11/8/11 The Hindu : Business / Econom : Need for sustainable wealth creation

1/2 www.thehindu.com/business/Econom/article2604537.ece
Business Economy
Need for sustainable wealth creation
. V. V. YER
TIe rusI oI proLesLs ucross LIe ALIunLIc over corporuLe greed In recenL weeks Is sympLomuLIc oI u deeper muIuIse,
someLIIng wIIcI cunnoL be wIsIed uwuy. UnIess gIobuI economIes Luke serIous noLe oI LIe sImmerIng unger und sense
oI uIIenuLIon oI LIe vusL numbers, LIere Is u reuI dunger oI u socIuI upIeuvuI oI gIobuI dImensIons. ApurL Irom mucro
economIc meusures Lo LuckIe LIe deep InequuIILIes beLween LIe 1 per cenL und LIe qq per cenL oI LIe popuIuLIon us In
AmerIcu, LIe IuIIure oI LIe overurcIIng sIureIoIder-cenLrIc corporuLe governunce modeI oI LIe U.S. Ius been one oI
LIe muIn IucLors Ior sucI InequuIILIes und Ience needs Lo be recuIIbruLed.
SIureIoIder-cenLrIc modeI: L cun be suId LIuL un overurcIIng sIureIoIder-cenLrIc corporuLe governunce modeI
prucLIsed In muny counLrIes, IncIudIng ndIu, resuILs quILe oILen In LIe redIsLrIbuLIon oI weuILI und noL so mucI In LIe
creuLIon oI weuILI. or wunL oI u susLuInubIe buIuncIng oI LIe InLeresLs oI LIe vurIous sLukeIoIders In u corporuLe body,
sucI un overurcIIng sIureIoIder-cenLrIc corporuLe governunce modeI resuILs In u skewed redIsLrIbuLIon oI weuILI
uccompunIed by wIde InequuIILIes. TIIs pIenomenon Is LukIng pIuce In LIe ndIun corporuLe secLor uIso.
I ndIu Ius Lo come ouL oI deep poverLy, susLuInubIe weuILI creuLIon Ius Lo Luke pIuce. AILIougI, socIuI subsIdIsuLIon
by LIe governmenL cun uIIevIuLe poverLy In LIe sIorL-Lerm, LIe Iong-Lerm soIuLIon Lo eIImInuLe poverLy cun onIy be
LIrougI susLuInubIe weuILI creuLIon.
An IncIusIve modeI oI corporuLe governunce muy be deIIned us u seL oI sysLems, processes und prIncIpIes, wIIcI ensure
LIuL u compuny Is governed In LIe besL InLeresLs oI uII sLukeIoIders. TIe seL oI sysLems LIuL IeIp LIe Lusk oI corporuLe
governunce wouId IncIude cerLuIn sLrucLuruI und orgunIsuLIonuI uspecLs oI u compuny. TIe seL oI processes wIIcI IeIp
corporuLe governunce wouId embruce Iow LIIngs ure done wILIIn sucI sLrucLures und orgunIsuLIonuI sysLems.
PrIncIpIes wouId embruce LIose uspecLs oI corporuLe beIuvIour und conducL wIIcI socIeLy expecLs oI u good corporuLe
cILIzen. WIen you LuIk oI LIe sLukeIoIders LIey do noL meun onIy sIureIoIders; u compuny wouId LypIcuIIy Iuve IIve
sLukeIoIders, numeIy, empIoyees, cusLomers, suppIIers, communILy und sIureIoIders. To be ubIe Lo serve LIe besL
InLeresLs oI uII sLukeIoIders, u seL oI sysLems, processes und prIncIpIes Iuve Lo be puL In pIuce.
SoIL uspecLs: WIIIe vurIous reguIuLIons Ior corporuLe governunce In ndIu und ubroud Iuve LuIked oI LIe vurIous
sysLems und processes, LIe prIncIpIes wIIcI u corporuLe governunce modeI sIouId embruce Lo Luke cure oI besL
InLeresLs oI uII sLukeIoIders Iuve IurgeIy remuIned un-empIusIsed. TIese ure LIe soIL uspecLs wIIcI In some wuys
drIve weuILI creuLIon In u susLuInubIe munner.
EmpIoyee InnovuLIon und deveIopmenL: TIe IIrsL prIncIpIe Is Lo enLIrone merIL In LIe orgunIsuLIon. A merIL-bused
orgunIsuLIon wIere IeudersIIp quuIILIes ure consLunLIy nurLured Is LIe orgunIsuLIon oI LIe IuLure. I ndIun corporuLe
secLor Ius Lo creuLe weuILI on u susLuIned busIs, IL Ius Lo sIure weuILI und power wILI LIe mosL ouLsLundIng
empIoyees. VenLure cupILuIIsLs In ndIu Iuve noL sIown LIe durIng und LIe convIcLIon Lo supporL some oI LIe besL
Ideus. TIIs Ius Lo Iuppen Lo muke LIe ndIun corporuLe secLor one oI LIe mosL InnovuLIve und creuLIve engInes oI
weuILI creuLIon. CompunIes Iuve Lo encouruge some oI LIe mosL ouLsLundIng empIoyees Lo InnovuLe und creuLe even II
IL were Lo resuIL In IuIIures. SLock opLIon scIemes In ndIu Iuve now IosL LIe uLLrucLIon. L Is LIme LIe corporuLe secLor
oIIered uLLrucLIve sLock opLIon scIemes Lo rewurd LIe mosL ouLsLundIng und merILorIous empIoyees. SuccessIon
pIunnIng Ius Lo be Luken serIousIy even In IumIIy-run compunIes so LIuL IeudersIIp posILIons ure IIIIed up onIy on LIe
busIs oI merIL und perIormunce. n order Lo creuLe u deep sense oI beIongIng umong LIe empIoyees, IL Is ImperuLIve
LIuL LIe uIIuIrs oI LIe compuny ure currIed on In u IuIr und LrunspurenL munner.
CreuLIng cusLomer suLIsIucLIon: WIen IL comes Lo cusLomers, compunIes sIouId gIve vuIue Ior money. CusLomer
preIerences und needs sIouId be consLunLIy sLudIed Lo creuLe producLs und servIces Ior cusLomer deIIgIL.
NurLurIng suppIIers: SuppIIers ure LIe buckbone oI LIe munuIucLurIng secLor. TIe corporuLe secLor Ius noL generuIIy
IeIL LIe need Lo nurLure quuIILy suppIIers. SuppIIers ure sLukeIoIders wIo Iuve Lo be nurLured, Lo ucIIeve cusLomer
deIIgIL.
SupporLIng communILy: nLeresLs oI LIe ImmedIuLe communILy wILI wIIcI compunIes Iuve InLerdependence, wouId
Iuve Lo be Luken cure oI. MosL oI LIe socIeLuI probIems LIuL LIe corporuLe secLor cuuses ure ouL oI LIe ubsence oI
genuIne concern Ior LIe members oI LIe ImmedIuLe communILy wIIcI Ius been dIspIuced or wIIcI Ius suIIered
envIronmenLuI degruduLIon by compunIes. UnIess u Iumune und IoIIsLIc upproucI Is udopLed In LIIs respecL und LIe
genuIne concerns oI sucI communILy ure uddressed, uny modeI oI corporuLe governunce wouId be u Iurce und wouId
noL creuLe weuILI In u susLuInubIe munner. Hence, un IncIusIve corporuLe governunce modeI cun III-uIIord Lo Ignore
LIIs uspecL.
Once LIe InLeresLs oI LIe ubove sLukeIoIders ure Luken cure oI, wILI InvesLor-IrIendIy meusures LIe InLeresLs oI LIe
sIureIoIders wouId geL uuLomuLIcuIIy Iooked uILer.
11/8/11 The Hindu : Business / Econom : Need for sustainable wealth creation
2/2 www.thehindu.com/business/Econom/article2604537.ece
haeholde old ge aomaicall looked afe.
In m, like Sec. 172 of he Companie Ac, 2006, of he U.K., ao poiion old hae o be bil ino o
Compan La o ha an inclie model of copoae goenance become he ao d of he boad. Time
eem o be popiio o bing in hi impoan change.
Corporate Lawer
He can be contacted at: ierassociates@sif.com
Keod: occpp poe, ainable ealh, economic aeg
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