Subir Gokarn: Corporate politics

There are some striking similarities between the political and the corporate realms in India, when it comes to the behaviour of senior professionals.

There was a time when affiliations lasted an entire career. You joined at the bottom, rose through the ranks, took on increasingly important roles and responsibilities and retired gracefully at some point.

The company, or the party, was expected to meet your aspirations and accommodate your evolving perspectives and commitments.

Then came a point when executives and politicians, frustrated with internal barriers to mobility and fulfilment, struck out on their own to set up new ventures and parties.

These days, the most visible mode of change seems to be movement from one company to another or one party to another.

However, in general, our attitude towards these developments in the two realms is quite markedly different.

We cheer when a high-profile manager changes course for more money, more independence or whatever else motivates him or her.

But, a politician making a similar move is condemned as a power-hungry opportunist who is willing to betray "ideology" for the sake of more materialistic goals.

This double standard reflects an obsolete notion of political institutions and mechanisms, not to mention a rather naïve perception of individual motivations.

Just as churn in managerial positions in the corporate sector has, by and large, been beneficial for long-term performance, mobility for politicians across parties has potentially positive consequences for both policy-making and governance.

Let's begin with a reasonable proposition. Politicians, like other professionals, are individuals pursuing and protecting their interests in a broader social context.

They presumably have similar motivations--better lifestyles, educating their children, ensuring old-age security, and so on.

As long as these goals are pursued within accepted ethical boundaries, actions taken in pursuit of these goals are entirely legitimate.

Against this backdrop, there are a number of reasons why cross-over by politicians is a good thing. From the broad perspective of policy paradigms, it indicates that the sharp differentiation between parties with respect to their views on what is good for the country no longer exists.

Many people have spoken about the need for a national policy agenda in order to ensure that there is continuity on key policy perspectives and action even as governments change.

While our political system is some distance away from formalising this arrangement, the willingness of politicians to cross party lines suggests that, in effect, a common agenda is already in place.

Pursuing individual interests by politicians depends on remaining relevant, i.e. able to get re-elected. Changing parties is a way to remain relevant.

A party whose platform is perceived to be politically unsaleable will eventually lose people to one whose positions are more palatable.

Over time, this should lead to the emergence of a largely overlapping set of policies and programmes amongst mainstream parties.

Niche parties, which command strong loyalties amongst different sets of people for a variety of reasons, will have their space, but it will be increasingly difficult to differentiate between mainstream parties, just as it is increasingly difficult to distinguish between the systems and work environments of successful companies.

This argument is not intended to question the merits of instruments that hinder political mobility, such as anti-defection laws.

As long as these instruments insist on conditions that maintain the integrity of the political process being met, such as re-election after the changed affiliation, they contribute to an alignment between the individual interests of politicians and the collective interests of the people that they represent.

Moving on to an organisational perspective, contemporary thinking on successful organisations would point to a balance between incumbency and entrance.

Indian companies have certainly evolved from cadre-based or lifetime employment models to ones that welcome and accommodate entrants at all levels, even the senior-most.

Finding the balance is obviously not easy and organisations have succumbed to the pressures that it can exert. However, it is clearly not impossible.

Many of the older companies, which have thrived in the liberal environment of the last decade, have done so because they found it.

On the other hand, organisations that have stuck by their cadres, with a few exceptions, have found it far more difficult to respond to the changing environment and the new demands that are being made by the marketplace.

Government agencies and public enterprises have obviously been far more loyal to their cadres than the private sector.

Without stretching the point too far, this is one reason for the huge disparity in the response of the two sectors to the opportunities provided and demands made by the environment.

This is, clearly, a reality and a challenge that political parties have to accept. Obviously, larger formal compensation packages will not play the same role as they do in the corporate sector.

Enhanced prospects for re-election will be the key trigger. Other than that, however, the situations are essentially the same.

A party has to find the best way to balance the aspirations of loyal cadres with the need to attract top-level talent and capability.

It has to allow the latter enough space to bring in their ideas for change in order to remain relevant. In doing so, it has to ensure that the cadres and new entrants are not in fundamental disagreement on most things.

In short, the movement of politicians across party lines, besides reflecting the emergence of a broadly overlapping policy platform, could also contribute to the strengthening of parties, allowing them to develop more competitive electoral strategies.

There is no reason to view this movement any differently from the way we view the movement of professional managers across companies.

However, having cast the issue of mobility in somewhat idealised terms, let's not lose sight of the pitfalls. Effective alignment between individual interests and the collective good requires tightly enforced ethical standards.

This is true for both the public and the private domains. The point is that both individuals and organisations have to possess the capacity to make the most of the change.

This capacity will maximise the prospects of collective benefits. Its absence, while still serving individual interests, can have high social costs.

The author is chief economist, Crisil. The views here are personal.