Sunday, May 01, 2011

New chairman at Infosys

Excuse me, but I am at a loss to comprehend the hoopla over the appointment of a new chairman at Infosys.

Media analysts asks whether this will make Infosys more aggressive, raise the bar at the company, etc. These questions are somewhat inappropriate once you grasp the following:
  • K V Kamath is supposed to be a non-executive chairman
  • There is also an executive co-chairman in Kris Gopalakrishnan.
  • NRN does not exit the firm, he stays on as Emeritus Chairman
It is not for a non-executive chairman to make a company more aggressive or even to define its direction. That is the CEO's role. The chairman is responsible only for governance: he has to ensure that the CEO is held accountable for objectives that he proposes and that the board agrees to. For Kamath to attempt anything more would amount to overstepping his role. Kamath himself was candid on this subject in response to questions posed to him yesterday after the board meeting. He said he thought Infosys was quite aggressive at it was and he would be happy to keep pace with it. That is the right spirit.

All the excitement over the appointment of a new chairman would have been merited only if governance was an issue at Infosys; that is hardly the case. So the appointment of a new chairman should have been a non-event. Companies appoint search committees to locate a CEO. Have you heard of committees making the effort for finding a chairman? For that matter, has the appointment of a chairman at any company generated such publicity?

If the CEO is to be given any direction, the primary responsibility will be that of executive co-chairman. Note also that NRN is very much around. One of the papers (BS) reported a few days ago that even as non-executive chairman, NRN had the last word on most matters, that all cheques of over Rs 5 lakh had to be signed by him and that he made it a point to meet heads of businesses regularly as non-executive chairman. It remains to be see whether he completely distances himself from the firm as emeritus chairman. It is fair to suggest that, had he wanted to do so, NRN would have exited the firm.


Anonymous said...

There is no hoopla sir. Media needs story to run and with the quantity of media outlets we have everything is a hoopla. Companies like infosys are cancers of tech industry destroying generations of otherwise talented professionals. Well you might say as long as it provides employment how does it matter... true to an extent, Indians always held themselves in low esteem.

Anonymous said...

It is the first time that any Company would be having so many Chairmen - NEC,CE and ECC. Board is required to split the roles of Governance & Management; Chairman heads Governance and MD/CEO heads Management. It would be interesting to see the equation among three Chairmen head hunting with the subject "Governance".

Clause A.2 of Combine Code (UK) do mandate for Chairman and MD to be separate individuals; but splitting the role of Chairman even further, has its own surmises & hunches of Board effectiveness.

NRN did mentioned to a press question that he won't be devoting a single day to Infosys, unless his advice is demanded. Does this mean that he won't be attending any of the Board Meetings???

And I doubt whether NRN's involvement in the Company will vary with mere change in the title...for an amateur NRN will continue to be a metaphor of Infosys.

asanandan said...

welcome sir..