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BW Businessworld

Is Media Aiding Early Resolution Of Corporate Spats?

The recent months have seen two of India’s most respected corporates, the Tata Group and Infosys take to the media to draw stakeholders’ attention to internal governance issues and concerns. In both cases, the people involved were industry stalwarts, who are seasoned professionals with decades of experience and have weathered many storms. What then made these respected industry stalwarts expose serious internal issues through the media, rather than sorting them out through internal communication and discussion?

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The recent months have seen two of India’s most respected corporates, the Tata Group and Infosys take to the media to draw stakeholders’ attention to internal governance issues and concerns. In both cases, the people involved were industry stalwarts, who are seasoned professionals with decades of experience and have weathered many storms. What then made these respected industry stalwarts expose serious internal issues through the media, rather than sorting them out through internal communication and discussion?

In the Ratan Tata-Cyrus Mistry ouster case, the Tata Sons’ board raised questions on the way the business was run and decisions taken. A lot of negative information was shared by both parties through front page stories in newspapers and prime time coverage on TV channels. Likewise, in the Infosys promoter group, led by N.R. Narayana Murthy, vs. CEO and board, issues pertaining to huge compensation to executives, acquisition strategy and appointment of independent directors were raised with the board. The promoter group claimed that the high governance standards of Infosys had been compromised.

In both cases, the persons who initiated the action, i.e Ratan Tata and Narayana Murthy, enjoy enormous brand equity, having steered their blue chip organisations to growth and success, along with demonstrating high levels of corporate social responsibility. On the other hand, Cyrus Mistry and Vishal Sikka, both very successful professionals with a proven track record, were relatively new to the respective companies. While the Tata-Mistry spat initially hit media because of the unceremonious removal of Cyrus Mistry as chairman of Tata Sons through a press release announcement, it developed into a full-fledged media battle with both sides proactively sharing information with the media that was not in the public domain, justifying their role and stand on the issue.

In the Infosys case, Narayana Murthy proactively exposed through media interviews, what he claimed as internal governance lapses at Infosys. He openly expressed unhappiness with the functioning of the board.

But isn’t effective internal and external communication one of the hallmarks of good corporate governance? Why then was it not possible for the Tata Sons board to have Cyrus Mistry resign and move out gracefully or the Infosys board to keep the promoter group informed of key decisions? Why did communication break down so hopelessly that both leaders had to go public with inside information?

Media splashes like the above, take internal and external stakeholders of the companies by surprise, leaving them confused, and disappointed. What then makes these respected industry stalwarts expose serious internal issues through the media, rather than sorting them out through internal communication and discussions?

Corporate Audience Bigger Than Immediate Stakeholders
Media, both print and television, have always played an important role in influencing people on important issues by sharing perspectives and analysis from experts, thus helping them to form their opinion. However, the emergence and growing popularity and usage of social media platforms such as Facebook, LinkedIn and Twitter, has made the universe of any corporate larger than its immediate stakeholders. Twitter has given 140 characters to everyone to express their views. Depending on the content — insightful, humorous, sarcastic or plain nasty — and who the sender is, the message gets amplified and can reach millions in no time. They in turn tweet their own reactions. And a huge buzz is created online!

The Need To Communicate Rationale And Maintain Personal Equity
The key people involved in the two episodes are themselves brands of stature. There are many who attribute the actions of Tata and Murthy to their desire to still be involved in key decisions and not let go of their control completely. But I think they wanted the rationale of their actions to be understood and perceived in a positive light, so their individual equity did not get diminished.

Reaching Out To Shareholders And Speeding Up Resolution

The combination of front page stories, prime time television and dominating online conversations, play a big role in reaching out to shareholders and getting their much needed support for the respective corporates, in keeping the brand equity of the business leaders intact and speeding up the conflict resolution.

While the issues were handled differently at each company, they saw an early resolution aided by the huge media exposure that galvanised public opinion. At Tata Sons, the succession has been smooth, and the other contentious issues that were exposed in the media are being worked on. The Infosys board too was quick to address the issues raised by the promoter group.

As I write this article, one more corporate spat, though not as high profile has hit the media — the ShopClues family feud, between founder Sandeep Agarwal and his estranged wife Radhika Agarwal who leads the company with Sanjay Sethi as co-founder. The ShopClues board has openly supported the leadership of Radhika Agarwal and Sanjay Sethi. Are we seeing a trend here?

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


Veena Gidwani

The author is a Strategic PR consultant, board director and former CEO of Madison PR

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