Kanika Datta: Corporations and their 'citizens'

SWOT

Are corporations and their executives mutually exclusive? Or, to extend the question: is there a link between corporate behaviour and executive behaviour?

Much is made these days about how a good corporate reputation is vital to attract "the right talent". Certainly, given the premium that acute competition places on ability, it is critical for companies to be considered great places to work (the growing popularity of this annual survey in India is no coincidence).

The question that is rarely examined is whether "the right talent" has a behavioural fit with the reputation of the corporation. Sure, most companies do the routine background checks on candidates or require employees to sign codes of conduct. But this is a question that goes beyond proforma responses. This is about executive behaviour as a reflection of corporate behaviour. With "corporate citizenship" increasingly coming under scrutiny, both globally and in India, I would argue that this "retro-fitting" is becoming vital too.

This issue was less of a problem in pre-liberalisation India, not because executives behaved better but because no one put a great deal of emphasis on corporate reputation anyway. In those days, private corporations in India "" notably the few multinationals that survived Fera's onslaught "" were extremely restrictive about their hiring policies. Attending a certain school or college, for instance, imbued applicants with a cachet that improved if they were suitably well-connected with the great and the good or the powerful. This helped stock India Inc with a certain uniform corporate caste, but didn't necessarily guarantee good behaviour "" indeed, in the sprawling plantation industries of yore, executive conduct became legendary for its dissoluteness. But in those bad old days when economic policies were inward-looking and competition restricted, this didn't seem to matter a great deal. Chaps who were looking for "discipline" could always join the army, after all.

The great thing about economic liberalisation is that it has forced corporations to look beyond form to substance in their hiring policies. But the extreme focus on performance has willy-nilly forced HR departments to focus on talent and compensation to the exclusion of all else.

Ages ago, when Peter Drucker said corporations do not exist outside of society he meant it in the wider sense of the community and environment. But I would argue that HR departments need to consider the issue in the narrower sense of promoting standards of behaviour internally because these eventually have an impact on the community and environment as well.

Any urban reader will readily identify with the sight of senior executives of large corporations readily breaking traffic rules, littering or mis-behaving in public places (queue-jumping in airports and rude behaviour with waiters appear to be favourites). Yet, once inside their shiny glass and concrete offices, they somehow transform themselves into models of rectitude.

At one level, these appear to be minor transgressions. How does it matter if a brilliant exec of a Fortune 500 subsidiary who delivers on numbers quarter after quarter breaks rules or misbehaves in public?

Others may argue that corporations can scarcely be held responsible for an individual's bad behaviour outside of the office. Still others might point out that behaviour is a product of upbringing and background.

All these explanations are only partially true. As management gurus are coming to recognise the modern corporation exerts just as powerful an influence on an individual as, say, the home environment or a school or university. And the reason it is important for the two to be in synch is that low standards of individual behaviour "" and not just in the C-suite, though this is vital "" have a curious habit of percolating through the corporation.

Of course, most of the time, individual behaviourial transgressions do not matter within the larger corporate dynamic, especially if the company is successful. Implosions like Enron, which seemed to specialise in hiring brilliant, dysfunctional people or Microsoft's anti-trust crisis, the product of collective executive arrogance, are rare examples of an adverse overlap. But consider this: good "corporate citizenship" has become all the rage not least because of the declining reputation of corporations as repositories of responsible behaviour.

Promoting good behaviour is hardly rocket science. One company, for instance, holds classes by an external trainer that tells employees such simple things as the importance of not yawning or sneezing without covering the mouth and the importance of standing in queue. Seen in isolation, these examples look silly. Should HR departments really be wasting time on such things? But the broader message to employees is an important one: that the corporation sets great store by good manners. In these days when the "ugly corporation" has become demonised in popular literature, that's not such a bad thing to propagate.