Photo: iStockphoto
Photo: iStockphoto

What about the business of tolerance?

A fair workplace and good corporate governance depend on how tolerant business leaders are to criticism and dissent

The discourse on respecting plurality, diversity, criticism, dissent and contrarianism has dominated the public space in India in the past couple of months. Various people who have received public acclaim have voiced the need for a culture that is tolerant and gives space for fearless expression of thoughts and opinions.

Infosys co-founder N.R. Narayana Murthy joined in with his views on preserving the culture of valuing minority rights and concerns. The Reserve Bank of India governor Raghuram Rajan weighed in, voicing caution about the danger of being excessively politically correct in our social discourse.

This set me thinking about how much space businesses have for employees to fearlessly articulate their thoughts and opinions without having to face punitive repercussions.

How often do we see a culture in any business organization where minority groups that are adversely impacted by a policy can fearlessly engage their business leadership? Intolerance to the concerns of minority groups is what drove employees about 150 years ago to find safety in numbers—trade unions. We know that the law forbids having employees work more than nine hours in a day and 48 hours in a week. Yet, in most organizations that do not have trade unions, employees are required to work much longer.

The dividing line between personal space and work space has blurred. People often have to work during their personal time. Given the stretch in targets, no employee can meet his performance expectations by working for the legally specified time. This is especially true of the sales and logistics teams. How much space do companies give these employees at the bottom of the ladder to express their concerns without serious retribution? Is it not the right of every individual or minority group in an organization to seek redressal for the distress these practices cause them?

Let us take another example. We eulogize the performance culture, with its performance-linked pay and other consequence management measures. But, is there room for employees to have a say in the performance targets that have life or death consequences for them?

My argument is not that every employee should set his own performance target. However, should there not be a culture for employees to engage their leaders fearlessly and demand the rationale for the targets? Should there not be a debate on how reasonable are the aspirations given the economic and market factors, especially since employees can lose their jobs if they fail? The final call should still be with the leaders, but should they not hear the voices from the field that may have different perspectives? Without giving our employees voice, how will a culture engender ownership and inclusiveness?

When employees see that the consequences for low performance are harsh and ruthless at the coalface and lenient at the senior levels, where is the space in modern businesses, that do not have trade unions, to seek an open and transparent debate? How fair can a system be when there is no avenue for its members to draw the attention of their leaders to this inequity? Harsh reprisals are unleashed even on leaders who seek to notify these issues and seek an open debate. Such is our tolerance in business establishments.

How much space for plurality do you think exists in business organizations on issues like strategy? Practically very little. Occasionally an odd inclusive business leader creates a platform for consultation. Even this leader rarely goes beyond consultation. Do not be fooled by the strategy workshops and meetings. Usually there is little room for different views on issues like forging a common understanding on the state of the economy or the state of market competitiveness or appropriateness of products and services, resource allocation, etc.

How much to grow, how fast, in which business and which market are governed solely by the business leader’s aspiration and risk appetite; often others in the meeting are expected to merely endorse it. Any attempt to seriously challenge the underlying assumptions, the institution’s existing capabilities or the prioritization of resources, is foolhardy.

People who join start-ups from established corporations come with a romantic notion that there the culture will be more tolerant to challenge and debate. They fail to understand that in most start-ups, which are driven by value extraction, this space is reserved for the promoters and their small coterie.

The publicly articulated position of most leaders is that innovation thrives when there is divergent thinking. However, as Rajan advises, if I were to be politically incorrect, in most organizations the plurality is limited to lodging the ideas. That innovation is not possible without disrupting an existing product, service or practice is well accepted. However, the million dollar question always is, who will bell the cat where the business leader is the patron of the dying product, service or practice? Banks’ hesitation to jettison the current branch model, when banking is fast becoming digital, is a case in point. Similarly, it is seriously risky in business to initiate a debate on whether an innovation where the CEO is the sponsor, has indeed failed in the market. Nano is a case in point.

As with political issues that are deeply ideological, where challenge is dangerous, so too it is with ideas where the CEO is the patron. That is why it takes a new CEO to break free from the hallowed past model and adopt new approaches. And you dare not challenge it openly if you have a differing point of view. Of course, there is always the rare leader who is an exception to this approach.

In most organizations, leaders rarely seek out alternative views from their colleagues on their business models or strategies. In meetings often the expectation is that each business leader will have a bilateral engagement with the CEO, without their ignorant and mischievous colleagues’ interventions. An endorsement and political support in fact will be appreciated. Many also desire that this is left as a series of bilateral equations, where each business leader sits quietly in the meeting when his business is not being discussed. Worse is if the politically incorrect intervention were to challenge the preferred outcome of the CEO.

Wherever a leader prefers a bilateral engagement with his team members, it should be clear that this leader is uncomfortable with plurality of views and healthy challenge to ideas and opinions.

Once the leader sets the tone, this culture is mirrored across engagements at all levels. Say in a review, a particular market or product is under discussion. It will be unwelcome for other managers to join in with alternative takes on the issue. It will be seen as unwarranted interference. So it is not only the CEO who is responsible for intolerance to alternate views.

A friend of mine, a thought leader, narrated to me how she was made to feel unwelcome as an independent director on the board of one of India’s globally acclaimed business organizations. She told me that the chair of the organization had little patience for any challenge or contrarian views. Her mistake was that she understood the role of an independent director as examining all propositions closely by challenging them.

I am also aware of another incidence where another friend on the board of another business establishment was involved. It appears that the board sought a 360-degree feedback on its members’ performance. They then found the feedback to be critical of the board’s functioning. This distressed the powers on the board. They sent a not-too-subtle message that they did not appreciate the feedback.

Just like citizens who take a contrarian position to the political establishment are accused of being anti-national and traitors, companies too brand contrarian thinkers and challengers as mischief mongers or disruptors. Unlike the political establishment, companies are not brazen in neutralizing these contrarians. They are more suave in their methods of retribution. People soon learn the true meaning of pluralism and tolerance.

We as a nation are caught in a transition from a feudal society to being a pluralistic democracy. Distance from power, masculinity and normative behaviour are the fingerprints of feudal culture. Egalitarianism, human rights and pluralism are the fingerprints of a mature democracy. Like our socio-political system, a dominant part of our economic system is transitioning from proprietary mindset to custodial mindset. A widely publicly held enterprise cannot be run by leaders who are deeply rooted in a proprietary mindset.

The essence of governance is to socialize the power and eliminate the conflict of interest, which larger-than-life CEOs and business leaders unwittingly slip into. They suffer the delusion of being the owner with hardly any personal capital investment.

The feudal qualities of loyalty, obedience and hero worship prevail in most business institutions. Healthy challenge, debate and contrarianism can be experienced only in very few business establishments. So the confluence of feudal remnants in the socio-political system, the proprietary delusions of business leaders and half-hearted governance create the climate of intolerance in companies which I have illustrated in this article.

At the heart of intolerance is the threat of retribution. Feudal and proprietary mindsets are predicated upon the notion of unquestionable nature of authority. In this social dynamics power devolves from one’s position and allegiance to an ideology. Thus the pay-off is dominance, reverence and subservience to the leader—religious, political, social or business leader.

It’s no wonder that leaders are thrilled to be on the various power lists that business magazines publish. While many business leaders will deny that they bring in either a feudal or proprietary mindset, the truth is only a few have matured into being custodial leaders who submit themselves in true spirit to the governance structure of the board. Without this transition it is impossible to create an egalitarian and collegial culture of tolerance.

It will do us good to initiate a debate on how to guide our business institutions to a custodial structure and nurture boards that are not in awe of CEOs, especially the iconic ones. It is when business leaders experience the board as a challenger and healthy critic and not an awestruck cheer leading group that the business environment will value pluralism and egalitarianism. The fear that boards will become obstructionist and intrusive when they challenge is a misplaced feudal mindset. Seeing every challenge and critic as obstructive or intrusive is the heart of intolerance.

I believe that the first step is initiating a public debate on the current culture in business organizations, especially the role that the independent board members are required to play, to make business establishments more tolerant.

These are the personal views of the author.

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K. Ramkumar is an executive director on the board of ICICI Bank Ltd and the president of ICICI Foundation.