CFO India - July 2012 by Bhupinder Sharma

CFO PROFILE JOYDEEP NAG, CFO, GE HEALTHCARE P. 24

IN PRACTICE LEADING WITH PERSONAL MASTERY P. 28

ON WHEELS MERCEDES BENZ C63 AMG P. 58

VOLUME 03 ISSUE 07 75 JULY 2012

Managing a

Responsible Business: Challenges & Solutions Andrew Harding

Global MD, CIMA on how CFOs in India can tackle ethical issues better.

Andrew Harding CIMA’s Global MD

GLOBAL SURVEY ON BUSINESS ETHICS

A 9.9 MEDIA PUBLICATION

CFO july | 2012

Inside

13 COVer story

I THINK 10 SN mukherjee The CFO of IL&FS Engineering and Construction Company talks about the new business landscape in India and the challenges it poses before CFOs

in practice 28 leading with personal mastery Leadership development strategies for achieving a level of personal mastery will equip CFOs to face myraid external and internal challenges

INSIGHT 48 organising for an emerging world The structures, processes and communication approaches of many far-flung businesses have been stretched to the breaking point. Ideas for relieving the strains

CFO PROFILE JOYDEEP NAG

The healthcare industry will need the right kind of financing, says Joydeep Nag, CFO South Asia, GE Healthcare

Managing a responsible business: challenges & solutions Ethics have been at the centre of many scandals which ultimately cause an organisation’s downfall. A look at key ethical and behavioural challenges before leaders and ways to tackle them

CASE STUDY 44 streamlining financial reporting Anjali Bhadbhade, CFO, DHL Express talks about how the company streamlined their financial reporting system and brought in a cultural change

Cfo lounge 58 ON WHEELS | mercedes C63AMG 61 M&E | ITC Grand Central, Mumbai

leader’s world 54 dealing with

62 TRAVEL | Kerala

difficult people David Lim discusses how to work on team goals and to deal with difficult colleagues or situations

Regulars 04 LETTERS TO THE EDITOR 64 NOT JUST THE LAST WORD

cFO prOFiLe JoYdeeP nAG, cFo, Ge HeAltHcAR e P. 24

in practice leAdinG PeRSonAlWitH MASteRY

P. 28

On WHeeLS MeRcedeS benZ c63

P. 58

AMG

CFO I NDIA CFO PROFILE: JOYDEEP NAG 24 LOUNGE: MERCEDES BENZ 58

Cover design atul deshmukh Cover photography jiten gandhi

I thINk:

Managing a Respon sible Busines s:

S.N. MUkhERJEE

challenges & solutions

Andrew Harding, Global MD, CIMA, on how CFOs in India can tackle ethical issues better.

+ GloBal suRvey on Business ethics

vOLUME

AD index 03

VoluMe 03 iSSue 07 75

JulY 2012

Andrew Harding CIMA’s Global MD

ISSUE

A 9. 9 MediA

PublicAtion

from the

managing editor

dhiman chattopadhyay dhiman.c@9dot9.in

Managing Director: Dr. Pramath Raj Sinha

Be good, be the most preferred

by the time this magazine reaches your table, we will be busy with our 3rd Annual CFO Leadership Conclave. This time it is being hosted at Taj Malabar in Kochi from July 27 - 29, with 60 of India’s leading CFOs in attendance. The theme for the conclave is “The CFO@2015: A juggler par excellence. And one of the key subjects the CFOs will discuss during the sessions is the issue of managing a ‘responsible business’. The road ahead, we feel, is clear: Manage your business ethically or responsibly, and stakeholders will stick with you, investors will value you and most importantly, customers will never desert you. While this may sound easy, it takes a bit of doing. The challenges are many, especially in a country like India. The hurdles often seem insurmountable. But there are solutions. There are best practices to look up to. There is hope. That is the message we have tried to convey in this issue’s cover story (Managing a Responsible Business: Challenges & Solutions). In India the situation is improving but still far from satisfactory. A recent Chartered Global Management Accountant (CGMA) survey found that while 80 per cent of Indian companies had a written code of conduct for work ethics, when it came to execution, many fell short. The reasons for this, the survey found (the research team spoke to CXOs and mid-level executives of 77 Indian companies) were threefold. One, many leaders did not walk the talk and so, others did not feel obliged to follow the rules. Two, these written rules were seldom passed down the line. Finally nearly 50 per cent of those surveyed said they were often under pressure from colleagues or external stakeholders, to break rules. Thankfully things are changing, even though whistle-blowers need more protection, and perhaps even need to be rewarded as heroes. The good thing is, India Inc has well and truly understood one truth: that in the end it is not a court case or a CBI team barging into the office that they have to fear most but the goodwill of the stakeholder, the investor and the customer. And these three sets of people are now increasingly supporting only those organisations whose ethical credibility is well established. We hope you enjoy reading the cover package as well as the other articles we have in store for you this month. Do send us your feedback and lest we forget, don’t forget to check out our new look website www.cfoinstitute.com.

Editorial EDITOR: Anuradha Das Mathur managing editor: Dhiman Chattopadhyay Assistant Editor: Purva Khole SUB EDITOR: Radhika Haswani Design Senior Creative Director: Jayan K Narayanan Art Director: Anil VK Associate Art Director: Atul Deshmukh senior Visualiser: Manav Sachdev Visualisers: Prasanth TR, Anil T & Shokeen Saifi Senior Designers: Sristi Maurya & NV Baiju DesignerS: Suneesh K, Shigil N, Charu Dwivedi Raj Verma, Prince Antony, Peterson, Midhun Mohan & Prameesh Purushothaman C chief photographer: Subhojit Paul SENIOR photographer: Jiten Gandhi The CFO Institute Executive Director: Deepak Garg Assistant Brand Manager: Nisha Anand ASSISTANT MANAGER: Dr Leena Narain Assistant Manager - Corporate Initiatives: Deepika Sharma Sales & Marketing Senior VP SALES & MARKETINg: Krishna Kumar KG (09810206034) ASSISTANT REGIONAL manager (sales): Rajesh Kandari (+91-9811140424) National Manager (Events & Special Projects): Mahantesh Godi (+91-9680436623) Assistant Brand Manager: Arpita Ganguli South: Vinodh Kaliappan (+91-9740714817) West: Sachin N Mhashilkar (+91-9920348755) For any customer queries and assistance please contact: help@9dot9.in Production & Logistics Senior General Manager (Operations): Shivshankar Hiremath Manager Operations: Rakesh Upadhyay Asst. Manager - Logistics: Vijay Menon Executive Logistics: Nilesh Shiravadekar Assistant Production manager: Vilas Mhatre Logistics: MP Singh, Mohamed Ansari officE addrEss Nine Dot Nine Interactive Pvt Ltd Office No. B201-B202, Arjun Centre B Wing, Station Road, Govandi (East), Mumbai 400088 INDIA. Published, Printed and Owned by Nine Dot Nine Interactive Pvt Ltd. Published and printed on their behalf by Kanak Ghosh. Published at Bungalow No. 725, Sector - 1, Shirvane, Nerul, Navi Mumbai - 400706 Printed at Tara Art Printers Pvt ltd., A-46-47, Sector-5 NOIDA (U.P.) 201301 All rights reserved: Reproduction in whole or in part without written permission from Nine Dot Nine Interactive Pvt Ltd is prohibited. subscriber services: Call +91-120-4010999 Visit CFO India’s Website www.cfo-india.in

CFO india

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Letters

CFO INDIA

july 2012

lOunGe: sRInaGaR 50 I tHInk: anuJ aGGaRWal 10 vOlume

Issue

07.12

Case study: RayCHem-RPG 34

I found the cover article on ‘tech tonic revolution’ extremely interesting. As I am learning about cloud computing and the opportunities, I am also keen to understand the risks around using these solutions and the ways of mitigating those risks. I hope you take up this subject at one of your future issues and also keep it as a topic at one of the many large conclaves and conferences you host. — Sugata Sircar, MD Gujarat Gas, Ahmedabad

case study RAYCHEM-RpG’S TURNAROUND p. 34

in practice THE BUSINESS OF COMMUNICATION p. 18

travel STUNNING SRINAGAR p. 50

VOlUME 03 ISSUE 06 75 JUNE 2012

CFO IndIa

Another tech-nonic feast?

MASTERS

OF THE

GAME Four years after they acquired their erstwhile parents and 18 months after their IPO, VA-Tech Wabag is on another mission: become a €1 bn MNC by 2017

S. varadarajan, CFO, VA Tech Wabag rajiv mittal, MD, VA Tech Wabag

A 9.9 MEDIA pUBlICATION

Your voice can make a change: Share your viewpoint on what’s happening in the community and your feedback on the magazine at editor@cfo-india.in

Developing Niche Communities

Inspiring Cover story

I am happy to see CFO India grow into a fine magazine with articles that are both top of the mind and well researched. Thanks to CFO India I have also been introduced to some of your sister concerns such as Inc. India and their Inc India 500 awards. I think 9.9 Media is doing a fine job in developing niche communities. — Arvind Joshi, CFO, Sandhar, Gurgaon

I enjoyed reading the June issue of CFO India. The story of how VA Tech Wabag acquired its parent company and went from strength to strength thereafter, is inspiring to say the least. Let us hope that such stories of amazing entrepreneurial skills and guts, inspires other Indians to push the boundaries of possibility and take India Inc to the next level. — Rukmini S Thakar, Ceyenar Chemicals, Thiruvananthapuram

Wishing the Conclave the very best I have been a regular reader and patron of CFO India for a long time now. Apart from the magazine I have also found your large conferences and roundtables extremely valuable, having been a part of many of them as a speaker and a delegate. I am saddened therefore at not being able to be a part of the 3rd Annual CFO Leadership Conclave being held at Taj Malabar in Kochi between 27th and 29th July due to another engagement. My colleagues from Kotak and over 50 other companies will attend the conclave though, and I wish it all the very best. — Jaimin Bhatt, President & CFO, Kotak Mahindra Bank, Mumbai

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Great read The June issue was a great read as usual. The Case Study of Raychem-RPG achieved its mindset change and with it, returned to profit-making ways, was interesting to read. Of course the cover story that traced the success of VA Tech Wabag from a small water treatment engineering firm in India to an Indian MNC with a presence in 19 countries – was awe inspiring. Hats off to Ravi Mittal and S Varadarajan for achieving the seemingly impossible. — Amitabha Modak, Head-Finance, Senco Pharma, Kolkata

07.12 BUZZ

Taxing Times

Almost all services that we use will now be subject to 12 per cent service tax. Only a few on the negative list and the exempt list have been spared. The services offered by the unorganised sector for instance, will remain unaffected. India Inc has been in favour of a negative list of services that will not be taxed instead of a positive list which is expanded every year to tax more services. This move is being seen as a step towards a comprehensive Goods and Services Tax (GST) regime. The new additions in these ‘taxable’ services include Speed Posts and express parcels. The government has also decided to subject upper class rail travel to service tax. Tickets 6

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and overseas holidays bought via e-portals in India and a single ticket bought for many overseas destinations are to be fully taxed as well. If service providers and recipients are in India, tickets for trips originating in India will be taxed. But if you were to buy, say, separate tickets for the London-New York-London leg of New Delhi-London-New York round trip in London, that leg is tax free. Bad news for students too as taking tests such as GMAT and GRE will get more expensive as companies such as Prometric Testing that conduct these examinations will now be subject to service tax. Entrance tests of Indian institutions such as IITs and IIMs will be exempt though. CFA Institute’s examination fee will also rise. Private tuition providers will now be subject to service tax if their annual turnover exceeds `10 lakh. Seeking help of agents to get a passport made or obtain a visa will get more expensive, as these services are provided for a commission. New rules that have just kicked in subjects commissions charged for providing a services to 12 per cent tax. Also coming under the service tax bracket will be the entry or exit loads paid on purchase or sale of mutual funds.

What’s AROUND ZONE CFO Book: Ravi S Gupta...................................... Pg 08 Jargon Decoded: Hum a few bars........................ Pg 08 CFO Movements...................................................Pg 09 US Faces Rising Sea.............................................Pg 09

THE CFO POLL

9% Yes

result

Do you agree with S&P that India could lose its investment grade rating?

24% Maybe 67% No

current POLL question

Do you think Barack Obama’s speech urging India to step up reforms will re-energise the govt? Vote now at www.cfoinstitute.com/poll

THE WORLD

Do Mushrooms Affect Coal Formation? Environment

Algae Under Arctic Ice NASA had sent a team to sample the ice pack off the Chukchi Sea along Alaska’s coast. The researchers aboard the US Coast Guard icebreaker ship, Healy, sampled beneath the 0.8-1.3 meter (2.4-4.0 feet) thick sea ice. The team found phytoplankton biomass that was extremely high, about four fold greater than in open water. Kevin Arrigo, the mission leader said, “If you rank all the phytoplankton blooms anywhere in the world by the amount of phytoplankton that is contained in them, the under-ice bloom that we saw during ICESCAPE would finish at the very top of the list. The layer of sea ice was thick as a fiveyear-old child is tall.” Phytoplankton blooms in the Arctic have been observed to peak as many as 50 days earlier than they did a dozen years ago, a development that could have implications for the larger food web, scientists have said.

Mushrooms may be a reason for coal shortage. Scientists claim to have found evidence that shows the arrival of fleshy fungi species may have stopped the formation of coal deposits about 300 million years ago. Coal is a part of the fossilised remains of plants that lived from around 360 to 300 million years ago. But at the end of that period, coal stopped forming. As per the findings, scientists have evidence that show the evolution of fungi, which are capable of Stopped Sly digesting plants, may have stopped dead plants building up into peat and forming into coal. In the research, David Hibbett , a Clark University biologist, and his colleagues focused on Basidiomycetes, which include mushroom species. Basidiomycetes also include brown rot fungi such as the dry rot that can destroy houses by breaking down the cellulose in the construction wood but leave the lignin untouched ; and white rot fungi of interest to the pulp and paper industries that can break down both types of polymers. The researchers then used molecular clock analyses to track the evolution of the enzymes back through the fungal lineages. It showed that around 290 million years ago, right at the end of the Carboniferous period , a white rot fungal ancestor with the capacity to break down lignin appeared. j u ly 2 0 1 2

CFO india

O-ZONE cfobook

JARGON BUSTER

THE PHRASE: HUM A FEW BARS

Ravi S. Gupta Wall

Info

Boxes

What’s on your mind? Attach

Share Ravi S. Gupta Is confident that Jubilant Foodworks will show significant growth in 2012-13 July 19 at 21.35 · 4 people commented · 2 persons like this

Personal

Ravi S. Gupta Loves pizzas. No surprises here!! July 15 at 22.01 · Comment · 23 people like this

Z odiac: NA Views: Liberal

WORK

Ravi S. Gupta believes the IPO at Jubilant was one of his greatest learning experiences

CFO, Jubilant Foodworks Limited 2010 t0 present PAST Compliance Officer & CS, Jubilant Foodworks 2002 - 2010 L&T Ltd Hutchison Max Ltd

July 11, at 18.05 · Comment · 14 people like this

I Read...

Books on travel, finance and food 3 people commented · Like

EDUCATION

I Listen... Beatles, Old hindi music

Shriram College of Commerce, Delhi ICFAI

2 comments · 4 persons like this Recent activity Ravi S. Gupta likes Dominos pizza and 2 others E 03 VOlUM06 ISSUE 75 2012

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MD,

vOlum

Issue

TECH

Now, a Tablet From Google THE WAIT IS finally over. This October, Google will launch Nexus 7, the tablet developed by Google in collaboration with Asus. The 7-inch tablet is first Nexus branded tablet and hence runs Google’s unmodified Android operating software. The 8GB variant will be priced at $199 and the 16GB will be available for $249. In the days to come, it will be soon available in the US and three other countries. An Asus spokesperson told the Times Of India that the tablet would be available in India in October. “We hope to complete the process to bring the tablet to India by the end of September. Once we have the sufficient stock, we will launch it here,” said the spokesperson. 8

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THE MEANING This is usually used as a request to provide a verbal summary of a presentation or a speech. THE USAGE Please! Don’t start singing if your colleague says “Your report was far too long. Can you hum a few bars?” Now you know!

O-ZONE

PEOPLE movement HEALTH

Cancer alert on Diabetes drug According to a recent Canadian research, Pioglitazone, a drug commonly prescribed for type 2 diabetes, may also elevate bladder cancer risk. In a bid to link pioglitazone and bladder cancer, researchers conducted a systematic review and analysis of clinical trials and observational studies involving over 2.6 million patients. “We observed an increased risk of bladder cancer associated with the use of thiazolidinediones,” writes Jeffrey Johnson from the School of Public Health, University of Alberta and

study co-author, the Canadian Medical Association Journal reports. Thiazolidinediones, including Pioglitazone, introduced in the late 1990s, are also known as glitazones, a class of drugs used in the treatment of type 2 diabetes, according to an Alberta statement. “In particular, use of pioglitazone was associated with an increased risk of bladder cancer based on a pooled estimate from three cohort studies involving more than 1.7 million individuals,” adds Johnson.

GLOBAL WARMING

US Faces Rising Sea The worlds most expensive coasts are in danger of flooding as sea levels are rising much faster along the US East Coast than they are around the globe, US government researchers have said. US Geological Survey scientists call the 600-mile (965-kilometer) swath a ‘hot spot’ for climbing sea levels caused by global warming. As per a study published in the journal Natural Climate Change, the Atlantic Ocean is rising at an annual rate three times to four times faster than the global average since 1990. It’s not just a faster rate, but at a faster pace, like a car on a highway “jamming on the accelerator,” said the study’s lead author, Asbury Sallenger Jr., an oceanographer at the agency. He looked at sea levels starting in 1950, and noticed a change beginning in 1990. Since then, sea levels have gone up globally about 2 inches (5 cm). But in Norfolk, Virginia, where officials are scrambling to fight more frequent flooding, sea level has jumped a total of 4.8 inches (12.19 cm), the research showed. For Philadelphia, levels went up 3.7 inches (9.4 cm), and in New York City, it was 2.8 inches (7.11 cm).

Fresh Hire at Tata Motors Umesh Asher has joined Tata Motors as Senior Vice President, Internal Audit. He is currently heading Internal Audit of Kirloskar Brothers. Ashar comes with two decades of exposure in strategising and implementing international best practices in Internal audit. He is a CA, CS with certifications from American Institute of Certified Public Accountants and Institute of Internal Auditors, Florida , USA.

Snapdeal Gets New CFO Snapdeal.com, India’s leading e-commerce company has appointed Aakash Moondhra as the Chief Financial Officer. Aakash has over 15 years of diverse experience in Banking, Corporate Finance and M&A, Strategy consulting and Private Equity. He has been a part of the project team that concluded Bharti’s Alliance with Wal-Mart for Retail, and was also a part of the corporate strategy team during the merger of AT&T with SBC in USA.

Top Level Changes at 3i Infotech 3i Infotech has appointed Madhivanan Balakrishnan as Managing Director and CEO of the company with effect from July 1, 2012. Madhivanan is currently Executive Director in ICICI Prudential Life Insurance Company. The company has also inducted Charanjit Attra as Executive Director with effect from July 1, 2012. Attra is currently CFO and head strategic finance group of ICICI Securities.

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CFO india

cfo

i think

Facts & Trivia EDUCATION: M Com, LLB, CA

S.N. MUKHERJEE

QUALIFICATIONS: MBA from XLRI

Jamshedpur, PhD, IIT Kanpur LAST JOB: COO, IL&FS, 2007-2011 CAREER: 1997-2007 - EVP, Siemens Public

Communication Networks

When I look at the fundamental challenges before the finance community, specially the CFOs of today, I am reminded of the film Avataar. The changing avataar of business in India is mind-boggling indeed. The landscape itself is changing and with a whole gamut of new laws, regulations and taxation systems being introduced, business will have to be done very differently in less than two yearâ&#x20AC;&#x2122;s time. To my mind there are four or five changes that will impact the way India Inc operates by 2015. The new accounting standards or IFRS will be here soon. So will DTC and GST. The treasury function will undergo a sea change as a result of these related changes. At the same time, governance and compliance is changing even as we write this. Finally the Competition Act will make all CFO and indeed all business leaders rethink their strategies. These are serious areas of concern. 10

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The CFO of IL&FS Engineering and Construction Company talks about the new surroundings in which business in India is being conducted and the challenges before CFOs

The treasury department will have its hands full managing risks in liquidity, currency markets and capital markets. If you look back, managing currency volatility was always the forte of CFOs and finance managers. But the scale at which things have been happening is

The changes on the horizon are sweeping changes and this new avataar is about to hit us like a cyclone. It is best, as always, to be prepared

very different now. The uncertainty is not just domestic but a global economic uncertainty. Imagine the difference: it is no longer just banks or companies but sovereigns or nations itself which are filing for bankruptcy. Against this background we are also looking at fundamentally new accounting systems. A relatively recent Deloitte survey found that 32 per cent of Indian CFOs felt the biggest challenge with IFRS was lack of skilled personnel while another 33 per cent felt lack of proper guidelines and live examples were a big challenge too. So manpower is going to be crucial in meeting this challenge, my view is that instead of trying to do patchwork learning to meet these new challenges, we have to start afresh, maybe rewrite a new Companies Act! Look at the Competition Act, all that many of us learnt as we studied and later practiced finance, will be of little

Subhojit Paul

use in the coming years. CFOs would do well to make a clean start and learn the new ways of financial accounting with a fresh mind. No I do not mean we should forget all that we know. The challenge really is to continuously retrain and develop yourself and your people. Why am I saying this? Because

the changes I have mentioned above are all going to have a far reaching or ‘collateral impact’ on business. For example look at DTC. We do not know in what exact form and shape it will finally come, yet the storm is already here. So fundamentally, you need to have re-training for your entire fleet. If

it means getting back to a bit of serious studying, so be it. Being a CFO was never an easy job was it? So to come back to my opening remarks – the changes on the horizon are sweeping changes and this new avataar is about to hit us like a cyclone. It is best, as always, to be prepared. j u ly 2 0 1 2

CFO india

ARE YOU READY TO BECOME A CIO? APPLY FOR INDIA’s FUTURE CIOs

Go to www.next100.in

2012 If you think you are ready to play the role of a Chief Information Officer, prove it to your peers and superiors. ITNEXT will help you echo your aspiration. NEXT100 is an awards program from IT NEXT magazine that identifies senior IT Managers who have the skills, talent and spirit to make to the top slot - the CIO. The process starts with a call for self nomination. The nominees then participate in a series of exercises that test their techno-commercial and management skills. The evaluation and selection of award recipients is made by a prestigious committee of technology and business leaders who judge nominees on career accomplishments, professional expertise, skills and potential to be a CIO. The culmination of NEXT100 is in an awards night that celebrates the NEXT100 CIOs. The ceremony will be held in December 2012

IT IS NOW YOUR TURN TO RISE ABOVE THE REST. YOUR TURN TO CALL THE SHOTS. YOUR TURN TO BE THE NEXT100. PRINCIPAL PARTNER

TECHNOLOGY PARTNER

NEXT100 awardees will be profiled in the NEXT100 book which will be sent to India’s top 1000 CIOs. EVENT BY

cover story

Ethical Leadership

Managing a Responsible Business:

Challenges & Solutions Conducting business in an ethical manner, even under pressure is no easy task. Yet experience tells us, stakeholders, investors and customers increasingly put â&#x20AC;&#x2DC;ethicsâ&#x20AC;&#x2122; as the top quality when choosing a company to support. A recent Chartered Global Management Accountant (CGMA) survey of over 700 companies across 25 countries including 77 from India looks at key ethical and behavioural challenges before business leaders and ways to tackle them Dhiman Chattopadhyay

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cover story

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Business Challenge

Ethical culture Effective leaders need to understand the particular ethical challenges their

Figure 1: Does your organisation provide a code of ethics or similar document

Does your organisation provide a code of ethics or similar document to guide standards in their work? staff about ethical standards in their work? % 80

70 60 50 40 30 20 10 Sri Lanka

(77)

(132)

(89)

(43)

(148)

(90)

(288)

Zambia

South Africa

(71)

Pakistan

Base: (1,966)

Malaysia

0 Ireland

WHAT THE SURVEY FOUND

India

organisation faces and how they can be addressed. Once they have identified the priorities, they need to develop performance metrics in order to monitor progress over the long term and to ensure ethical behaviour is consistent with the stated policy. While more companies have committed themselves to ethical performance, these claims do not seem to be matched by changes in practice. Neither the senior management nor the board seems to be reviewing, analysing and monitoring ethics information on the scale seen in 2008, with falls from 86 per cent to 78 per cent and 68 per cent to 56 per cent respectively. Given that the senior leadership team is responsible for establishing the ‘tone from the top,’ there is a risk this could undermine the stated values of the organisation. One reason for this decline could be that the leadership’s attention has been diverted to more immediate concerns such as cost-

Australia

emerging economies. There has been an increase in those observing ethical misconduct over the course of a year. Management accountants are most likely to feel the pressure to compromise standards when working with colleagues in other departments. This may reflect in challenges to professional objectivity when working in commercial business units. Business issues: Security of information remains the greatest issue of concern across all markets. Bribery has risen from sixth to third in the rankings of issues of concern, reflecting the intensifying of anti-bribery and corruption legislation.

Total

usiness failures, public distrust and protest against corporate and government misdemeanours across different countries over the past few years have highlighted the costs of acting unethically. India is no exception. There is now growing awareness that how ethics and governance are put into practice is an essential complement to codes, policies and legislation. Companies are recognising that they need to take risks to their reputation very seriously if potential crises are not to turn into catastrophes. Both globally as well as in the case of India and other emerging market economies, the key issues of businesses must address in order to embed business ethics are the following: Ethical culture: Corporate leadership appears to be less actively engaged in reviewing and taking responsibility for ethical performance compared to 2008. A weakened ‘tone from the top’ has potentially serious implications for the overall ethical operating culture of an organisation. Accounting for ethics: Though there was an increase in organisations both collecting and reporting on ethical information and corporate social responsibility, a number of firms collecting and reporting information are still a minority and lag way behind the four out of five (80 per cent of organisations that have ethical codes. This suggests there is a gap between rhetoric and reality over ethical performance. This is a potential risk to the organisation which needs to be addressed. Ethical dilemmas and pressures: Despite an increase in ethical codes and training, there is greater pressure within organisations to act unethically. Pressures are most apparent in some

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78%

organisations with ethics codes (80%) and those that collect and report ethics information provides further possible evidence that ethical practice falls short of the stated policy. lecting and reporting on ethics inforSmall and medium organisations are mation, such as number of employees less likely to have processes in place to attending ethics training, risk analysis, capture such data. The growing imporsupplier due diligence, follow up and tance of integrated reporting is driving actions taken on hotline reports. While the need for better and more robust more firms are gathering this infornon-financial data. Frequently, reported mation it is still only a minority, highethics information is sourced from outlighting a gap between what firms say side the finance funcand what they do. On the tion, for example by positive side, more firms corporate responsibility (compared to 2008) are teams, human resourccollecting information es, or facilities. (up from 30% to 36%). KPMG’s Interna In addition, more organtional Survey of Corisations are reporting on Indian CXOs porate Responsibilethical information and say they have formal ity Reporting 2011-12 corporate social responresponsibility Business Challenge 2 highlighted the need sibility. However, the fact got ensuring to raise the bar on that organisations which Accounting for ethics ethical data, recommending collect and report ethics Ethical performance can only be manstandards that “great focus must information are still in aged and monitored if there is the right at their organisation be placed on developa minority and the gap management information. We thereing high levels of data between the number of fore investigated the extent of both colintegrity through better governance, systems and controls that meet the future demands of both the company and its stakeholders.” The report also found that reputation • The number of companies using incentives for staff to uphold the organisation’s and ethical considerations were the two standards of ethical conduct have increased from 19 per cent to 25 per cent highest business drivers in corporate between 2008 and 2012 as has training (46 per cent to 57 per cent), and use of responsibility. Ethical performance ethical hotlines (40 per cent to 49 per cent). However, the use of incentives such as personal performance indicators varies from a low of 12 per cent in Malaysia makes up a core area of non-financial to 48 per cent in India. information. This underlines the growing need for integrated reporting, the • The main reason among those who did not report misconduct was the perception need to understand the impact of nonthat reporting would not make a difference (37 per cent). Respondents in South financial information and the potenAsia (India, Pakistan and Sri Lanka) had a particular fear of repercussions, such as tially significant role that management the impact on job security. accountants can play in developing this. • Pressures to compromise standards are highest in the emerging economies cutting in the light of the challenging economic conditions. In the survey, a third of respondents globally said they had formal responsibility for establishing and ensuring ethical standards, with those in Sri Lanka (52%), Malaysia (48%) and India (45%) having the highest response rate and the UK at 21 per cent the lowest There was a significant decline in the number of corporate leaders who held formal responsibility for ethics. This provides more evidence of a gap between the rhetoric from corporate leadership on ethical issues and actual practice. Finance-related roles, however, are now seen as having greater responsibility for ethical standards – with the CFO up from 34 per cent (in a similar 2008 study) to 39 per cent and the head of internal audit up from 24 per cent to 28 per cent.

Say their organisation would benefit from collecting ethical management information

45%

India Picture and the Cfo’s role

• A third of respondents said they had formal responsibility for establishing and ensuring ethical standards, similar to 2008, with those in Sri Lanka (52 per cent), Malaysia (48 per cent) and India (45 per cent) having the highest response rate and the UK at 21 per cent the lowest, falling from 27 per cent in 2008. • Finance-related roles are now seen as having greater responsibility for ethical standards – with the finance director/CFO up from 34 per cent to 39 per cent and the head of internal audit up from 24 per cent to 28 per cent.

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Monitoring ethical performance It is essential that ethical management information is monitored so that any shortcomings can be addressed. A recent study of 18 major corporate crises revealed that risks related to failures of ethos, culture and behaviour tended to go unrecognised and yet

% 70

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50 49 Figure 3: W ho (else) has formal responsibility for ethical standards across your organisation? Who (else) has formal responsibility for ethical standards across your organisation? 41

40 %

70 30

67 60

20 50

49 41

38 38

33 36 24

20 0

24 1817

18 17

17 15 10 8

10 0

Board Board

2008

Chief executive Chief executive

2011

*All staff are CFO/Finance director deemed responsible

*All staff are deemed responsible HR director

CFO/Finance director Audit committee

HR director

Head of Compliance internal audit officer

Audit committee

2 Head of internal audit

Corporate Other board Company Don’t No one has Other (social) subcommittee secretary know responsibility for this role responsibility manager

*Not asked in 2008

2011

Base: All who said Yes or Don't know to managing ethical management information 2008 (817) 2011 (1,960) *Not asked in 2008 Base: All who said Y es or Don't know to managing ethical management information 2008 (817) 2011 (1 ,960 )

are highest in the emerging econoA minority of respondents in mature were major causes of the crisis – even mies It seems apparent that despite the economies said they felt under presworse, such risks tipped the original increased ‘noise’ about a need for ethisure, with the UK and the US regcrisis into a ‘reputational catastrophe.’ cal behaviour, combined with a greater istering the lowest percentages. In The survey reveals both good and bad Figure 18: In which ways do you contribute to management of ethical performance? prevalence of both codes and even regsome countries the number feeling news when it comes to the collection ulation, there are greater demands on pressure to act unethically has fallen, and reporting of ethical information. Upholding my professional code of ethics for example, in the UK from 22% in 86 employees to act unethically. ResponWhile more firms are gathering this 2008 to 18% in 2011. Pressures to83 dents feel under more pressure to act information itEnsuring is still the only integrityaofminority, information unethically during an economic downcompromise standards are highest highlighting management a gap between what firms Leading example turn compared to an upturn. in the emerging economies with over say and what they do.byOn the positive 80 The challenging economic situahalf of respondents in some markets side, more firms are collecting inforReporting ethical concerns the organisation tion in some countries in recent years experiencing this.49 mation (up from to30% to 36%). may therefore explain why pressures to It seems apparent that despite the In addition, organisations are Incorporatingmore ethical standards into 39 strategic business decisions compromise standards are perceived to increased ‘noise’ about a need for ethireporting on ethical information and Contributing to developing the code be greater. However, there were some 24 cal behaviour, combined with a greater corporate social responsibility (up from of ethics or similar document notable regional variations. It is imporprevalence of both codes and even reg35% to 40%). However, the fact that Reporting ethical performance 19 against our goalsand report tant to bear in mind the general market ulation, there are greater demands on organisations which collect environment in which employees to act unethiethics informationCollecting are still in a minorethical 17 management information respondents operate. cally. The CGMA survey ity and the gap between the number of ethical 17shows that although the organisationsmanagement withAnalysing ethics codes (80%) information majority of respondents and those that collect and report ethics Reporting ethical Other 2 see their organisations as information provides further possible misconduct ethical, they are experiencevidence that ethical practice falls short Of the respondents 0 10 20 30 40 50 60 70 80 % ing greater pressure to act of the stated policy. in the survey who Say managing unethically. The percentAnalysis by company size shows that observed unethical ethical age of respondents who larger companies are more likely to conduct, a majority performance is a major part of sometimes or always feel both collect and report on this informa(69%) reported it. This their role now under pressure to comprotion. Small and medium organisations is despite just over a mise their organisation’s are less likely to have processes in place quarter, 26 per cent, standards of ethical conto capture such data. fearing that they could duct has increased across all markets be regarded as troublemakers. Of the Business Challenge 3 from 28 per cent in 2008 to 35 per cent. 69 per cent only half felt satisfied about There is a clear divide between views the way their ethical concern was hanEthical dilemmas and pressures in mature and emerging economies. dled, and 13 per cent felt neutral. The There is a clear divide between views Pressures to compromise standards main reason among those who did not in mature and emerging economies.

30%

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24%

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Zambia

Sri Lanka

Pakistan

Sri Lanka

Malaysia

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South Africa

Ireland

South Africa

India

Australia

Total

and Sri Lanka cited pressure report misconduct was the perception Indian CXOs admit to compromise standards. The that reporting would not make a differthey have pressure UK, the US, Ireland, Australia ence (37%). This again highlights that to be unethical and South Africa are below the the ‘tone from the top’ – as articulated during a slowdown global average of 18 per cent. in ethical statements, codes and policies – may be out of step with practice. Business Challenge 4 a global average of 36 per cent. India Respondents in South Asia (India, Pakialso has, together with the US, the stan and Sri Lanka) had a particular fear Business issues 1: Does such yourasorganisation code of rate ethics similar guide staff about highestaresponse for or those who document ofFigure repercussions, the impact on provide There is atoconsistent theme acrossethical all standards in their agree that their company lives up to its job security. This couldwork? indicate more key markets over which ethical issues stated policy of corporate responsibilfundamental issues related to their are of most concern to management % 84 84 and overall ity, at 82 per cent. operating environment ethiaccountants. Security of information at 82 82 80 79 79 77 80 culture as 75 is consistent with KPMG findcal highlighted earlier, and 74 This 91% remains uppermost in importance 74 ings that 80 per cent of Indian compoint to conflict of interests or specific and there has also been an increase in 70 panies conduct assurance activities on ethical threats such as intimidation by attention to tackling bribery and cor60 their corporate responsibility report management or supervisors. ruption. This is consistent with the 50 – the highest by country studied comrecent CGMA report on fraud risk man40 pared to only 13 per cent of US comagement which indicated that the risks The Ethics Divide 30 panies, for example, which conduct of fraud may be increasing globally. One of the key messages to emerge 20 this survey is what we term an assurance. On the other hand, India The report also emphasised that manfrom 10 has the highest percentage of people agement accountants are well placed to ‘ethics divide’– a stated strong comreporting pressure to act unethically. take practical steps towards establishmitment to ethical codes and behav0 Almost half of India’s respondents ing more robust procedures to tackle iour but in practice high pressure to (46%) feel pressured to meet reportfraud, particularly in terms of prevenact unethically. The response from ing deadlines compared to 10 per cent tion, detection and response. Given the India is a case in point. On one hand in the UK and 3 per cent in the US role of CFOs and indeed of any senior itBase: has(1,966) a large number of organisations (71) (77) (132) (89) (43) (148) (90) (288) (228) (55) and a global average of 22 per cent. finance leader in preparing and reportwith codes of conduct, incentives to In terms of compiling the manageing management information, it is promote ethical behaviour and trust ment accounts, 40 per cent of responunsurprising that issues such as secuin management to act ethically, as dents from India, and over 30 per cent rity of information feature highly on well as the highest collection of ethirespondents from Malaysia, Pakistan their list of concerns compared to other cal information – 48 per cent against executives. For finance professionals, both technological advances and the growing threat of cyber crime mean Do you 9: ever feel under frompressure your colleagues or manager to Figure Do you everpressure feel under from your colleagues or manager to compromise your often of a sensithat more information, compromise your organisation’s standards of ethical business conduct? organisation’s standards of ethical business conduct? tive nature, is stored than ever before. Finance professionals have a key role % as guardians of such information. They 60 also have greater access to confidential 60 54 52 51 51 data than others. They are responsible 50 for information and for ensuring its integrity, and therefore understand the 37 40 35 importance of maintaining its security. 27 30 The introduction of the UK Bribery Act 20 18 18 in 2011 and the US Foreign Corrupt 20 Practices Act are likely to have rami10 fications everywhere, and many other countries are revisiting corruption and 0 bribery law. Concerns around the supply chain have also increased, in keeping with increasing focus on corruption, human rights, the environment, Base: (1,966) (71) (77) (132) (89) (43) (148) (90) (288) (228) (55) labour rights and safety.

Base: All who said Y es or Don't know to managing ethical management information 2008 (817) 2011 (1 ,960 )

cover story Figure 18: ways In which wayscontribute do you contribute to management of ethical performance? In which do you to management of ethical performance? Upholding my professional code of ethics

Ensuring the integrity of management information

83 80

Leading by example Reporting ethical concerns to the organisation

Incorporating ethical standards into strategic business decisions

Contributing to developing the code of ethics or similar document

Reporting ethical performance against our goals

Collecting ethical management information

Analysing ethical management information

17 2

Other

LOOKING AHEAD

the survey shows that they recognise this. The problem is that they may not always While there have been positive developbe supported and enabled to do so by the ments in terms of building the architecwider organisation – and in some cases, ture for ethical codes and policies, the may even come under pressure to act translation of these into actual practice unethically. In other words, it is clear and everyday business processes is lagthat ethical issues are being acknowlging behind. This gap between the organedged and addressed by management isation’s stated commitment to an ethical accountants everywhere, but ethical stance and what is actually being done culture overall, backed by trusted leadwithin the business can pose a significant ership and clear processes, needs to be risk to the organisation’s reputation. This strengthened from the top to enable peois not just in terms of a loss of credibility ple to have the confidence to ‘do the right for employees, but also in relation to other thing.’ The challenge of achieving this is stakeholders, including customers, supnot underestimated; it’s pliers, investors and society much harder to bring at large.The potential negaabout genuine behavtive consequences, such as ioural change than it is declining share price and to establish policies and loss of customers, should processes. Despite the not be underestimated and increase in pressures there are numerous examCollect to compromise ethical ples of companies attracting management standards and shortnegative coverage for ethical information comings in ethical perfailings – with a consequent on ethics formance management, impact on the bottom line. more organisations are The widespread use of the implementing ethical internet and social media codes and other policies. Organisations casts a harsher spotlight than before. need to continually strive towards buildManagement accountants are well placed ing ethical businesses, while not losto bring their skills, insight and influence ing sight of the very real demands this to encourage ethical performance, and

48%

makes on them. An authentic tone from the top can improve ethical behaviour. A large majority of respondents (86%) said that upholding their professional code was the main way management accountants contribute to managing the ethical performance of their organisation. This no doubt reinforces why ensuring the integrity of management information and leading by example also rate highly as important aspects of the role, as both are related to the fundamental principles of a professional code of ethics. Also in keeping with the professional code, nearly half see their role in reporting ethical concerns to the organisation as part of their role. It is clear that there are increased pressures within the workplace to compromise ethical standards – despite the increasing prevalence of ethical codes, policies and statements. The message here is clear: leadership teams need to ensure that their stated commitment to ethical practice is fully embedded within the actual operating culture of the organisation. Without an authentic tone from the top, ethical behaviour is compromised. This disparity between policy and actual behaviour is a potential source of reputational risk, as some organisations have found to their cost. To support this effort, it is particularly crucial for organisations to collect, report on and monitor ethical information to enable them to track this important aspect of their business and to ensure continuous improvement. Despite the increase in pressures to compromise on ethical standards and shortcomings in ethical performance management, more organisations are implementing ethical codes and other policies. These have the potential to be powerful catalysts of change. The survey draws on methodology used by the Institute of Business Ethics and explores not only the importance placed on business ethics, ethical performance and ethical management within organisations, but also on the challenges faced by individual CGMAs. j u ly 2 0 1 2

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Q&A

â&#x20AC;&#x153;Education and

Re-training is the Key to Better Ethical Behaviourâ&#x20AC;? CIMAâ&#x20AC;&#x2122;s global MD Andrew Harding and Chief Representative for India Arati Porwal talk about the big challenges before CEOs and CFOs when it comes to managing ethical issues and discuss possible best practices and solutions Dhiman Chattopadhyay

What are the key ethical dilemmas that companies face, when it comes to managing business responsibly? Andrew Harding: I guess the top one is the area around confidentiality. Companies are still grappling with how to deal with it, what should be kept confidential and how such confidentiality can be ensured...also how one presents or shares that. Moving on though, bribery is coming up as an equally big issue. This could be because of increasing international and national laws and regulations. There are so many legislation coming

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up around bribery in every country. A big challenge for CEOs and CFOs is how to manage and adapt to anti bribery legislations. The third big challenge is how to deal with the way in which people in organisations feel under pressure to break or compromise their ethical standards. Legislations of course are a big thing for the legal and finance teams to worry about. For the first time we now see legislation go beyond national boundaries. For multinationals, especially for companies from emerging markets such as India which are spawning new MNCs every year, this is

a big challenge. It becomes a huge risk for the acquiring company since they have to immediately improve their knowledge base.

In your experience are these also the top challenges for India Inc? Arati Porwal: I think the three challenges are the same but the order changes. The pressure to act unethically is the top challenge in India. This is especially so because of the pace at which growth is happening in India. Because of this, performance is becoming a priority and sometimes there is

a dilemma between performance and ethical behaviour. In many cases performance takes priority over ethical behaviour, leading to a conflict. If you go through the detailed survey findings of the CGMA 2012 report on managing businesses responsibly, you will see that 80 per cent Indian companies seem to have definite guidelines on work ethics. This is very high compared to the US where it is around 20 per cent. But in most cases, employees here say they are under pressure to act unethically from colleagues and superiors.

jiten gandhi

When you say ‘managing businesses responsibly’ what exactly do you mean? AH: The first and best way to define responsible business is an organisation where the leadership leads by example. Without this nothing will work. They have to walk the walk. Secondly doing business responsibly may mean having a clear and detailed written code of conduct that should be followed. Going alongside that you need to see if the staff need to have hotline mechanisms to report bad behaviour or if they need advice on behaviour. Sometimes they might wonder if a certain step or action is ethical or not and they may need a ‘go to’ person or a helpline. The big challenge here is a clear whistle blower policy. They should be allowed to speak up with confidence. Unless the government has a very effective protection system in place and guarantees the safety of each whistle blower, the message to the people will be that the government does not care! But to come back to what it means to manage a business responsibly, here is another example: quite a few large companies we studied, do the easy bit: measure

‘‘

The best businesses are now embarking on training programmes, getting people to understand the dilemmas and the challenges...” — andrew harding global MD, CIMA

cover story environmental impact, reward great sales guys and look at CSR numbers. But this is not really tackling the core issue of ethics and good behaviour. My opinion is that companies which are looking to build sustainable credibility and maintain that level of credibility over a longer term, need to reward good behaviour. Give awards to people who expose unethical behaviour in the company and make it a top virtue. Once you start doing that a new culture will emerge. Sometimes people think, ‘is my behaviour ethical?’ My answer is, subject yourself to a simple test: if you have a report in the newspapers the next day on what you have done, will you be proud of it and show it to friends? Then you are fine on the ethics count. On the other hand if it is a report that will earn you a contract or a raise but may embarrass you before your family, then it is probably not an ethical thing that you have done. AP: As I mentioned, a large number of Indian companies have a code of conduct for ethical behaviour for employees, but somewhere down the line it is getting lost and employees are not aware about these rules. The conflict is between the business objective and decisions or steps that come in the way of achieving those business objectives at the desired pace. This can be solved only when business owners or CEOs understand the business risk, the risk to reputation that may result from unethical behaviour. When they realise that it will affect their chances of sustainable growth, then they will will start working towards building a genuine code of conduct and walk the talk themselves. AH: Increasingly thanks to social media, it is very difficult to cover up a wrong-doing for a significant time. So you see a lot of business owners now say they need to make a virtue out of transparency, because if they do not, the truth will come out anyway. j u ly 2 0 1 2

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In India what are the key hurdles when it comes to enforcing such these best practices? AP: The pressure to act unethically is both internal and external in many cases in India. So even if the organisation has a strict ethical code and follows all guidelines, there is an external pressure to deal with. It could be investor pressure, pressure from suppliers or even customers. The pressure to deliver exceptional results every quarter is a huge pressure to deal with. Also there is bribery. What do you do when bribing an external stakeholder, whether private or public, is the only way to get a project to start? What do you do then? Give up the project?

AH: Yes, the hurdles are of a different nature in many emerging markets. Why would a company choose to 22

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er than just traditional rewards for sales and profit. I also think recognising the power of social media is important.

arati porwal Chief Representative, India, CIMA

behave ethically when nobody else does so? But there is a change is happening. Shareholders are questioning not just performance but also asking ethical behaviour questions.

So is reporting a problem in India? What we found is that on the surface most Indian companies are doing things right, all the compliance norms are in place. But when you look at the pressure to perform and how that pushes people towards unethical practices, many Indian companies do not quite pass that test. In those cases, it would seem like they are just ticking the boxes, following the letter of the law.

Given your experience and what you gathered from your survey results, is there a set of ‘recommended steps’ needed to manage business better, specifically in the Indian context? AH: My top recommendation is that it is all about education and understanding the benefits of behaving ethically. Once you have educated yourself on ethics, companies should support and reward people for such behaviour rath-

On a scale of 1 to 10 where would you put India when it comes to running running businesses ethically? AP: I would say 5 on 10 and this is much higher than what we would have said 7-10 years back The Satyam case acted as a catalyst and did India Inc a lot of good. It aslo showed how swift action can salvage things. The India picture is not grim any more in that sense. Things are improving rapidly. Reporting is improving and increased exposure of corruption and unethical behaviour is making people aware of what is happening and sending a strong message that it can dent hardearned reputations in a matter of days. Having said that, only a quarter of the battle has been won so far. It is important that India Inc continues along this line, continues scrutiny and exposure of unethical behaviour. Clearly, we cannot leave it to the government alone because when the government acts, it is forced to act so strongly that it can strangle an entire industry. Look at what happened to the insurance sector. So, self enforcement and self regulation is crucial. Vigilance is the key and protecting those who are vigilant must be given the top priority now. Prevention is better than cure any day and so a strong whistleblower protection act is more important today than any anti-corruption act.

AH: The challenge that India and other emerging economies now face us that as you grow, inflation, growth numbers etc ensure that the whole cost advantage that you once enjoyed, is gone. So emerging markets need to look at something else to come into play to keep this cost advantage. Here is where ethical business will b e a lead player. If you are known to be an ethically managed and run business, people will buy from you. Investors will prefer you as well. It is that simple.

jiten gandhi

What are some of the global best practices that companies are employing to improve their score? AH: I haven’t got a specific case study, but there are two features around this. One is of course that the leaders need to walk the talk. But significantly, the best businesses are now embarking on training programmes, getting people to understand the dilemmas and the challenges and discussing how to manage or recognise the situations that can compromise the company’s reputation. And finally, ways to prevent instead of tackling things after a crime has been committed. The other big differences in the best run companies are the great people they have, who are bound by their own professional code of ethics even beyond what their company has written down for them. A legal framework in a company merely gives you a background, a set of ground rules to work with.... it doesn’t create a behavioural pattern. That can only come from within. Finally of course the best companies regularly reward those who speak up about wrongdoings in business and expose any unethical behaviour.

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cfo

Profile Joydeep Nag

CFO - South asia, GE Healthcare

Bhadralok

CFO

With an

Ear for Music The healthcare industry will need the right type of financing to expand says, Joydeep Nag, CFO - South Asia, GE Healthcare Dhiman Chattopadhyay

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From tuning and playing the sitar to fine tuning the financial strategy of a large healthcare multinational, Joydeep Nag’s journey from the bylanes of Kolkata to the heart of Bangalore has been almost as colourful as the personal cultural change it has brought with it. Mr Nag was born in Kolkata, by his own admission “in to a family of landlords, who had lost their lands two decades back, in the largest caesarian dissection of the century” “Our family had strong political connections and many of my uncles, aunts and my father had been part of the freedom as well as the political struggle in India. Our family , though joint, had turned nuclear and my parents, both government servants, sent me to the best school in town, St Xaviers, to be tutored under the hawkish and caring gaze of the Jesuit Fathers,” he recalls. In school he was a ‘quiet middle-bencher’, but he admits that the values of honesty, hard-work and perseverance, which has sustained him till

Milestones FIRST JOB Dunlop India Ltd BIG BREAK When I joined Indal, in Treasury. Indal was the greatest learning organisation, that I have seen, even greater in many ways than GE AHA! MOMENT When I succeeded in leading the $180m GDR due diligence of Indal LESSER KNOWN FACT We, three close friends started writing a history book in Class Four and then aborted as we moved sections DREAM To lead and support the cause against female foetacide

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cfo Profile date, were driven into him early in his life by his parents and by Fathers.A “restless and multifaceted” teenager, he initially took a keen interest in music and for a while dabbled with the sitar. So how did the son of two government officers with an ear for music come to crunch numbers and lock horns with hard-nosed bankers? “I had a strong inclination towards public life, but my mother’s strong surveillance prevented me from pursuing the same. Of course I always had an interest in reading and drawing. These have stood by me, all through the years, as windows, through which I have slipped into a world of imagination and bliss,” he laughs. But when choosing between Medicine and Economics proved hard (His father was nearing retirement and neither Economics nor Medicine was thought to be lucrative professions then), senior members of the extended household adviced him to sit for his Chartered Accountancy exams. Mr Nag has a funny story to tell however, as to why a job in finance was considered a lire in his family. “Some of our relations were Chartered Accountants and doing well for themselves , particularly one, who was then the Financial Advisor to the Maharaja of Nepal, and was living in a palace close to the King. So, I was commanded to put my head down and pass the dreadful CA examinations to lead, finally, a life of gain and glory,” he jests. He did pass his CA exams at one go though and promptly took up a position in the internal audit department of Dunlop India Ltd as an Audit Assistant. “I was posted in the Sahaganj Factory and commuted every day from Kolkata – an hours journey by train, from Howrah. I was then pursuing an evening course in Jadavpur University and while returning I used a medley of transports to reach the class in time. Sahaganj was on the river Hooghly, so I used to take a boat to cross Hooghly to Halisahar. Then I would take a bus, a train, walk down to the adjoining station and again board a train to Jadavpur, to reach my class in time,” he recalls. Twenty years have passed since those days. In between Mr Nag worked at Indal, then a bright Canadian blue chip and followed it up with stints at Alghanims in Kuwait and at Balagarh Power before joining GE – Appliances and now GE Healthcare. The challenges on the way, he says, have been many, with the successes or ‘highs’ standing out clearly in his mind. He still remembers for instance, one of 26

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joydeep nag says, while there have been many challenges, the successes or ‘highs‘ standout clearly in his mind

DESTINATION New York MUSIC Rabindra Sangeet ICON/ROLE MODEL Subhas Chandra Bose

the biggest lessons he learnt while at Indal. “I was still in my mid- twenties at the time. One day I was asked to lead the due diligence of Indal’s $180mn GDR placement. This was my first true external interface. The first day was a meeting with Investor Analysts. They would grill me on Indal’s financials and projections. I was taken to the board room filled with analysts, led by Meryll. My the then CFO, Mr Partho Datta led me to the room, introduced me to the twenty-odd investors, mostly foreign analysts. He then turned to me and said, ‘Now I throw you to the Wolves’ and walked out. Alone

cfo Profile

“The healthcare market has been caught in a blindspot by the twin issues of foreign exchange volatility and high interest rates ”

facing the ‘wolves’, I soon realised that things were not that bad and I could handle them. I walked out of the room, two hours later, mumbling Vini Vidi Vici. That interaction started off a lesson that you can face anything in the world. Just have the confidence, persist and face it,” he tells us as we chat. At GE Healthcare, where he has been for the past nine years and is currently CFO, South Asia, the challenges before him are different but equally engrossing he says. “The healthcare market has been caught in a blindspot by the twin issues of foreign exchange volatility and high interest rates. Though this year there has been growth, it has been

challenged by these two huge macro issues. To grow the market, two fundamental issues remain – how do you enable the customer to buy through cheap and optimal financing and how to reach the right products at the right price to the customer.” Looking ahead Mr Nag sees the healthcare sector in India growing rapidly for obvious reasons – good or even basic healthcare still hasn’t reached large parts of India. “The healthcare market will need the right type of financing to expand. It will move aggressively in to the Tier II and Tier III towns in the next few years. Government spends will increase over time

and producing the right equipment at the right price point, with right features, will be the key,” he explains. As the conversation comes to a close, the CFO in him is replaced by the trueblue Bengali bhadralok. Ask him about life beyond finance and he says, “I do all sorts of stuff. I read and lots of it – from Michio Kaku to Ramachandra Guha – anything which comes my way. I teach finance at the Sathya Sai University. I write articles, draw and write poetry in my spare time. Now that’s an amazing array of hobbies and passions for a man as busy as him. But then as he says, when there’s a will... j u ly 2 0 1 2

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in practice

Leadership

Leading with

Personal Mastery

Leadership development strategies for achieving a level of personal mastery will better equip Chief Financial Officers to face myriad external and internal challenges. CFOs across India Inc – take note! Marie Peeler

ickle markets, regulatory uncertainty and economic hardship have conspired to make this one of the most difficult times yet to be an executive over any functional area of the enterprise. All areas in an organisation are struggling to not only keep pace but to excel, despite a climate of extreme instability and uncertainty. Financial executives face particular challenges. While some of the most troubling external issues faced by today’s companies — the Dodd- Frank Wall Street Reform and Consumer Protection Act, tax reform, XBRL implementation and potential health care reform among them — fall into the main purview of the Chief Financial Officer.

The Conundrum The very nature of the CFO’s role can cause the executive to appear to be the 28

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gatekeeper to innovation and creativity. In fact, while other executives have roles to play in guarding the financial integrity of the company and managing risk, it is often the CFO that holds these responsibilities closest and, in doing so, seems to be a naysayer. Many CFOs have likely heard the cry, “Can’t you be solution-oriented, instead of telling us what we can’t do?” Such cries frustrate the CFO, who is simply trying to do a difficult job and keep the organisation on the straight and narrow. Some, faced with the apparent choice of doing “the right thing” or being a team player, simply choose the former and resign themselves to “being the bad guy,” not realising that there are other options. The problem with addressing the conundrum with such ‘either/or’ thinking is two-fold. A CFO has a dual role, one is as the head of finance and the other — the one that some would say is the more important one — is as a member of the larger team responsible for the success of the overall organisation. Individual team members cannot perform this part of their Role if they have retreated into simply looking after their functional responsibilities. Doing the supposed right thing is seldom clear cut and can be better accomplished with a holistic organisational view. CFOs would be well advised to be ever-mindful of their interpersonal relationships and the full spectrum of their organisational responsibilities because the ability to influence others is far less dependent on position than it is on credibility. The CFO that cultivates a reputation for being balanced and open-minded will inevitably be more respected and wield more influence in the organisation. Going it alone is simply less effective. It is also emotionally exhausting, creatively discouraging and downright lonely.

Personal Attributes of Successful CFOs The most successful CFOs learn, often

over time and with some impetus, to develop the skills to simultaneously build and maintain personal relationships and guard the financial integrity and risk of their organisations. They are both task- and people-oriented. In addition, they learn to speak boldly and courageously to deliver the critical messages that the organisation needs to hear. They cultivate an understanding of the complete organisational system that helps guide their decisionmaking. They are credible and trusted and therefore influential. They are visionary and skilled in communicat-

that drive the behaviour. The successful development of competencies that drive leadership greatness also requires CFOs to get comfortable with ambiguity — a tall order for a profession that often depends on the ability to sharply see delineations. It requires that they focus not just on the attainment of skills; they must focus as much on their being as their doing. The distinction is that doing is the tasks and behaviours that one executes (what a person does) while being is the character, beliefs and attitudes (who a person is) that one brings to leader-

The successful development of competencies that drive leadership greatness also requires CFOs to get comfortable with ambiguity ing their vision. They are collaborators and mentors who genuinely care about people and relationships. Further, these senior executives are composed and live in balance. They are self-aware, accept their strengths and weakness and are committed to learning. They are not just good leaders; they are great leaders. The cultivation of these leadership competencies can be thought of as the acquisition of a set of skills, but it is so much more. For most CFOs, building the various facets of their leadership competency so that they attend to people and tasks with equal skillfulness takes years of practice and a fundamental shift in how the CFO views the world. He or she must examine both conscious and unconscious beliefs with an understanding that behaviour is driven by beliefs and that behaviour change will not be authentic or durable without a change in the underlying beliefs

ship. Successful being drives successful doing. Working on both is the discipline of personal mastery that CFOs develop that allows them to operate in a creative rather than reactive mode. Peter Senge, well known for his writing on personal mastery, wrote in The Fifth Discipline: The Art and Practice of the Learning Organisation that “Personal mastery goes beyond competence and skills, though it is grounded in competence and skills. It goes beyond spiritual unfolding or opening, although it requires spiritual growth. It means approaching one’s life as a creative work, living life from a creative as opposed to reactive viewpoint.” Leaders in the quest for personal mastery who desire to lead creatively, rather than reactively, must be mindful of their inherent fallback positions, as these are the natural places they revert to in times of stress, frustration or other less-than-optimal conditions. J u ly 2 0 1 2

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in practice Fallback positions are rooted in the human need for safety and security. Behaviours produced in this mode include inflexibility, excessive drive, need to control, perfectionism, complacency, pleasing, arrogance and resistance. These behaviours can derail a leader’s best creative intentions.

The Case for Personal Mastery Personal mastery likely sounds a little heavy and perhaps not very concrete. The overburdened CFO, already inundated with the standard fare of responsibilities, might wonder why he or she should commit to this extra task — the development of personal mastery — if things generally seem to be going all right. Can the difference between a good leader and a great leader be significant enough to make the endeavour to attain leadership greatness worth the time and effort? Yes, as it turns out. Anecdotal evidence alone might lead one to expect good leaders to outperform

It is fair to say that being at the top of the pack in terms of leadership competency does make a difference those whose leadership competencies are poorly developed. But a surprising finding from research data is the degree to which great leaders earn better results than leaders who are simply good. The data reveal compelling evidence that, indeed, the extra effort to go from being a good leader to being a great leader does pay off, not only for the individual but for organisational results, as well. Researchers John Zenger and Joseph Folkman assessed subjects’ leadership competencies using 360-degree feedback surveys and then compared the

data to certain organisational indicators in order to establish a correlation between levels of leadership competency and organisational performance. They reported in their book, The Extraordinary Leader: Turning Good Managers into Great Leaders, that those leaders scoring in the higher percentiles in leadership competency — great leaders — enjoyed the lowest employee turnover, the highest customer satisfaction and the highest net profit as compared to other leaders. In one organisation — a mortgage bank — Zenger and Folkman found

Leadership competencies for CFOs Cultivating leadership competencies must be a key pursuit of financial executives. Here are 13 main competencies for chief financial officers Integrity and honesty: • Not only telling the truth but “walking the walk.” Courageous authenticity: • The bravery to talk about the “elephant in the room,” and speak the truth in service to the team, even when doing so is unpopular. Relationship-building through caring connections: • Building relationships just because people are important. Seeing others as valuable regardless of what they can or cannot do for you. Development of others: 30

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• Eagerness to assist others in their natural desire to grow and develop. Motivation and inspiration of others: • Ability to energize others and earn their commitment. Internal and external collaboration: • Valuing connection. Understanding and promoting teamwork and shared vision. Self-awareness: • Understanding one’s own strengths and weaknesses. Having self-esteem that comes from within rather than being dependent upon external validation. Composure: • The ability to stay calm under pressure, remain present in the moment and handle stress constructively. Self-development: • Curious and humble, leaders high in

this competency are open to feedback and new experiences. They seek learning opportunities and alternate work methods. Results orientation: • The ability to set stretch goals and high measurable performance standards, as well as to pursue projects to completion. Strategic perspective: • Trend awareness and propensity to develop strategies to ensure longterm success. Systems-thinking: • The ability to see the bigger picture and the interrelatedness of events. Understanding that cause and effect is often disparate in terms of time and space. Sustainability: • Ability to balance energy and resources to sustain high performance over time.

in practice that while leaders low in leadership competency actually lost money for the bank, good leaders produced a profit. However, the great leaders in the top 10 per cent produced net profits that were nearly double those produced by the merely good leaders in the middle 80 per cent. The researchers also looked at employee turnover at an insurance company and found that leaders in the bottom 30 per cent had more than twice the turnover of leaders in the top 10 per cent. Those great leaders at the top enjoyed more than a third less turnover than good leaders in the middle 60 per cent. Accordingly, it is fair to say that being at the top of the pack in terms of leadership competency does make a difference. CFOs would be well served by working to cultivate certain leadership competencies, which generally fall on either the task side or the people side of the equation, but sometimes take on aspects of both.

Choosing the Journey The development of personal mastery and creative leadership competencies is a demanding endeavour. The case for it, however, is well supported. CFOs who undertake the venture will not only see better business results but also enjoy the satisfaction of a wider worldview and greater connectedness. This is an intentional journey. The leader must choose it and decide to develop as both a leader and a person. Along the journey, there are a number of supports. Feedback is an important developmental tool. One can obtain feedback using an informal approach of simply asking questions or utilising a formal 360-degree feedback survey instrument. Though many senior executives don’t receive feedback well (remember those reactive fallback positions?), learning to process feedback constructively is one of the most powerful

Points to Ponder • The most successful CFOs learn to develop the skills to simultaneously build and maintain personal relationships and guard the financial integrity and risk of their firms • They cultivate an understanding of the complete organisational system to guide their decision-making • CFOs would be well served by working to cultivate certain leadership competencies, which generally fall on either the task side or the people side of the equation. • CFOs can also work with a coach, mentors and role models who are themselves strong in the competencies that the leader wants to develop • This is an intentional journey. The leader must choose it and decide to develop as both a leader and a person

things that a leader can do for her or his self-development. CFOs can also work with a coach, mentors and role models who are themselves strong in the competencies that the leader wants to develop. Constant engagement in learning and reflection are key to personal mastery. Being exposed to new ideas and taking the time to reflect on one’s expe-

riences are essential in the growth of the great CFO.

Marie Peeler is a principal of Peeler Associates (www.peel erassociates.com), a Pembroke, Mass.-based organization that helps leaders clarify objectives, find engagement, improve interpersonal effectiveness and attain their goals. J u ly 2 0 1 2

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in practice

EMPLOYEE BENEFITS

The risks and real costs

of employee benefits

In an interview with CFO India, Gene Wickes, Global Benefits Director, Towers Watson along with his colleagues Anuradha Sriram, Benefits Director TW India and Andrew Heard, MD APAC Benefits, TW, discuss of employee benefits or the lack of it could hamper India’s growth story NISHA ANAND

Why is global governance becoming more important? Gene Wickes: The easy way to answer this is, the world is globalising. So the faster the world globalises, the more they need to know what is going around. What really drove global governance was there are Sarbanes Oxley systems in the US where every quarter the CEO and CFO sign, where they know what is going on and there is no compliance issue and that kind of cascaded around the world. As soon as the CEO and CFO are totally accountable for everything that is going around the globe they have to know what’s happening. But now it’s gone beyond the point of managing risk to improving operations. Governance is now focussed more on risk management as much as operational efficiency and competitive advantage.

Apart from risk mitigation, what are some of the other strategic advantages of governance, especially when it comes to a point where HR and Finance meet? Gene Wickes: It is a competitive

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advantage. If you have good governance in place what you actually do is tell the broad organisations what your values are, what your roadmap is for success, and then help monitor and direct what’s happening. What global governance does… you cannot control everything from the centre, the organi-

“The successful organisations are those that determine what responsibility exists at each level and then empower the people..” —Gene Wickes, Global Benefits Director, Towers Watson

sations are generally too large for a small group of people to control, so what they need to do is set strategy and then help to steer and correct things, and governance gives you the opportunity to understand what is happening, and then give directions. Andrew Heard: It is an effective tool for communicating the strategy and ensuring behaviours in line with the strategy. Gene Wickes: Global governance gives you the ability to know what is going on in different places, so that you’re not reinventing the wheel every single time. So if we are in 30 different countries, we are not telling them that you are independent… go figure it out, but telling them to focus on business, as opposed to reinventing things.

What according to you, are some of the key risks of inadequate benefits governance? Andrew Heard: Non compliance is a material risk. In many companies if

in practice tions as a form of expansion. It is a big difference. Mergers and Acquisitions open up a whole lot of new risks. Gene Wickes: The difference is at the corporate level, the key role is to set the strategy, vision and direction of where they want the company to go. But at the local level, the role is to actually run the business. It is important to ensure that the people are empowered, and given a vision and direction. One must steer them in the right direction, and this must also be constantly measured. Successful organisations are those that determine what responsibility exists at each level and then empower the people to be able to make the decisions to succeed.

One of the key problems when going global could be different benchmarks and standards of employee benefits in different countries. Wouldn’t this inevitably lead to employees of Nation-A being unhappy with employees of Nation-B getting different benefits? standardisation also may involve risks, how does a CFO or an organisation tackle this? Gene Wickes: You are definitely going to have different benefits country by country, the key reasons are that the tax laws, competitive environment are

Gene Wickes, Global Benefits Director, Towers Watson

you are not complying, you may lose your qualified status, your tax advantages… it is quite material Gene Wickes: You have the legal and financial risk that you are not running the business, you will have wasted costs and you will have people risk. You can have people going in different directions and making decisions which are not compatible with what you want.

Many Indian companies are now acquiring organizations

overseas or setting up large operations in other nations and Global companies need different types of support at different levels. Can you elaborate? Andrew Heard: If you look back in India in 1980’s – early 90’s, a lot of overseas expansion was in developed countries like Europe, America etc. It wasn’t that Asia focused, so it was going for mature markets and often doing it through start-ups or green field operations. There has been a change in the last decade with mergers and acquisi-

“What we’ve seen change in the last decade is using mergers and acquisitions as a form of expansion. It is a big difference” —Andrew Heard, MD, Asia Pacific Region, Benefits, Towers Watson J u ly 2 0 1 2

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Anuradha Sriram, Benefits Director, TW India

different, and it isn’t just benefits but a key measure is on a total reward basis, but most companies are marking to market, and the market is very different from country to country. The demographics are different, the competitive environments are different.There are some things that do cover the entire corporation so a lot of corporations will say that there are certain things that are important, like it’s important that people have minimum level of retirement when they leave, but how that is provided is different from country to country, but the goal remains the same.

perspective we can quote some comparatives, so if you see the way we have evolved, the financial accounting standards have evolved, and the way liabilities are being accounted for...that has really driven a lot of transparency in the system. It has also eased certain decision making in the organisation. For instance, the lead benefit. It has been restructured in quite a significant manner, so we have seen the accumulated lead balances being downsized in many of the organisations primarily because the CFO’s came to know about the size of the liabilities, and then they took a decision. Alternatively there were benefits which we are not accounted for before. Now that we see revised international accounting standards, there will be more disclosures which will focus on risk, timing of cash flows etc which will really increase their line of sight in the eyes of the CFO, and will either give them the necessary information, and also drive behaviour.

When one talks about building “best in class HR due diligence” in an M&A plan... what are some of the key elements, particularly from the finance function’s point of view? Andrew Heard: The essence around

Andrew Heard: It is important to have a guiding principle or philosophy for in place.

Given the experiences of US and UK...it would seem that benefit costs (including retirement benefits) and regulatory complexity will continue as major challenges in the next few years....is there any ‘best practice’ or do’s and dont’s for CFOs here? Anuradha Sriram: From an India

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Andrew Heard, MD APAC Benefits, TW

“The way liabilities are being accounted for...has really driven a lot of transparency in the system. It has also made decision making easier” —Anuradha Sriram, Benefits Director, Towers Warson India

this is around planning. So often we see mergers not achieve what they set out to achieving. One of the key reasons for failure is culture. The bringing together of different cultures and trying to assimilate them. This is even more challenging when you are going international. So it is pretty cool that HR has a seat at the table from the outset. Gene Wickes: I think one of the critical things to any acquisition, and what finance brings to the table, to a certain degree, is someone has to be kind of the impartial person looking at this. Often, we fall in love with the acquisition, and we get to the point where it’s just a conquest. We forget about all these things and we keep saying that this not important or that is not important. I think that’s the key role of CFO’s—to come in and to be the impartial judge. To tell what can be from the business standpoint, the cost, and the returns. Anuradha Sriram: In fact, talent retention or identifying the talent in the acquired or the merged company is very critical, and probably losing the key talent could be a big detriment in achieving synergies.

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opinion

Getting the website to perform for profit Enterprises are on a spree to optimise website performance. What are some of the best practices one should adopt? Neeraj Dotel*

he sharp growth of reliable applications available in the market has opened up a wide array of lucrative options for enterprises from the application performance management vendors of India. In the present day and age where consumer is king; no longer can vendors dictate enterprises as to what they need to do. In this competitive world it becomes mandatory for enterprises to create and generate awareness about their products and solutions available through this space itself. The basic tool that helps leverage this aspect is the online space, with primary source of information being on the company website. With an increasing literacy rate and tech-savvy online users, consumers are increasingly forming their opinion, based on their experience while browsing through the company websites. 36

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in practice For instance, the number of trade transactions conducted electronically has grown widely with widespread internet usage. The use of commerce is carried out in multiple innovative ways from electronic funds transfer, supply chain management, internet (viral) marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Online shopping is a type of e commerce where the buyer is directly online or dealing with the seller via the internet. Consequently, enterprises are always looking for superior web performance to reach out to their existing and prospective customers. Also, organisations are also on a lookout to reduce costs and improve service levels which must first prepare the network to support significant increases in bandwidth usage and web browsing traffic. Customers’ expectations are on the rise with each passing day as they expect websites to load as quickly or faster on their phones as on their home computers or laptops. Also, the faster the speed the easier it is for an enterprise to hook onto its customer. Compuware commissioned the first survey of tablet users’ web performance expectations in India rcently. The study surveyed more than 200 end users who accessed the internet in India on a tablet in the past six months. The survey report titled, “Engaging the Tablet User: What they expect from websites” reveals that tablet users’ expectations in India are not being met, with a majority of users experiencing slow or unreliable web and application performance. Tablet users expect quick, anytime transactions that work flawlessly every time, but as the survey findings illustrate, that’s not what they’re experiencing in India, as yet. Slow load time and websites not functioning as expected are cited as the most common issues experienced when accessing a website. For applications, slow load time and crashing,

freezing or receiving an error message were more prevalent issues. The transformation in the consumer behaviour has resulted in decrease in brand loyalty. Consumers are now looking for instant solutions and solutions catering to their needs. Media penetration has acted as a catalyst to make the consumers more aware of the power and reach of the online space. Application performance management tools like Gomez provides the consumers wide range of options that could fulfill their needs. In a day and age of stiff competition, consum-

• Home Page Last Mile Benchmarks: measure the performance of the home page from the end user’s desktop taking into account the real user’s connection speed. • Transaction Benchmarks: measure the performance of a key business process such as ordering a product or making a stock trade. • Mobile Benchmarks: measure the performance of mobile site’s home page on the largest carriers. Successful businesses adopt best practices that give greater control over their website decisions and continuity in their

Tablet users expect quick, anytime transactions that work flawlessly every time ers’ preference is based on a simple insight, that is, a one stop destination to their requirements in the shortest span of time. Gomez Benchmarks provide a comprehensive set of global independent web and mobile performance metrics and ranks the web and mobile performance of companies across three key metrics: • Response Time—measures the time elapsed while downloading a page or an entire multistep transaction process. • Availability—measures the percentage of successfully completed tests out of total test attempts for the measurement period. • Consistency—measures the standard deviation of the response time of successful tests completed. Such tools publish hundreds of global web and mobile performance benchmarks based on millions of measurements per month across thousands of companies and include: • Home Page Backbone Benchmarks: measure the performance of the website’s home page from the Internet Backbone.

online success. However, many companies are still using a very limited set of criteria to measure how their web site is performing. With the rapidly growing market where hundreds and thousands of new applications are launched every day, it has become essential to maintain the performance and availability of these applications, and that is where Application Performance Management (APM) market is expected to have a huge scope. The combination of cloud, social computing and mobility can be used to increase geographic diversity and raise the productivity of virtual teams. We believe that this year, 2012, will be a year of growing dependence on online performance and agility. Along with cloud computing, mobile application will have huge potential and may become one of the highest sources of revenue.

*Neeraj Dotel is the Managing Director at Compuware India. The Views expressed here are personal. j u ly 2 0 1 2

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technology

teaming up with the board of Directors CIOs who are on the board are making every effort to ensure that they add substantial value to the organisation to justify being at this elite group Atanu Kumar Das

nteracting with the Board of Directors can become very tricky if a CIO does not have the right skill-set to do that. There are many CIOs on the board today who are finding it increasingly challenging to build an effective communication channel with the members. Knowing the board of directors is crucial for a CIO to work contructively at the board level. When a CIO is meeting the Board of Directors, he/she needs to understand that the board is not interested in micro issues. A CIO should, therefore, talk about how IT can help in boosting the growth of the company. A CIO needs to realise that by getting to sit at the high table, he has got a fantastic opportunity and hee has to make the most of it. According to Rajesh Uppal, Executive Director, (IT) & CIO, (Information Technology Division), Maruti Suzuki India, once the CIO is at the board of director level, he has to ensure four key things 1. Be a partner with the board in forming strategies

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2. Add value to the discussion making process 3. Update the board with the latest technological developments and how it can be incorporated to benefit the company 4. The CIO must possess credibility and reliability for rolling out strategies “I have been on the board of Maruti since 2010 and in the last two years we have had numerous meetings with external members as well as people in the company to discuss and take various critical decisions,” he says. “Once you become part of the board, you have to ensure that you rise above technology and talk to the members of the board at his level. You have to provide ideas and innovation at his level so that you can build trust,” Uppal says. According to Gartner, only 16 per cent of board directors have any IT background or experience, so CIOs need to treat the board as one of their most valued customers if they are to improve their overall ability to work with the Board of Directors.

Agrees Vijay Sethi, Vice President and CIO, Hero MotoCorp, “One cannot talk technology with the board of directors because they will not be able to understand that. As a CIO you have to evolve and ensure that each and every discussion should be businessoriented and IT should only be an enabler. IT should help in terms of ease-of-use or in terms of cutting down costs. It seems quite difficult at the beginning but slowly and steadily one gets used to it. Most of the technology talks happen within the team but not with the management.” Sethi has been on the board of Hero MotoCorp for the last four and half years and his journey has been enriching as well as challenging. At Hero MotoCorp there are two boards, one is an external board and the other is the Enterprise Management Board. Sethi is part of the latter where there are seven members and they roughly meet once a month to discuss what are the strategic changes that

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Subhojit Paul

Vijay Sethi, VP & CIO, Hero MotoCorp

are required to improve the business of the company. At Hero MotoCorp, the culture is of ‘more than equal’ and the board members share their challenges and ideas that can be incorporated to make the company grow vertically as well as horizontally. According to Sethi, the beauty of the Board is that anybody can come up with any topic, for example, even a CIO come up with a problem that persists with human resource and provide solution to it, and if all the mem-

bers agree, then they can go ahead and implement the same.

Changing role of a CIO Today, technology is only a part of CIO’s job portfolio. What is more important is to come up with ideas and innovative strategies that can transform the business of the organisation. Uppal says that forecasting analysis is also critical for a CIO when he reaches at the Board of Directors’ level.

“The board expects you to forecast what are the changes that we can expect from technology and as a CIO one has to have that level of understanding about technology to predict how a company can benefit from the same.” Uppal who has been working with Maruti since 1985, has seen the company transform significantly in the last 27 years. He says that Maruti has always considered IT as a separate division since he joined and the importance that IT received was crucial. “IT involvement at the board level is very important and at Maruti I have experienced it right from the day I joined the company. IT was a parallel organisation like Finance or Human Resource and we were given the liberty to enable IT to help business processes. Even now when I am at the board, we discuss different ways of how IT can help us in not only saving cost but improve the business of the company,” Uppal says. He believes that today IT is becoming a commodity and CIOs don’t need to invest much time into it but to focus more on business dynamics and be more business-oriented so that a CIO can add value to the Board. “The concept of IT is changing very fast and now there are people who can run your IT infrastructure, so a CIO today has to concentrate more on ensuring how he can strategise and analyse into the business of the company,” says Uppal. At Maruti, twice a month there are strategy forums among the board members where they brainstorm ideas that can be implemented to enhance the business growth of the company. As a CIO it is very important to understand that IT innovation is very short-lived so one has to keep on innovating and raising the bar. “I remember in 2006, we were the first to implement a Dealer Management System (DMS) and today almost every automobile company has that system but we since we were the first to introduce it in the country we got the early mover advantage. If a CIO is j u ly 2 0 1 2

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in practice at the board, the members of the board will always expect how you can come up with fresh ideas to improve the business of the company,” says Uppal. According to Sethi, “Once you are part of the board, you have to learn to disassociate yourself from the thinking that you are the head of a particular functionality. Every part of the business becomes integral and the function that you are currently handle is not the only responsibility.” “As a CIO, one has to understand that the most important thing is to get the trust and faith of the peers and other members of the company. This can be achieved only by delivering. If I have told the management that I will be getting a particular task done, I will have to ensure that I do it with conviction and ensure that the results are visible. Once this is done, the board understands that by whatever I say and do, I mean business. This is the only way one can gain trust and be a true leader in the organisation.” he says. Sethi further adds, “Another important aspect for a CIO is to ensure that he invites feedback from the employees. This is a good way to know what are the things that are bothering the employee. Once you get the feedback, you have to work on it so that the problem gets solved. This method also helps when you interact with the board because you can communicate a particular challenge that has become a deterrent for the company’s growth.” An important transformation underway is that CIOs are increasingly getting equal treatment like a CMO or a CFO. “It is a wrong concept that CIOs get less importance than a CFO or a CMO. At Hero MotoCorp, I get equal importance as any other board member and my ideas are also given equal importance like that of my peers,” says Sethi. Even Mr Uppal says, “In the last two years that I have interacted with the board, the experience I have is if you giving the right idea and knocking the right door, you will get the desired result.” “The primary thing for the CIO is keep the technology baggage behind 40

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board. He should know how to communicate his thoughts both to the external as well as internal board members. Some of key things that are required are integrity, honesty and knowledge of your subject. One should be aware of any technological advancement that is going around, so a CIO always has to be wellread and has to keep his eyes and ears open to any other business development that can affect his business,” says Sethi. Uppal points out that deep-rooted involvement is required for a CIO who is at the board.

“Once you are part of the board, you have to learn to disassociate yourself from the thinking that you are the head of a particular functionality” —Rajesh Uppal, ED (IT) & CIO, Maruti Suzuki

when they enter a discussion with the board members. If you communicate in the right manner, chances are that you will get the desired results. In fact I have realised that since I have joined the board, all IT strategies are getting aligned much better than before,” says Uppal.

What is required for a CIO to be in board? There are many aspiring CIOs today who are eagerly waiting for their turn to be at the board level. While it can be easy for some to adjust to that level but it can also become increasingly difficult if you do not possess some inherent qualities to be at that level. Sethi believes that maintaining good relationships with the board of directors helps him understand the board members better and also communicate his thoughts in a proper manner. “Proper communication is a must for a CIO when he becomes part of the

“To be at the board is an added responsibility and you have to justify that trust by giving your best not only in terms of technology developments but also formulating strategies which are futuristic and business-oriented,” he says. According to Gartner, “The CIOs must learn to treat the board as they would treat their customers. They need to get to know the members and their priorities, and make certain that they have the plans in place to meet boardlevel expectations.” To add value to the board, a CIO needs to transforming himself from merely being a technologist to evolving as a business strategist and an innovative analyst. By doing this, the CIO is not only evolving his role but also enabling his company to grow by providing strategic and analytical ideas that helps in constant improvement and broadening of business horizons.

in practice

BOOK EXTRACT

brand-building strategies for emerging market MNcs In their book “The New Emerging Market Multinationals: Four strategies for disrupting markets and building brands,” the authors analyse key strategies and tactics used by 39 EMNCs for building their global businesses and brands. The book has just been launched in India after a successful global launch in US. An extract:

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n the past decade, a new breed of challenger businesses and brands have burst upon the world stage, and in many categories—such as appliances, automobiles, consumer electronics, mobile phones, computers, personal care products, telecommunications equipment, and beer. They have built up significant new branded businesses with a broad international footprint. These new multinational corporations (MNCs)—with names such as Acer, Arçelik, Apollo Tyres, Bharti Airtel, Bimbo, Bright Food, Geely, HTC, Haier, Huawei, LG, Lenovo, Modelo, MTS, Natura, SAB-Miller, SAIC Motor Corp., Tata Motors, Tata Tea, Ulker, and Vitra— are not from the United States, Europe, or Japan, the ‘triad’ nations from which large MNCs typically come. Rather, they are from countries such as China, India, Brazil, Russia, Turkey, South Africa, and Mexico, all relatively poor counj u ly 2 0 1 2

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“What strikes me as most interesting is how creative and innovative the EMNC strategies are” In a candid chat with CFO India, Dr Amitava Chattopadhyay, co-author of the book, talks about why and how emerging market MNCs (EMNC) are succeeding on the global stage

You mention in your book that one reason for international success of the 39 emerging market multinationals you have studied, is a new mindset? What is this new mindset? Having started the internationalisation process through serendipitous opportunism, supply contracts as OEM or ODM suppliers to developed market MNCs, an imperative to acquire capabilities to fight developed market MNCs at home, and to diversify risk, many of these firms have now learned about developed country market needs; acquired the needed technological competencies by investing in innovation; established the quality-control, management, and supply chain processes needed to run global operations through learning by doing.

Dr Amitava Chattopadhyay

How is this a recipe for financial success? The EMNCs we talked to are pursuing the next stage of the game leveraging their low cost structures to create firm specific advantages. They have extended their low cost advantage beyond manufacturing and throughout the value chain to develop frugal innovation capabilities, frugal supply chains, and frugal marketing. They are also deploying their resources in tightly focused domains to achieve maximal impact.

In the emerging markets you have studied, what has been the big difference in marketing strategy that you have noticed? What strikes me as most interesting is how creative and innovative the EMNC strategies are. At every opportunity, the marketing strategies have leveraged multiplier effects to magnify the impact of the limited resources available to the firm. Thus, consider Wipro, its entire revenues are about the size of IBM’s marketing budget, but it is Wipro’s biggest competitor. Wipro has to carefully target its marketing and leverage multipliers wherever possible to have an impact and build its brand, a critical requirement if it wishes to offer high value services. Wipro carefully targets CXOs of Fortune 1000 companies. To do so, it forsook traditional avenues. Instead, it decided to place advertisements at key airports used by its target audience, which included JFK, San Francisco, Heathrow, Frankfurt and Tokyo. It also acquired the right to advertise by wrapping the buses used at the World Economic Forum at Davos, to ferry participants between the hotels and conference venue, achieving a very targeted impact at low cost. It complemented this with its puzzle box, distributed to executives arriving at Bengaluru International Airport through the limousine services used by target executives. This focused and integrated effort has

What do you feel should be the big takeaway....the reason why business leaders should be reading this book? If you are a CXO, an aspiring EMNC or even an EMNC, then clearly the lessons from the 39 companies would be of benefit. Rather than reinventing the wheel, why not learn from the companies we talked to so that you can take your business to the next level. If you are from smaller or what we call ‘challenger businesses’ from the developed world, then the challenges you face are similar to the challenges faced by our EMNCs. Thus, CXOs from these organisations can learn from the lessons offered by the 39 companies we talked to. If you are from the TMNCs, the book offers valuable insights. As Jeffrey Immelt, CEO and Chairman, GE in a 2009 Harvard Business Review article warned “GE has tremendous respect for traditional rivals… But it knows how to compete with them; they will never destroy GE. However, the emerging giants very well could”. Thus, understanding the strategic competencies and strategies of the EMNCs will help the TMNCs to potentially develop competitive responses and stave off the dire consequences that could otherwise befall them.

tries with per capita incomes of around US$10,000 or less, as compared with incomes of US$34,000 or more for the most developed (G7) countries...

...We report in this book the findings from our in-depth study of 39 cases of such Emerging Market Multinationals (EMNCs), based on our personal

interviews with their senior executives and our research into their challenges, strategies, tactics, and results...Such EMNCs face two key challenges: they

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substantially improved the standing of Wipro in the minds of the targeted CXOs.

in practice How You Can Use These Findings

need to build global businesses, and they need to build global brands...

About the Book ...This book is based on our own field research into the strategies and tactics used by 39 EMNCs for building their global businesses and brands. Our research began with interviews we conducted with their senior managers and executives. The Appendix at the back of this book provides a brief look at these companies and identifies the people we interviewed; we encourage you to skim this section now to gain familiarity with the background of the challenger firms we studied. We supplemented those interviews with an extensive study of ‘secondary’ published material (such as written cases and media articles), acknowledged in our endnotes. We also consulted with subject-area experts in specific areas, such as acquisitions, to tap their expertise for specifically identified supplementary materials in the book. (Professor Prashant Kale of Rice University, an expert on acquisitions by EMNCs, co-wrote the acquisitions chapter with us.) By researching the histories and talking directly to the main protagonists of the 39 companies we discuss, we sought to answer three questions: 1. How are EMNCs building global branded businesses? 2. What can other aspiring EMNCs— and challenger businesses everywhere—learn from the ways in which EMNCs go about building strong global branded businesses, given the resource and country-of-origin challenges EMNCs face? 3. What can the TMNCs that are increasingly threatened by this new breed of EMNCs learn from this analysis, and thus what strategies can they proactively develop to respond to the new challenges? To address these three questions, in the first section of the book we examine the strategic choices these EMNCs make and the competencies they

The New Emerging Market Multinationals: Four strategies for disrupting markets and building brands Amitava Chattopadhyay & Rajiv Batra with Aysegul Ozsomer Published by: McGraw Hill Price: `595 also available on www.amazon.com

acquire—in areas as diverse as market selection, products, and technology—as the basis for building their new global branded businesses. Next, we discuss how they are overcoming the challenges of building a brand, given their constraints and disadvantages, based on the insights from the firms we studied. Brand building on a global scale requires management capabilities that can deal with markets that are culturally, economically, politically, and geographically distant and diverse. This is the focus of the third section. We close with a final section that brings together the key lessons for other aspiring EMNCs and for challenger firms in general; this last section also identifies the increasing threat to TMNCs and the ways in which they might be addressed, and it provides a look at the future. What factors might accelerate or retard this potential onslaught by EMNCs in the global marketplace?

If you are an EMNC like the ones in our book, these shared experiences and lessons can provide insight into the strategies and tactics that will help you to build these more-sustainable and more profitable businesses and brands in global markets. The road to these strong businesses and brands is paved with challenges that need to be overcome: finding ways to build brand awareness, identity, and associations despite weak financial resources, and overcoming (usually) negative quality imagery stemming from countries of origin... And our findings also should provide useful policy directions to governments and trade organisations in the emerging-market countries seeking to enhance the global competitiveness of companies from their countries. If you are a company in the ‘developed triad’ that already is, or will soon be, competing with these new EMNCs (or sometimes partnering with them), the stories and strategies we tell might suggest new ways to disrupt and fight them. If you are simply a small challenger business, going up against much better-endowed, larger market leaders, the many detailed cases we provide of low-budget competitors managing to compete and win ought to provide you a game-plan on how your resource limitations can be side-stepped. For those who simply want to better understand the strategies and tactics needed to build strong global businesses and brands, these case histories and examples provide fresh instances of the many creative pathways through which these can be built. At some abstract academic level, the strategies and tactics we report here may perhaps not be seen as new. But their specific implementation by companies so challenged in their resources and starting positions—but not in their determination and imagination—is extremely interesting and inspiring. We learned much from their stories, and we hope you will too. j u ly 2 0 1 2

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Case

Study

Project Map The challenge: To bring in a process-driven financial reporting system across 120+ warehouses of DHL Logistics TIMELINE: 2009-â&#x20AC;&#x2122;10 (about 10 months) People Involved: Finance, IT and Operations teams KEY CFO TAKEWAYS: Empower colleagues if you want them to be drivers of change. Communicate tangible gains to all stakeholders

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Case Study

Express Logic: How

DHL Logistics Streamlined its

Financial Reporting Getting 100 warehouse managers to understand profitability and get them to take ownership of bringing about a cultural change, was no easy task. That is the challenge CFO Anjali Bhadbhade and her team at DHL Lemuir Logistics Supply Chain successfully faced in 2009. Currently the CFO of DHL Express, Ms Bhadbhade recounts how the battle was won Purva Khole

jiten gandhi

uring the global economic crisis on 2009, DHL Lemuir Logistics, an arm of the DHL India (a wholly owned subsidiary of Deutsche Post DHL) was going through a relatively lean phase. One reason of course was the state of the global economy itself, then in the midst of a recession. But even within DHL Supply Chain, there was also a focus on finding the right balance between company growth and meeting stake holder expectations, while keeping,input costs down. Given the business environment, the growth initiatives were eschewed in favour of cost cutting.

The reason: The success of the supply chain market is heavily fragmented, the business model is customer-need driven and a lot depends on the demands of individual customers. During the 200910 financial year, the finance team, headed by its then CFO Ms Anjali Bhadbhade (she has since moved on to take over as CFO of DHL Express) faced a serious cost management problem.

THE CHALLENGE “At that time we had about 100 to 125 business sites or warehouses. Though we had a good ERP system in place, generation of accurate reports was a problem and getting them on time was an even bigger task. Since the main

issue was of accurate reporting, the major concern came back to square one—cost management,” recalls Ms Bhadbhade as as we catch up with her at the DHL Express office in Mumbai, where she has been CFO since 2011. She spent the five years previous to 2011 at DHL Supply Chain. With a high (almost 80 per cent) variable cost being common to most warehouses, it was a reporting challenge of immense proportions. “We used an Oracle software which was good but we were unable to give access to this tool to all unit or site heads. We realised what we needed was a new technological tool to drive costs. The idea was to create awareness among all site managers J u ly 2 0 1 2

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Case Study

“Once all major stakeholders bought in to the idea, the path became less thorny. In fact many of the operations guys came up with ideas and proposals to improve the system further” about the profitability of each individual unit. They needed to understand if their unit was profitable or not, so that they could then focus on growing their own unit profitably. This would mean not just giving them technology but also training them and more crucially, bringing about a mindset change, a cultural change so to speak,” she recalls.

HOW IT WAS TACKLED The first step was to train every site manager in using the tool, while attempting a cultural change within every unit. “It was a tough ask, since a finance person talking financial jargon to an operations personnel has every chance of coming up against a roadblock,” says Ms Bhadbhade. A local tool was created and all site managers were given access to it. By 46

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updating all information on this platform site managers could check if their site/warehouse was profitable. “We did a number of follow ups and on-site training. To begin with our IT team developed a local tool that would ride on to Oracle data. This tool would have accruals of revenue and cost. Site managers had to give accruals at the end of each month. The data was then computed on Oracle and the results flashed back to unit managers,” she recalls. It took about eight to ten months to develop, train and implement this new system. For Ms Bhadbhade and her finance team, two things worked in favour. First, the top management backed the cost-management proposal right from the start. And then, the operations personnel were convinced that the key to their increased efficien-

cy and profitability lay in the success of this project. “Once all major stakeholders bought in to the idea, the path became less thorny. In fact many of the operations guys came up with ideas and proposals to improve the system further. In the end they were the one’s driving it,” she recalls. The results were swift, with not only the numbers showing a healthier trend at the end of the financial year but also a mindset change also evident among employees. Two years after the new system was introduced, DHL Logistics is a much more process-driven company today. The new system also promotes transparency and has improved the accuracy in reporting at each unit. As Ms Bhadbhade explains: “For instance one of our major customers had been demanding a certain pricing which we were unsure of at that stage, since no unit was aware of its individual profitability. With the implementation of this tool, we could see, judge and rationalise costs at different levels. The increased benefits were then passed on to the customers. As a result, we could retain this large customer.”

LESSONS Almost three years have passed since the project was implemented but the lessons she learnt are still crystal clear. “When you start a project, make sure all stakeholders are aware of what he or she stands to gain from the project. Once all stakeholders realise there is a lot at stake for them too, they will come up with ideas and are willing to drive the project,” she says. She also believes empowering stakeholders (in this case all line managers and unit managers at over 100 sites) is important since only empowered people feel responsible for their actions. The toughest part in this entire challenge? “To make people believe in a project or a plan that is merely an idea, a vision in your head. If you can communicate an idea successfully and excite others, half the battle is won,” says Ms Bhadbhade. Now who would disagree with that?

insight

STRATEGY

Organising for an emerging world The structures, processes, and communication approaches of many far-flung businesses have been stretched to the breaking point. Here are some ideas for relieving the strains Toby Gibbs, Suzanne Heywood, and Leigh Weiss

s global organisations expand, they get more complicated and difficult to manage. For evidence, look no further than the interviews and surveys we recently conducted with 300 executives at 17 major global companies. Fewer than half of the respondents believed that their organisations’ structure created clear accountabilities, and many suggested that globalisation brings, as one put it, ‘cumulative degrees of complexity.’ However, our research and experience in the field suggest that even complex organisations can be improved to give employees around the world the mix of control, support, and autonomy they need to do their jobs well. What’s more, redesigning an organisation to suit its changing scale and scope can do much to address the challenges of man-

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insight aging strategy, costs, people, and risk on a global basis. Our goal in this article isn’t to provide a definitive blueprint for the global organisation of the future (there’s no such thing), but rather to offer multinationals fresh ideas on the critical organisational-design questions facing them today: how to adjust structure to support growth in emerging markets, how to find a productive balance between standardised global and diverse local processes, where to locate the corporate centre and what to do there, and how to deploy knowledge and skills effectively around the world by getting the right people communicating with each other—and no one else.

Rethinking boundaries

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Global organisations have long sought to realise scale benefits by centralising activities that are similar across locations and tailoring to local markets any tasks that need to differ from country to country. Today, as more and more companies shift their weight to emerging markets, boundaries between those activities are changing for many organisations. At some point, they will need to adapt their structures and processes to acknowledge this boundary shift, whose nature will vary across and within companies, depending on their industry, focus, and history. In one recent case, an international publishing company created global ‘verticals’ comprising people who work on content and delivery technology for similar publications around the world. But it was careful to leave all sales and marketing operations in the hands of local country managers, because in publishing these activities can succeed only if they are tailored to local markets. In the case of IBM in Asia, the company has globalised its business services but left the businesses local.

IBM’s experience in Asia IBM’s Vice President, Global Strat-

Changing business processes can take months. Changing a culture and the way employees adapt to new ways of working takes years egy for growth markets, Michael Cannon-Brookes, described to us the structural redesign of the company. Shortly after the start of the new millennium, its leaders realised that having each country operation in Asia run a complete suite of business services to support different product brands no longer made sense; there was simply too much duplication of effort. In each country market, these leaders identified 11 services with common features in functional areas: Supply chain, Legal, Communications, Marketing, Sales Management, HR, and Finance. Each function was assigned a global ‘owner’ with the task of consolidating and refining operations to support businesses in the region’s different countries. The company then assessed which essential elements of each function to keep and which redundant (or potentially redundant) elements to eliminate. From these assessments grew the “globally integrated enterprise model,” which evolved into an entirely new structure for IBM’s global operations. “Instead of taking people to where the work is, you take work to where the people are,” says Cannon-Brookes. IBM sought out pools of competitive talent with the skills required to perform each service at different cost points. Then it built teams of specialists geographically close to the relevant pool to meet the region’s needs in each service. So now, for instance, IBM’s growth market operations are served by HR specialists in Manila, accounts receivable are

processed in Shanghai, accounting is done in Kuala Lumpur, procurement in Shenzhen, and the customer service help desk is based in Brisbane. Globalisation functions that were previously country based has been a huge corporate-wide undertaking for IBM. “This is a cultural transformation,” says Cannon-Brookes. “Changing organisation charts can take a few mouse clicks. Changing business processes can take months. Changing a culture and the way employees adapt to new ways of working takes years.”

A complex calculus To repeat, though, no company’s restructuring should be viewed as a blueprint for that of another. On the one hand, the importance of regional layers seems to be growing for companies in sectors such as pharmaceuticals and consumer goods. Regional centres of excellence in these sectors often are cost effective. Brand and product portfolios often differ significantly between regional outposts and the traditional core, and greater regional muscle can make it easier to pull local perspectives into global product-innovation efforts. On the other hand, we’ve seen companies conclude that the traditional role of their regional layers—as ‘span breakers’ helping distant corporate leaders to gather data and distil strategically important information—is becoming obsolescent as information technology makes analysing, synthesizing, j u ly 2 0 1 2

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insight and exchanging information so much easier. Today’s faster data exchanges, along with faster travel and video conferencing, make it feasible for some organisations to group their units by criteria other than physical proximity—for example, similar growth rates or strategies. (For more on the role of technology in managing global organisations, see the next page, “Technology as friend or foe?”) That’s led some companies to reduce regional layers to teams of ten or fewer members. Those teams might focus on managing people strategy in a region or on gathering high-level business intelligence that feeds into regionalstrategy setting—for example, spotting regional, country, and competitive risks and opportunities. Wafer-thin regional layers have the added benefit of curbing ‘shadow’ functional structures (in HR, Marketing, and so on), which tend to sprout unplanned in larger regional organisations. Although these structures are not clearly visible to the corporate centre, they add considerable cost and complexity.

Process pointers As IBM’s experience illustrates, executives evaluating the structure of their companies will often be drawn into considering which processes should be global or local. That is sensible: in our survey of more than 300 executives at global companies, processes emerged as one of the three weakest aspects of organisation, out of 12 we explored. Some companies have far too many processes—nearly a third of the surveyed executives said that their companies would be more effective globally with fewer standard ones. Some companies, especially if they grew by Ms&A, don’t know how many processes they have or what those processes are. And, most important, few can distinguish standard processes that create value from those that don’t or can identify the value drivers of worthwhile standard processes. 50

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Wafer-thin regional layers have added the benefit of curbing ‘shadow’ functional structures which tend to sprout unplanned in larger regional organisations For managers grappling with these issues, here are some ideas that have proved valuable in practice: • Don’t standardise more than is necessary: For example, businesses and regions should be allowed to choose their own locally relevant key performance indicators to track, on top of the four or five KPIs used in the global process for setting annual targets. • Fit technology to the process, not vice versa.:Standard screen-based processes may ensure global compliance in an instant but can lock in globalised costs, too. Before making huge investments in technology to standardise a process, businesses must be sure they can realise the expected return. • Prefer standard principles to detailed rules for local processes: For instance, to hire an assistant in a new location, managers need only a set of global fair-hiring principles, not chapter and verse on how to hire. • Listen to voices from all the functions that are—or should be— involved in making a process better and make sure those people can continue communicating with each other: Standard processes, by themselves, are not enough to capture all of the potential value from a company’s global footprint: ongoing communication between people who influence and execute processes helps to capture more of it. • Implement new processes from the top: Consultation on design is important, but business leaders may eventually need to cut the talk and mandate a new process. Unfashionable command-

and-control methods can be appropriate in this sphere because, as one executive explained, “Locations aren’t nearly as different as they think they are.”

Lightening the corporate heart Over the past decade, corporate centres have been slimming down. Many have shed their traditional roles of providing the business units with shared backbone services. Similarly, some companies have found locations other than the corporate headquarters for centres of excellence on, among other things, innovation or customer insights and sometimes host them within one business for the benefit of all. This leaves slim corporate centres free to focus on their perennial headquarters roles: upholding the organisation’s values, developing corporate strategy, and managing the portfolio of businesses and their individual performance in line with those values and strategies. However, even a newly focused corporate centre can struggle to grasp just how diverse a company’s markets have become and how fast they are changing: one group based in the United States accepted two per cent growth targets from its local managers in India because the US market was growing by only one per cent a year. But the Indian economy was growing much faster, so precious market share was lost. Corporate centres are likely to make better strategic calls if they move closer to the action. Locating headquarters

insight in a growth market also sends a clear signal about company priorities to current and future employees, as well as to investors, customers, and other external stakeholders. However, a lot of corporate centres can’t or won’t move in their entirety, for reasons of history, convenience, or legal constraints. So we see a growing number of companies creating a global ‘virtual headquarters,’ in which vision-setting and -coordinating activities and centres of excellence are placed in different areas around the world: global procurement may be located in a geography quite different from that of, say, global talent. Thus companies can move headquarters activities closer to high-priority markets without having to shut up the home headquarters.

For instance, ABB has shifted the global base of its robotics business from Detroit to Shanghai, where it has built a robotics R&D centre and production line in response to expected demand for robots in Asia. Other firms are going for a split centre, with a site in a mature market and another in an emerging one. US technology company Dell, for instance, has set up a functional headquarters in Singapore in pursuit of greater financial, operational, and tax efficiency. The US oil and gas company Halliburton created a second headquarters, in Dubai, to speed up decision making by putting it closer to major customers. Who should staff the lighter corporate centre? To cross-pollinate ideas and knowledge, a headquarters ideally needs to attract but not retain talent. Picture

it as the beating heart of the organization, pumping high-potential staff to and from the business units and replenishing each person with the oxygen of learning. Given the right HR mechanisms, a headquarters could do without any permanent staff except the CEO and his or her direct reports; other executives could have fixed-term appointments and then return to a business unit or function. The diversity of the corporate centre’s constant flow of staff would then naturally reflect a company’s international reach and strengths.

Coordinating communication Having the right structures and processes to enable growth and reduce

Technology as friend or foe? Inexpensive electronic and voice com-

munications, video-conferencing, technology-enabled workflows, and, most recently, social-networking technologies have transformed connectivity and knowledge sharing within complex global organizations. Aditya Birla’s HR Director, Santrupt Misra, says, “Our use of ICT [Information and Communications Technology] has really helped us become global. For example, we acquired Colombian Chemicals six months ago, and the first thing we established is, connectivity between them and our locations elsewhere so they have access to our portal, our knowledge, our e-learning, and every other support.” The company puts out regular live webcast aimed at all employees and their families. It also makes all internal vacancies visible to all employees, to foster the sense of belonging to a community that is local and global at the same time. Similarly, IBM’s internal Beehive Web site helps employees to connect with peers they meet on interdepartmental projects or meetings, to brainstorm for current and new projects, and to approach higher-ranking people

they wouldn’t normally have contact with to share ideas and ask for advice. Yet fewer than one-third of the more than 300 global executives we surveyed and interviewed believed that their companies were getting the most out of information and communications technology. For all its benefits, it sometimes creates challenges such as the following. Exacerbating pressure: A senior executive at one company’s central site in China says he regularly works a “second shift” on conference calls when he should be asleep — not good for him or the company in the long term. Jesse Wu, Worldwide Chairman of Johnson & Johnson’s consumer group, observes, “Many people in New York like to have global calls on a Friday morning, so they can get everything clear before the weekend. However, that’s Friday evening in Asia, thus unnecessarily affecting a colleague’s family life on the other side of the world.” Company leaders have to model the time zone sensitivity on which a healthy global organisation depends. Locking in complexity: Computerised forms can instantly standardise a process

around the world, but once that process is locked in, technology can make changing it complicated and expensive. One global retailer, for example, generated significant value by standardising supply chain processes in its home market and then adapted and extended the system to its operations overseas. Whenever overseas operations wanted to tweak their local procedures, a change to the global IT system was involved, making such small but necessary changes very costly. Elevating issues indiscriminately: One leader of a global company based in an emerging market notes: “With the growth of ICT, we have become more headquarters-centric. This hasn’t been a deliberate policy; it’s just that people in the distant territories have found ICT an easy way to kick the ball upstairs.”While these are avoidable problems, they underscore the fact that technology is not a panacea for companies facing organisational challenges. Rather, its creative deployment should reinforce — and be supported by — a company’s organisational design. j u ly 2 0 1 2

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insight One oil company used a social-network analysis to target improved communication between field workers and technical experts. AN oil company used a social-network analysis to target improved communication between field workers and technical experts Social-network analysis at a major oil and gas company Before

Angola

After

Brazil

Canada

Gulf of Mexico

Nigeria

Saudi Arabia

United Kingdom

complexity is a triumph in itself. But even the best-structured organisation with the most carefully designed processes may falter without the right linkages between them. By the same token, two-thirds of the executives at global companies we recently surveyed said that their ability to create internal links was a source of strength. To get the best from modern communications and a global network of contacts, managers should focus on their communication, both regular and intermittent, on contacts that really matter to their jobs. Leaders can help by making it easier for their people to forge the kind of web-based connections and communities of interest that spread knowledge quickly. But they also must protect managers from the need to spend a lot of time in conversations and meetings where agendas and decision rights are so hazy that they can’t get their jobs done.

analysis, which map the frequency and effectiveness of communication; and employee surveys that review connections among a company’s major business, functional, and geographic units to find out why they’re sharing information, the importance of the information they get to meeting their performance or strategic goals, and how effectively they share it. Leaders of a global oil and gas company, for example, understood that operations personnel weren’t sharing

Taking stock

best practices well, because a quick review showed that the company had dozens of ways to operate a given rig. Managers also knew that workers facing problems in the field (such as equipment breakages or uncertainty about the local terrain) didn’t know

Understanding the number and value of the communications that managers participate in is a first step in finding the sweet spot. A variety of tools are available to help. They include interviews with employees; social-network 52

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how to get expert help quickly and effectively. A social-network analysis of how information flowed between field workers and technical experts identified three problems. First, field workers tended to reach out only to those technical experts with whom they had strong personal relationships. Also, experts did not reach out unasked to field workers to share best practices. Finally, only when staff moved between sites—as when a group went from Angola to the Gulf of Mexico—did field workers from different sites share best practices among themselves.

Strengthening the right connections Once people understand the number and nature of their connections and communications, they can decide which to drop, keep, or add. In companies where a lot of people seem to lose time on too many linkages, the leaders’ reflex response is often to clarify links by changing the structure—for example, adding reporting lines or new dimensions to the organisational matrix. But these make the organisation more complex and costly to manage; dual reporting lines will almost certainly double an executive’s administrative burden, to

Better solutions can come from considering a wider range of linkage mechanisms, their purposes and what must be in place take only the most obvious example. Better solutions can come from considering a wider range of linkage mechanisms, their different strategic purposes, and what must be in place to make them work. For example, coaching or mentoring links transfer knowledge across

insight an organisation and build future leaders. They require strong, personal, and frequent interactions based on trust. Other knowledge transfer connections, such as those for sharing documents, can be weaker, impersonal, and less frequent. Although these kinds of relationships deliver important gains, they do not have to be formally enshrined in a structure or process. If people have too few contacts (as at the oil company) or contacts in the wrong places, managers with a particular area of responsibility will have to identify who needs knowledge in that area, who has it, and how best to connect them. One way companies can foster strong personal ties is to designate someone to nurture them until they flourish unaided. When researchers analysed social networks and e-mails among teams developing aerodynamic components for Formula 1 racing cars, they found that teams that

designated someone to keep in touch with peers working on related products across geographies were 20 percent more productive than teams whose managers interacted less often. The oil company above transferred some field workers to peer teams elsewhere. That move forged global connections and expanded the collective expertise on which each field worker could draw. New networks blossomed (exhibit) and quickly showed results: within a year, productivity rose by 10 per cent, while costs related to poor quality fell by twothirds. Structure, processes, and linkages are interrelated: it’s easier to avoid duplication in organisational structures when a company gets the balance right among global, regional, and local processes—and vice versa. Clear structures and processes also clarify roles, helping to focus communications, while structure and process problems can under-

mine the effectiveness of managers’ global networks and communications. Focusing on some of the points where structure, processes, and communications intersect, and engaging all the stakeholders involved to work on those critical junctions, can release benefits that ripple across organisations.

Toby Gibbs and Suzanne Heywood are principals in McKinsey’s London office; Leigh Weiss is a senior expert in the Boston office. The authors would like to acknowledge the contributions of Gregor Jost and Roni Katz to the development of this article. This article was originally published in McKinsey Quarterly, www.mckinseyquarterly.com. Copyright (c) 2012 McKinsey & Company. All rights reserved. Reprinted by permission.

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leader’s

world

Dealing withDifficult

People Work on team goals, ensure you are not a hurdle, discuss differences in private and leave your ego at home if you have to win over a difficult colleague or situation David Lim

ABOUT THE AUTHOR David Lim, Founder, Everest Motivation Team, is a leadership and negotiation coach, best-selling author and two-time Mt Everest expedition leader. He can be reached at his blog http:// theasiannegotiator. wordpress.com, or david@everestmotivation.com

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You may know this person, they are demanding, want things done yesterday, and on occasion can be totally uncooperative and sneaky. Often, they take the credit for your work. This could be your boss, your peer or just another colleague with whom you work with. Many times off and on the mountain, I have asked myself what I should do with such people. Dealing with difficult people is a perennial work-life challenge. If you Google the phrase, more than 10 million references pop up. One time on a mountain, one of my team-mates with whom I had not been on a long trip together, kept constantly ‘stirring the pot’ – making fun of everyone and anything to the point that he became an annoyance rather than an asset. If you climbed too fast, he would keep referring to you as a ‘show off’. Climb too slow, and he will make fun of you as the ‘slow coach’. People, in general, are not meant to spend a long time together under stress; so in that vein, people who moan about ‘difficult people’ at the workplace have it good, compared to those on a long sailing or climbing trip. In my limited experience, I have found these methods in dealing with people who irritate me, to be successful:

Clarity of Team Goals: If you have to work with this person, having clarity, or compelling the key stakeholder to have clarity about the goal is essential. Methods,

leader’s world pathways and approaches may change, but so long as there is clarity about the goal, you can adjust to differences in tactics and techniques in getting there together. However, if the goal is unclear, it’s difficult to accept a personality and attitude that clashes with your own because you don’t know if the effort to adapt to this person actually helps the team reach the goal

Work on Yourself First: We see our world though our own unique filters, biases and contextual cues. Very often, a ‘difficult’ person might be because he/she might have come from another organization where he or she may have been conditioned to behave very differently from us in order to achieve a goal we both want. In discussion, use ‘I’, rather than ‘you’. So, for example, say “I am having problems delivering this task” or “ I am frustrated that we are unable to agree on this”—rather than “You are always disagreeing”. It is worthwhile to take a step back to do a personal audit: are you taking yourself too seriously? Is this person’s behaviour truly difficult, or just your own perception? Consider the context in which this person works. For example, getting grumpy replies from finance staff might be linked to your requests coming in at the busiest time of the month.

“It’s infinitely better to discuss differences privately where neither of you might be tempted to pander to an audience to win support...”

Work on the Issues, not the Person: A few days ago, my wife used my technique when frustrated with a difficult person on a helpline. She said, “I am not angry at you, I am angry at the situation,”—knowing full well that sometimes, people do not deserve to bear our anger personally. Discuss your differences in private: It’s infinitely better to discuss differences privately where neither of you might be tempted to pander to an audience to win support, score ego points, or disclose something rather private Have courage: When all the counselling, coaching and other means fail to make a ‘difficult’ person behave in a less toxic fashion, and that behaviour is against the team’s efforts in a reaching the goal, have courage to fire them. Understand that some perfectly competent people may lack ‘self-regulation’—a key component to getting along with others. Classic telltales signs at the recruitment stage could be an absence of testimonials, or a high turnover in jobs in recent years by that individual. As I have said before, if all else fails to work, either you leave, they leave or you fire them—for the greater good

Don’t take things too personally: Often a thoughtless, unkind throwaway line from a ‘difficult’ person has been long forgotten—at least by them. But you still harbour ill-will for hours , days or weeks. Ultimately, ask yourself what really matters, and if these ‘hurts’ are simply self-inflicted. In the 1970s, an ace American climbing team headed by two famous climbers, the Whittaker brothers, Jim and Lou, went to attempt to climb K2 in Pakistan. As if the fearsome mountain challenge was not enough, the group broke up into sub-groups that hated each other to the point that one member wrote in his diary that Lou “should end up with an ice axe in the back of his head or a bullet between his eyes.” Incidentally, my team member who was proving to be difficult to deal with in the end was merely behaving in a very ‘British’ fashion—where he was accustomed to make fun of many things. I soon realised that I should relax a bit more, and respond in a similar fashion. I gave him some of his own medicine—which he lapped up. Ultimately, it was a successful expedition. But yes, there were times when I was tempted to use my ice-axe….

David Lim is a Leadership and negotiation coach. Learn more from his blog http://theasiannegotiator. wordpress.com. Email: david@everestmotivation.com J u ly 2 0 1 2

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Lounge

07.12

CFO

We test drive the lean, mean Mercedes C63 AMG this month for all of you looking to acquire a new car. This is also the season of rain and romance. So head out to God’s own country - Kerala for a relaxing break. Don’t forget to buy a new camera before you head out. Read about the Sony Aplha 77 camera that we recommend. Enjoy!

Mercedes Benz C63 AMG

A Bloodhound tamed

The C63 AMG is exhilaratingly savage, yet so predictably sure-footed you can’t help but liken it to a wild bloodhound which listens only to its master Amit Chhangani After driving the quintessential MercedesBenz salon in the E350 CDI last month, we managed to get our hands on a car with a pair of vampire fangs jutting out of its mouth. We drove the C63 AMG, the mental, track tuned version of the C-class meant to maraud corners and give the smug guy in that red supercar the shock of his life as you pass him.

THE FEEL Turn the ignition on, press the right pedal just that wee bit and this baby would play one of the most melodious tunes for you. The sound coming out of that 6.3 litre engine naturally aspirated V8 is decidedly one of the most exhilarating sounds your ears would hear within a

DID YOU

KNOW?

The Mercedes C63 AMG Coupe Black Series made its world debut at the Formula 1 German Grand Prix in Nürburgring in 2012. Sales in the US market began in early 2012

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on Wheels car’s cabin. There are more than 450 horses under that bonnet waiting to be taken charge of, leashed by the AMG SPEEDSHIFT MCT 7-speed sports transmission, offering various modes for various driving moods and conditions. You can choose from comfort (really?), Sport (nah), Manual (am too lazy) and Sport+ (now we’re talking) modes which change the engine response, shift points, suspension tautness and steering feedback to deliver the best experience to the driver. To be frank I did not choose the Sport+ setting as I started off. Tough as you would find it to believe, but I really wanted to shift to the aggressive setting later to fully understand and appreciate the pleasures associated with it. I removed the unique Mercedes parking brake (pressed by left leg to engage, and pulled by right hand to disengage), and coasted out of the M-B facility. Once on the empty road outside, I shoved the right pedal with all my weight. And I felt blessed.

furious acceleration makes your daily driving experience unworthy of a smile on your face

MERCEDES C63 AMG Engine: 6.3 litre, naturally Aspirated Petrol Mileage:

Power:

457PS@

Torque:

600Nm@

6800rpm

PERFORMANCE Given the stick, the C63 knows how to control all those derby chargers with élan. It holds its line even under furious acceleration, and with its tight steering feels like a taut, well put together unit cocooning you in its arms even as you try to hurtle around corners at speed. The acceleration is furious and suddenly makes you understand why your daily driving experience is so unworthy of a smile on your face. It’s really an engaging, enthralling, and intoxicating sports car. Not that I was not having fun, but I finally decided to put it in the S+ mode, and I can’t begin to explain how much it changed the character of the car. The tacho needle which was dropping down after kissing the 3000-3500 mark on the tacho every time I accelerated, suddenly decided it’s going to keep climbing up until

it reaches the summit at 5500-6000 rpm. Absolutely thrilling! On the move, in the Sport+ mode, all that Price: `80 lakh power beneath that rather unassuming face of a slightly (Ex-showroom) modded C-class is looking for the slightest chance to overwhelm the wheels. If you are charging hard, the Positives slightest spec of dust will be attacked by the tyres in a • Extremely engaging bid to lose traction. All you have to do is turn ESP off. and entertaining Wrangling with the steering wheel to bring the beast • A rare track tool back in line, and turning out victorious gives you a different sort of high, and C63 MG has enough firepower Negatives to keep you busy the whole day if you so wish. • Not visually as 5000rpm

appealing as some of the other supercars • Expensive VERDICT If you have the moolah and if you can handle speed, this is what you want

TO BUY OR... We didn’t quite carry our testing gear along, nor did we have a racetrack to really adjudge the car in detail on its handling or performance merit. I have driven a few other AMGs as well, but I have always loved this car, the C63AMG, the most of the entire lot. If I had to adjudge all the AMG cars on their performance and handling merits, this one would be my weapon of choice. Given a choice, I would any day take the C63 to a racetrack. It’s a beautiful, beautiful machine! It’s a feral canine, this thing – but wouldn’t as much as woof without its master’s intent. j u ly 2 0 1 2

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Gizmos new launches

Sharp LC-90LE745U

Hot Spot

Sony Alpha 77 Sony’s latest frame-buster Swapnil Mathur

Sony’s DSLRs have always had a rocky start, however, the Alpha 77 is a different story. There are several major innovations that make the Alpha 77 a mighty impressive APC-DSLR. It is the first crop-sensor camera to incorporate a 24.3 megapixel sensor, the highest pixel density in a crop sensor at release. One would think that a crop sensor that big would experience issues with noise at high ISO, but Sony’s technical know-how has been put to good use as the A77 handles noise extremely well. The second achievement that the Sony A77 boasts of is the ridiculously fast 12 frames per second it can shoot thanks to Sony’s translucent mirror technology. The light goes right through the translucent mirror and onto the sensor, allowing for faster frames per second. The drawback of this, however, is a dimmer than normal viewfinder, which Sony countered by packing in an electronic view finder. The EVF is capable of displaying a host of information, including a level gauge. 60

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Coming to image quality, we found the colors of the A77 to be rich, though the green seemed to be a little on the stronger side. The 24 MP images are exquisitely full of detail. Video shot on the A77 also shares the same characteristics The Sony A77 has been with ruggedness in mind, thanks to water and dust seals present all around the camera. Also included is a three-way tilt-swivel articulated LCD, designed to help film makers get into those weird corners they’ve always fantasized shooting from. The A77 is all yours for a price of 69,999 for body only or 99,999 with the 16-105 lens, but we recommend buying body only along with better lenses. Specifications: Sensor: 24.3MP APS-C Exmor HD CMOS; Bust rate: 12 fps; ISO Range: 100 - 16000; Shutter Speed: 1/8000 to 30 secs Price: 69,999 (body only), 99,999 (Body + 16-105mm lens)

Sharp recently released what is probably one of the world’s largest LED TV. The 90-inch behemoth is not short on features, either. There is Sharp’s SmartTV system for surfing the net and streaming movies, built-in Skype, and, above all, its 3D enabled. Yours for 11k. Dollars, that is.

Nokia 808 PureView Nokia rolled out the eagerly anticipated 808 PureView. Sporting the world’s highest resolution phone camera at a rating of 41MP. Then, there’s NFC, 1080p video, and CD quality audio recording. The price-tag currently stands at `33,899.

Sony’s SmartWatch Curiously similar to the Kickstarter project Peble, Sony’s ‘SmartWatch’ hit the Indian shores in June. It promises to tell you the time, alert you of new messages, and provide Twitter and Facebook control. At `6299, it’s among the most affordable of luxuries.

ad Re Y st OG Mo L E ’s NO ZIN dia CH GA In TE MA

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M&E

INDIA’S COOLEST MEETING & EATING PLACES

A GRAND EXPERIENCE

A decadent spa package, conferencing facilities and great food – all at the ITC Grand Central in Mumbai Dhiman Chattopadhyay Mumbai looks pretty, especially if you are sipping single malt on an open terrace on the 30th floor of a hotel that offers a 360 degree view of the metropolis. The ITC Grand Central in the heart of Mumbai is a great place to not just hold a conference or catch for a business lunch, but probably an equally great place to take your family and indulge in a sinfully relaxing weekend. The big thing right now is the Spa Luxury Package exclusively designed for the discerning business traveller to up-

ITC GRAND CENTRAL Location: Parel, Mumbai USP: Large ballroom, varied and good food special packages for business travellers Reservations: www.itchotels.in The Kaya Kalp special package is @ `11999+applicable taxes per night. Offer is on till September 30, 2012

The spa luxury package offers complimentary usage of the boardroom of upto three hours

grade his business. The offer includes a room and breakfast for two adults at Towers (a high room category), a complimentary signature Kaya Kalp massage (one guest per room), exclusive access to the Point of View lounge (during 6 - 8 pm, you are pampered with signature cocktails and hors d’ oeuvres’), round the clock butler service, complimentary internet usage and even the complimentary use of the boardroom for up to three hours. After checking in on Friday afternoon, we headed to Kebabs & Kurries – the specialty Indian restaurant of the hotel. One word of warning though: this is serious high calories tuff. The food is great, so the art is to know when to stop! Dinner was at Shanghai Club – the Chinese restaurant which I would rate higher that K&K. Maybe because I prefer oriental cuisine to the high-onoil-and-ghee Indian cuisine! The sinful weekend continued the next morning with a signature Kaya Kalp massage (chances are you will fall asleep during it) and a lavish breakfast at Hornby’s Pavilion. The high point for me though was the hour we spent late on Friday evening at Point of View. This split-level lounge offers a breathtaking view of the city and the sea. Back to business, we found out that the hotel’s ballroom is pretty large at 450 sq m and can accommodate 500 people for cocktails and nearly 90 executives in a ‘U’ shaped setting. Wii is free for 30 minutes everyday for these guests, so it’s a pretty much win-win situation. Now you know where to hold that weekend conference where you can take your family too! j u ly 2 0 1 2

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travel

kerala

A Malabar Monsoon As the clouds get darker and they soak the earth and providing the much needed relief, this season, head to Kerala to celebrate the monsoons Anil Mulchandani THOUGH THE NORTHERN districts of Kerala are not as celebrated as the backwaters and hill stations of central Kerala or the beaches of southern Kerala, they surely are a visual treat! To explore these regions, we took the flight to Kozhikode and hired a cab to reach Kalpetta in the Wayanad district, in the northeast corner of Kerala. After running along backwaters and crossing rivers, the road ascended the Western Ghats with scenic views of the forested hills above the valley below. After Ladikki which is considered the gateway to Wayanad district, the road enfolded dramatic sceneries of the misty mountains rising through dense forests to angular grassy summits, neatly laid out tea, coffee, spice and paddy plantations, and green meadows. We then took our route ahead and reached Kalpetta, a crowded township with little to comment, but Green Gates â&#x20AC;&#x201C; where we chose to stay was a saving grace as it was had lush grounds to unwind. After lunch, we drove to Soochipara fall, one has to walk through rolling grasslands and tall trees to get a view of these spectacular waterfalls. A guide from the hotel told us that on a clear day it is possible to get a good view of the Chembra Hill which is about 2100 m above the sea level while approaching the falls. The following morning, we hired a jeep for the Wyaanad Sanctuary. We drove first to 62

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the Mutunga forests, near the historic town of Sultanâ&#x20AC;&#x2122;s Bathery. Despite the heavy rains, the driving trail was in an excellent condition. As we drove ahead, the road curved through the forest, we saw a huge tusker on the side of the road. He came forward and charged towards us trumpeting loudly. Our driver kept his cool, and drove away to a safe distance. After lunch, we drove Tholpetty which is the entrance to the northern side of the Wyaanad Sanctuary. Our guide had

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travel the road enfolded dramatic sceneries of the misty mountains rising through dense forests to angular grassy summits, neatly laid out tea, coffee, spice and paddy plantations, and green meadows

Dinesh Shukla

After running along backwaters and crossing rivers, the road ascended the Western Ghats with scenic views of the forested hills above the valley below

great spotting skills, he showed us three elephants hiding in the woods, spurfowl skulking in the bushes and a family of jungle fowl. From Kalpetta, we drove back in the morning to the coastal plains of Kerala and proceeded to Thalesseri or Tellichery, a seaside town with a British fort and other colonial buildings. We checked-in at the Ayisha Manzil, an enormous mansion of a Mappila Muslim business family. One of the highlights of this house, apart from the colossal rooms and their historical flavour, is the cuisine â&#x20AC;&#x201C; Faiza Moosa makes delectable dishes from the Mappila or Moplah tradition. We tucked into mussels, meat dishes and flavoursome biryani.

At the crack of the dawn next day, we started for Kannur which is known for its textile weavers, cooperatives and medieval coastal fort. We were here for the Teyyam dance which is a spiritual possession ritual, featuring colorfully costumed performers and depicting fascinating folk tales, performed in select temples. At the Parsinnadukavu Temple, the Teyyam is a ritual enactment of Sree Muthappan, considered to be a manifestation of an integrated or unified form of Vishnu (with a fish-shaped crown) and Shiva (with a crescent-shaped crown). People of all castes, religions and nationalities are permitted to enter the temple and take part in the worship of this incarnation of Lord Shiva, during which fish is offered. After the ritualistic dance at the temple, we continued north to the Bekal Fort, one of the largest forts in Kerala covering about 40 acre. The fort has an impressive location facing the sea, while within the walls are a water-tank with a flight of steps leading to it, the magazine for keeping ammunition and the Observation Tower which is noteworthy for its broad stairway. HOW TO GET THERE: Fly to Kozhikode. WHERE TO STAY: There are some interesting family-run properties like Tranquil in a spice plantation of Wayanad, Pachyderm Palace near Tholpetty, Hari Vihar in Kozhikode, Ayisha Manzil at Thalesseri and Costa Malabari near Kannur. Vythri in Wayanad has excellent resorts and eco-properties. Vivanta by Taj Bekal and The Lalit Resort and Spa are luxury resorts to chill along the North Kerala coast. J U LY 2 0 1 2

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not just

the last word

Guilty: till proven innocent

he saga of scams that began some years ago doesn’t seem to end. And they are dragging into their wake the most unexpected cast of characters - from senior political leaders to blue-blooded corporate ones. Is it possible to predict events in your professional future? How scary is it to be a CFO in this environment? Very scary! And I believe it will get worse before it gets better. Here’s why. Feeding the growth bias: The dynamism of the business environment makes everything uncertain and unpredictable. A growth bias demands speed, which is often at conflict with ‘due’ process. As a part of the senior management, CFOs are expected to use their judgment to take some business risks and make trade-offs to ‘partner’ their businesses. The accompanying exposure can lead to the ‘grey zone’. Regulations and regulators: With every adverse event, regulations become more stringent making them incongruous with a ‘speedy’ environment. Simultaneously, in some quarters of the economy, regulations are eased up with a view to being progressive and flexible to boost growth. However, this laxity in regulation is accompanied by much greater stringency in the regulator. World-over, regulators are trained to view individuals and organisations with suspicion – assuming the worst possi64

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ble intentions from them. And given the economic conditions and the pressure to deliver ‘inclusive growth’, I suspect the bias will remain. Insider trading: In the limelight for its role in Wall Street’s meltdown in recent years, this is one of the most difficult issues that CFOs have to grapple with. Beginning with ambiguity in definition to vindictive pursuit by the lawmakers and the desire to make an example out of successful individuals, the nuances are endless. The US has brought cases against 66 traders and their sources from Wall Street to Silicon Valley. There have been 63 convictions and six cases are pending. The most recent involving the iconic Rajat Gupta suggests that circumstantial evidence is good enough! Where must you draw the line? Distributed web of stakeholders: Businesses today collaborate instead of compete. And therefore, their asso-

ciations are widespread – from directors and promoters to vendors, banks and employees. The compliance and governance code needs to be adhered to not just within the company but also amongst your associates. Technology: It is all-pervasive and makes the discovery of every mistake or misdeed possible – now or later. Management gurus suggest that it is all about having the right context. But legal matters believe in absolutes. So being quoted piecemeal and out of context could land you in prison. Going forward, there will be more regulations and stricter penalties for violations. Regulators and the media will treat you as guilty till you can prove your innocence. And proving your innocence in an uncharitable environment will be tough. I suspect that the risks of being at work will be high and if you do something then you could do something ‘wrong’. You may be tempted to mimic the Government and do nothing at all, since no behaviour can ensure safety. What do you think? I sincerely wish you luck and I wish you safety. Anuradha Das Mathur, Editor, CFO India

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