 professors have been trained to make
learning more focused by combining traditional teaching methods with modern
education. In 2009, 70 professors underwent a 12-day training program.
Chandigarh DC:
Behavior and social skills development: Prayaas, our local CSR team, organized a
program where 60 children from the Panchkula slum showcased their creativity in
group activities. The children were imparted training in social etiquette.
Medical camp and cleanliness drive: Prayaas has adopted Tanda village to drive
social transformation in the region. Our volunteers engaged residents in a
cleanliness drive to prevent malaria. A free camp for eye and general medical check
up was organized. Medicines and spectacles prescribed by doctors at the camp
were distributed free of cost. The team collected data on health and sanitation
related issues to address them.
Chennai DC:
Educare: Sneham, our local CSR team, manages a dedicated intranet portal to help
employees support education of the children of our housekeeping and security staff.
In 2009, 1,500 members contributed approximately Rs. 14,00,000 to support more
than 370 students. Meritorious students were awarded for their performance. A
special award was presented to a girl child with exceptional recitation skills.
Helping the visually challenged: Infoscions partner with Nethrodaya, an NGO that
works with visually challenged children. Our volunteers regularly conduct weekend
reading sessions. In 2009, we organized a South India inter-state sports festival with
modified versions of cricket, volleyball and chess.
Facilities for rural schools: Volunteers constructed a water tank to supply drinking
water to 1,000 students of the Avanippoor Government Higher Secondary School.
We have been donating notebooks to the Anoor School since 2005. In 2009, we
donated a water tank to the school. We also distributed notebooks to the children of
Infosys’ support staff.
Hyderabad DC:
PC donation drive: Mamata, our local CSR team, donated more than 105 PCs to
institutions that undertake non-commercial and public activities. We have already
invited requests for the next list of beneficiaries.
Day of Change: Every Wednesday, drop boxes are placed at the campus entrance
and exit points, food courts and parking area to collect coins from Infoscions for
social welfare activities.
Mysore DC:
Notebook distribution: Soften, our local CSR team, distributed 57,000 books, 36,000
pencils and 3,600 erasers in the Notebook Distribution Drive 2009. Underprivileged
students from various schools have been benefiting from this drive since 2002.
Language and computer education: Basic computer education was imparted to the
security and housekeeping staff of the DC. Our team also helped 10 guards improve
their English language skills.
Blood donation: More than 80 Infoscions donated blood in a special camp conducted
in collaboration with the Mysore Rotary and Chandrakala Hospital.
School for dropouts: Our team works with Kaliyuva Mane, an informal school for
dropouts run by the Divya Deepa Trust. We interact with children in open
classrooms through painting competitions and games.
Pune DC:
Sparsh - A Healing Touch, our local CSR team, is a registered NGO. In 2009, we
conducted several programs:
Eye donation camp: More than 330 Infoscions pledged to donate their eyes in a
special camp organized with the Ruby Hall Clinic and Eye Bank Association of India.
Play and Live (PAL): We use sports to boost the confidence of underprivileged
children, teach them various skills and change their outlook. We donated sports
equipment including carom and chess boards, and prizes such as watches,
perfumes and chocolates.
Blood donation camp: 700 volunteers donated blood during a two-day camp in June
2009. Three blood banks - ISIS Blood Bank, KEM and Janakalyan - participated.
Doctors highlighted the need for safe blood donation at the camp.
Trivandrum DC:
The case attracted a lot of media coverage since a sexual harassment lawsuit
implicating such a senior official had never been heard of in the Indian corporate
world. It was also being seen as an event that could make Indian companies stop
ignoring the sensitive issue of sexual harassment at the workplace.
While sexual harassment of female employees was prevalent in the country, it was
either not reported or ignored. Either the victims kept quite due to fear of social
ridicule and fear of losing their jobs, or the matter was somehow hushed up by the
management. The stance adopted by Infosys in this case seemed to go against its
image of a company considered to be a model of good corporate governance.
Analysts claimed that the company had kept the issue under wraps for a long time.
Media reports blamed Infosys for neglecting to formulate/implement a structured
policy regarding sexual harassment and for compromising on moral values for an
'economically-valuable' person like Phaneesh.
Analysts wondered how a company that Forbes had once described as "a model of
transparency, not just for the rest of corporate India but for companies
everywhere," do such things! The saga of Phaneesh, Reka and Infosys and the issue
of sexual harassment at the workplace (in India as well as abroad) were debated
heatedly in corporate and media circles, as many more shocking events unfolded
over the next one year.
Quid pro quo involves making the conditions of employment contingent on the
employee (prospective/existing) granting the employer sexual favors. The employer
makes it very clear that hiring, promotions, perks, facilities etc. would be possible
only if the employee consents to the former's sexual advances. This is a very 'easy
to identify' and comparatively 'easy to prove' form of sexual harassment.
The 'hostile working environment' form of harassment, which is the basis of most of
the court cases filed, is more difficult to identify and prove. As per a 1993 US
Supreme Court ruling, this has been defined as, "When the workplace is permeated
with 'discriminatory intimidation, ridicule, and insult that is 'sufficiently' severe or
pervasive to alter the conditions of the victim's employment and create an abusive
working environment."
Reka vs. Phaneesh & infosysPhaneesh was an integral part of Infosys' success
story. While Chairman and Chief Mentor Narayana Murthy and a few others
established Infosys in India back in 1981, Phaneesh successfully set up the
company's overseas businesses. He was often called the 'other Murthy' of Infosys
and had many admirers within and outside the company. Not surprisingly, he was
the highest paid executive in the company with a take home package of Rs 20
million. Belonging to a middle-class South Indian family, Phaneesh graduated from
one of India's premier business schools. Before joining Infosys, Phaneesh was
working with another software company, Sonata Software as a regional manager.
He was said to be one of the main reasons for the company's good performance. In
1992, Phaneesh joined Infosys, then a $ 2 million company with a negligible
presence in the US. Within three years, Phaneesh became the head of sales at the
company, and in 1996, he was made the head of worldwide sales...
Phaneesh vs. Infosys - Round IEven as uncertainty about the outcome of Reka's suit
continued, Phaneesh seemed to have moved on. Media reports mentioned how
many IT companies in India were trying to lure him to work for them.
It was also reported that Phaneesh was planning to promote his own business
process outsourcing (BPO) firm. Infosys meanwhile issued a press release that
categorically stated that Phaneesh would not be taken back after the case was
settled. In December 2002, Phaneesh and his wife Jaya Murthy launched Primentor
(in California), an advisory firm, to outsource consulting for clients and vendors.
For clients, the services were to include partner/vendor selection, deal structuring
and on-going contract administration; for vendors, the services were to include
strategy consulting, service definitions, brand consulting, blueprints for the future,
sales, and account management training...
Phaneesh vs. Infosys - Round IIAt the press conference, Narayana Murthy, Nilekani
and Mohandas Pai (among others), made public the entire sequence of events in the
case. Firstly, Narayana Murthy made it very clear that Phaneesh was very much a
party to the settlement deal and that he had signed the documents himself.
Also, Infosys had reserved the right to proceed against him for his conduct and for
the fact that he did not contribute financially to the settlement. Nilekani said that
Phaneesh had first mentioned the lawsuit to him in January 2002, portraying it as a
very minor issue.
Recollecting the events, Nilekani said, "He told me he was innocent and that the
charge was without merit, and the company was not at risk. He did not tell me
anything else about the relationship or the other matters of things being filed
against the company." However, when the issue became more serious in June 2002
and Infosys was served a legal notice, the company's board stepped in...
Infosys Moves OnAt the press conference, Narayana Murthy did not answer a
question about the fact that Reka did not seek redressal of her grievances through
the company's internal systems. However, his refusal to answer did not necessarily
mean that the company's internal systems were still not equipped to handle such
problems.
In fact, Infosys had taken several measures to strengthen its grievance redressal
procedures and had designed and implemented an effective sexual harassment
policy. Narayana Murthy said, "The litigation is behind us. We have taken further
steps to strengthen our internal processes and improve the checks and balances to
handle similar situations." Mohandas Pai added, "We have conducted several
training programs, widened the dissemination of information and met employees on
this issue." Infosys conducted a course for all its officers and members (in India as
well as abroad) on sexual harassment and the importance of being sensitized about
the issue. The code of conduct provided in the employee manual was modified in
line with the above decision...
Lessons to be Learned
Though out-of-court settlements were the norm for most workplace sexual
harassment suits the world over, it clearly was not the best solution. Instead of
addressing the problem, this solution simply paid off the victim, so that the accused
could walk away. The larger issue of the emotional, physical and financial damage
caused to the victim, could be dealt with only if strict policies and guidelines
regarding sexual harassment were established by the companies.