Indian companies need a few Jasprit Bumrahs on their boards
Jasprit Bumrah’s success is testimony to the fact that young people have less respect for reputation and are more likely to upset long-held beliefs. It’s a lesson for Indian companies
Jasprit Bumrah isn’t a name likely to figure too often in corporate boardrooms. The 24-year-old journeyman was considered merely a T20 specialist till a few months ago when he was selected for India’s test series against South Africa in that country. That came on the back of his meteoric rise over the last four years, ever since he was spotted by Indian Premier League’s many talent scouts. The Mumbai Indians franchise decided to take a punt on his unusual sling-arm action and at 20 he was handed an IPL contract in 2013 even before he had made his first-class debut. In South Africa though, Bumrah showed he had the ability to hold his own among the big boys of international cricket. In India’s gripping victory at the Wanderers in Johannesburg, he picked up five South African wickets in the first innings. This was his maiden test series and the youngster bagged more wickets than senior pros in the side.
Bumrah’s success is testimony to the fact that young people have less respect for reputation and are more likely to upset long-held beliefs. They also have the confidence to challenge authority.
It is a lesson for Indian companies when constituting their boards most of which tend to be cozy clubs of men with professed experience and wisdom based on years spent doing the same thing. Despite that, they have failed spectacularly in ensuring the basic tenets of good corporate governance, which include transparency in terms corporate structures and operations and the accountability of managers and the boards to stakeholders.
Indeed, as the latest investigations by Bloomberg ((https://www.livemint.com/Companies/e5YbUPWVlneclXf2jzfktM/Billionaire-Singh-brothers-accused-in-lawsuit-of-siphoning-m.html) into the affairs of Religare India show, the ability of directors to prevent wrong doing is severely limited. According to the story, the Singh brothers, Malvinder and Shivinder, who are already embroiled in one international legal battle over alleged fraud, are now facing charges of “diversion, siphoning and digression of assets” by the New York-based private equity firm Siguler Guff & Co. in a lawsuit filed in the high court of Delhi. (Religare has since issued a rebuttal stating that “The allegations made by the plaintiff in the suit referred to in the article are categorically denied.”)
As with the Satyam case in 2008 where the board approved the reverse merger of Satyam Computer Services, the IT services firm, with the group’s infrastructure firm Maytas which was at the heart of the massive siphoning operation by the promoters, if the Religare case is proved to have merit, questions will have to be raised about the role of the directors. In other instances too, it has been a mystery why men and women of proven credibility are not able to advise caution or curb misplaced ambitions as for instance when Tata Steel upped its offer for Corus Group Plc. in January 2007 from the 4.1 billion pounds it originally bid in October 17, 2006 to the 6.2 billion pounds it finally ended up paying just three months later.
What’s equally worrying is that most boards in India rarely have their pulse on the market and are therefore rarely able to tip off a company to new opportunities or even bring in the strategic thinking needed to shake off mothballed thinking.
One reason for this is the preponderance of grey hair in corporate boardrooms.
According to the Indian Boards Database, the average age of over 10,792 directors on the boards of 1,723 NSE-listed companies is 59 years. A meagre 23 of them are below the age of 25. It is no different elsewhere. According to a report in the Financial Times, the average age of directors who govern the UK’s 100-biggest listed companies is 57.
Given India’s demographics, young people will soon make up the majority of the work force in the country which will have the world’s youngest population by 2022. In addition, they will also be the most influential consumer demographic, making the decisions that will determine the fortunes of thousands of these companies. Yet, they play little or no role in overseeing these very businesses on the specious plea that a board level position has to be earned through years spent in industry or governance.
But in that very homogeneity lies the genesis of many a corporate failure since the status quo is rarely challenged. Ultimately, every institution needs that one little boy capable of saying the emperor is naked.
Indian companies might want to take a look at Clara Shih, who has been a Starbucks director since December 2011 when she was just 28-year-old. As chief executive officer and a Board Member of Hearsay Social, Inc. an enterprise software company, she brings a completely different perspective to the consumer facing company’s board. With the exception of family scions, there are very few examples of such experimentation in Indian companies. They are the poorer for it.
Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider will look at current issues and trends in the corporate sector every week.
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