On January 7, 2009, early in the morning, Ramalinga Raju of Satyam confessed to his monumental fraud in a letter to the stock exchanges. He said in the letter that he had cooked the company’s accounts and inflated the numbers for seven long years. The Satyam stock tanked. But that was not the main concern. Satyam, after all, was a blue-chip information technology company. If the company imploded, close to 50,000 people would be jobless. The biggest Indian accounting fraud of all times threatened to drown the entire information technology sector with it. Elections were round the corner. New Delhi had to move fast and, more important, be seen as moving fast. To its credit, the government did act with unusual speed: Raju was arrested, a new board was appointed to run the company, clients were assured that the delivery capabilities of Satyam had not been dented by the controversy and a transparent mechanism was put in place to sell the company. Within months, Tech Mahindra had bought the company.
But that, perhaps, is not the full story of how Satyam was put on track. Behind the scenes, away from the media glare, a large bunch of people worked hard to keep the show running. These people ensured that the top talent did not desert Satyam. For this it was essential to disseminate information regularly to employees, ensure that salaries are paid on time and morale did not dip.
When the crisis broke out, Priscilla Nelson was the global director of people leadership at Satyam, and Ed Cohen, her husband, was the chief learning officer. Like everybody else, they were shell-shocked with Raju’s confession. But there was a job to be done. Immediately, they brought together all the leaders from the learning ecosystem of Satyam. Since the company’s leadership team was scattered around the world, the meetings were held on video. Thus began the process of selecting essential services to continue, new services that were necessary and services that could be curtailed. They called it the “Lights On” plan. The company had fallen from the top to the bottom of the heap. Resources, in a flash, had become scarce. The priorities had to be set.
The day after Raju confessed, this team went live with an open communication plan for all the employees of the company — well over 50,000 at that time. Employees were encouraged to say how they felt when they heard the news and how they communicated it to family and friends. Instead of closing its doors, which would have bred uncertainty and insecurity, this helped in letting off the steam. People knew that no secrets were being held from them, and that all were on the same boat. In information technology, people are the real assets of a company. This helped form cohesion across geographies.
It is worth noting that when the Satyam School of Leadership was formed, the company did not have a core set of values. Nelson and Cohen met Raju and emphasised the need for such a statement. To their surprise, instead of coming out with a new formula, rooted in traditional Indian thinking, Raju asked them to stick to AICS, or associates, investors, customers and society. Though Raju managed to hoodwink all of them for seven years, the priority list came in handy during the crisis. Ultimately, Satyam was saved from implosion by its employees.
The next stop was morale workshops. Employees were put in clusters. They were encouraged to give their views as employees (fears, apprehensions, etc.), consultants (how would they want Satyam to move) and the chief executive (what can be done). How this helped was that it made employees stakeholders in the revival of the company. The suggestions made by them were passed on to the higher authorities. It is quite possible that some of these suggestions were implemented.
When the scandal came to light, there was a dilemma facing the company’s leadership team. Nobody was sure if the company would be closed, sold or allowed to function on its own. This meant there were no clearly defined targets. Towards what goals should the managers function? The problem, it seems, was solved by asking the managers to work as if nothing had happened, against all odds. This is important. The stress that can hit the management of a company that is under the lens for a fraud can become unimaginable. A lot of people are unable to take that stress. Thus, it is important that clear goals be set for them, and their work be clearly articulated.
Riding the Tiger is more than the inside story of Satyam. It is meant to be a guide to crisis management. In its absence, the management of the company can get paralysed. That is when the company goes into a tailspin. Most companies and consultants have a manual on crisis management ready at all times. There is no shortage of advice on the subject. The issue is how many companies can put it into practice when crisis strikes? Unfortunately, there aren’t too many examples of successful crisis management around. Satyam, of course, is a shining example of how to do it right. In a couple of years, it will be out of the red. By then, hopefully, it will get merged with its parent Tech Mahindra.
Another example that springs to mind is Cadbury. The country’s largest maker of chocolate was hit when worms were found in its products. The company responded by improving the packaging and launching an advertisement campaign with Amitabh Bachchan. Within no time, its sales were back on track.
Also Read
RIDING THE TIGER
LEADING THROUGH LEARNING IN TROUBLED TIMES
Priscilla Nelson and Ed Cohen
Cengage Learning India Pvt Ltd
173 pages