As Mahatma Gandhi said, 'We must become the change we want to see in the world.' Leaders haveto prove their belief in sacrifice and hard work. Such behavior will enthuse the employees to makebigger sacrifices. It will help win the team's confidence, help leaders become credible, and helpcreate trust in their ideas.
Trust and confidence can only exist where there is a premium on transparency. The leader has tocreate an environment where each person feels secure enough to be able to disclose his or hermistakes, and resolves to improve.Investors respect such organisations. Investors understand that the business will have good timesand bad times. What they want you to do is to level with them at all times. They want you todisclose bad news on a proactive basis. At Infosys, our philosophy has always been, 'When indoubt, disclose.'
Good corporate governance is about maximising shareholder value on a sustainable basis whileensuring fairness to all stakeholders: customers, vendor-partners, investors, employees,government and society.A successful organisation tides over many downturns. The best index of success is its longevity.This is predicated on adhering to the finest levels of corporate governance.At Infosys, we have consistently adopted transparency and disclosure standards even before lawmandated it. In 1995, Infosys suffered losses in the secondary market. Under Indian GAAP(generally accepted accounting principles), we were not required to make this information public.Nevertheless, we published this information in our annual report.
Transparency about the organisation's operations should be accompanied by an open environmentinside the organisation. You have to create an environment where any employee can disagree withyou without fear of reprisal.In such a case, everyone makes suggestions for the common good. In the end everyone will bebetter off.On the other hand, at Enron, the CFO was running an empire where people were afraid to speak. Insome other cases, the whistle blowers have been harassed and thrown out of the company.
We have gone towards excessive salaries and options for senior management staff. At onecompany, the CEO's employment contract not only set out the model of the Mercedes the companywould buy him, but also promised a monthly first-class air ticket for his mother, along with a cashbonus of $10 million and other benefits.Not surprisingly, this company has already filed for bankruptcy.Managerial remuneration should be based on three principles:
Fairness with respect to the compensation of other employees;
Transparency with respect to shareholders and employees;
Accountability with respect to linking compensation with corporate performance.