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BW Businessworld

Analysis: Defensive Positions

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This case uses the dilemma of Ranbeer Singh to bring out an issue which more often than not is brushed under the carpet — executive harassment in the corporate world. This is not only more rampant than commonly believed, but also afflicts MNCs besides the owner-managed companies. The recent public fracas at Reebok India is perhaps a timely illustration. Even the celebrated James Murdoch case is an example of where initially the executives had to take the rap for owner decisions.

With the advent of professional management as distinct from ownership, it is commonly assumed that owners and managers are working together as one. This is not necessarily true. As Ranbeer's situation demonstrates, not only is there an alignment failure between owners and managers, there is also an adversarial relation driven by self-interest. The owner is ready to harass and even file cases against his own senior executives just to cover his own misdeeds.

Such situations are not new to the corporate world. The whole history of trade unions was the outcome of perceived and real harassment of blue collar workers by company owners. The past 30-40 years have brought focus on gender issues and sexual harassment at the workplace. The time has come perhaps to take notice of executive harassment as a real and live issue. 
It is clear that today's company law framework does not provide any recourse or relief to an executive if his own promoters choose to unfairly harass him. However, the issue is not about incorporating a few laws. Identifying frameworks to mitigate such situations requires a balanced understanding of the issues.

On the one hand, executives can find that they are being victimised by the very persons who should have protected them, and on the other, there could be genuine situations where  senior executives have willingly brought trouble to their companies without the owners knowledge. Our solutions for mitigating such situations, therefore, have to be equitable from the perspective of both the executives and the owners.

The solutions may require a combination of one or many of the following approaches.

Contractual refinements during appointments. These can be in many different areas. One could be to necessarily introduce liability insurance as part of appointment contracts. This can cover risks for managers and, if necessary, for owners. Another way could be to pre-appoint a mutually-agreed arbitrator.

The employer reference blog. While the concept of caveat emptor (that is, buyer beware) applies to an executive taking up a new job, today there is no larger forum where an executive can do reference checks on values, processes and practices of a potential employer. A reference site or blog could easily take care of this need. It would be akin to the travel advisory blogs one sees before booking packages or hotels.

The legal framework. This framework needs to borrow heavily from the experiences of the legal sanctity given to gender harassment cases. Starting with creating definitions of harassment, to creation of special courts. I am sure that no executive would mind paying a monthly fee for the running of such courts, so it would not cost the government anything to run these.
 
Strengthening the police. Just as special cells have been created in the police system to understand and deal with dowry cases, cyber crime etc., special cells dealing with executive harassment can also be created. Over time, these will learn to discriminate the real from the frivolous.

Awareness campaigns about executives' rights and liabilities. While the size of the corporate world has grown, awareness of rights and liabilities is rather abysmal. When respected corporate leaders can be fooled by a certain Ramalinga Raju in Satyam, what of the ignorant masses of executives in the corporate world. Just as the Ministry of Corporate Affairs runs campaigns about investor protection and employee protection, it can also run campaigns about executive protection.

Strengthening of ethics committees. Few companies have ethics committees and even fewer run them. Since the new company law is trying to include corporate social responsibility as a mandatory activity, it should also make the running of ethics committees compulsory for companies above a certain size.
 
While these and perhaps some other initiatives can help mitigate the cases of executive harassment, I am sure they won't go away .
 
So what does an executive in Ranbeer's position do? My view  is that he should leave the company without a second thought. Second, he should ensure that he moves the legal system proactively — bail, counter cases, etc. Third, he should formally write to all statutory bodies clearly documenting his dates of joining and leaving and stating his non-involvement in any misdemeanour. When others get dirty, you too have to get dirty.

The author is the managing director of Intrim Business Associates, a consulting firm focusing on strategy and public policy

(This story was published in Businessworld Issue Dated 21-05-2012)