INFOSYS - WHAT'S WRONG IN INDUCTING THE FOUNDERS SON?

By Ruma Dubey

Infosys had hit a 52-week high yesterday at Rs.3128 and it has been having a dream run northwards as the rupee continued to dip southwards. If today we are seeing the momentum in the stock, it is only courtesy the falling rupee.

But for the falling rupee, given the current upheavals happening in the Infosys top management, the stock would have been streaked red.  Yesterday, the quitting of Ashok Vemuri came as a shock to many as he was touted to be one of the youngest and most promising leaders at Infosys.  He left Infosys to join a mid-cap company like iGate.  And then last week, there was the news of Rohan Murthy, son of Narayana Murthy being promoted as Vice President and this news has probably caused more damage than the going of other top management.

Well, many would ask what could possibly be wrong about a founder promoting his son to a senior management position?  Isn’t this his birthright? Yes, in our country, the child is automatically considered to be the rightful heir to not just the wealth but also the company and the position. When Dhirubhai Ambani passed away, despite all the turmoil and the company being split into two, no one asked why the sons were given the baton? Or when Aditya Birla passed away suddenly in 1995, his son Kumara Mangalam Birla, 28 years old at that time, took charge of the huge empire. No one questioned how such a young lad could manage such a big group or whether it was the right thing to do? One can argue that this is what happens in brick and mortar companies but then what about HCL Tech and Wipro?  In 2009, HCL Tech’s  founder Shiv Nadar appointed his daughter Roshni Nadar as executive director and CEO. And Wipro’s Azim Premji appointed his eldest son, Rishad Premji, first as a manager in 2007 and in 2011 was promoted to Chief Strategy Officer. No one questioned the fact that within four years an employee got elevated to the top management as the ‘Premji’ surname gave him that automatic right.

So then the question is why are so many people, including many foreign and domestic brokerage houses questioning this promotion of Rohan Murthy? Its like this – Narayana Murthy established a new standard when it came to transparency and corporate governance; these are the two traits for which he is so highly respected today. And when he was to retire, there was major speculation about who would take over as he had conveyed through his various actions that the no child of the founder members would work at Infosys.  Then how come this induction of Rohan Murthy? This is what has irked many – how could Murthy, the founder of corporate governance in many ways in India, himself break rules, albeit unwritten?  

Also the bringing in of Narayana Murthy to ‘rescue’ the company did not go down too well with most analysts. The company is indeed currently undergoing some tough times and many have blamed it on the floundering top management. But does this mean that the company did not find anyone capable enough within the company to ‘rescue’ and had to once again call back Murthy? And he in turn coming in tow with his son sends out a message that apart from the Murthy’s at the moment, there is no one capable enough in the company? These few actions have currently dulled the very professional image of the company.

There is no doubt that when it comes to judging based on capabilities, Rohan is more than capable. Thirty year old Rohan holds a PhD in computer science from the University of Harvard and was a junior fellow in the Society of Fellows at the Harvard University. His graduate school work at Harvard was supported by a Siebel Scholars Fellowship and a Microsoft Research Fellowship.

If right from the beginning, the founders had not taken the high moral ground and showed they were much ahead of all others when it came to professionally running a company, this promotion of Rohan Murthy would have been business as usual. But because Murthy took a particular stand earlier and now he is himself in a sense going against it, there is sense of having been let down, a loss of integrity.  None of the others – Dhirubhai or Premji or Nadar ever spoke about being ‘professional’ and thus they inducting their children was the most natural thing to do. Here, at Infosys, currently it is the breaking of an ideal which has caused the pain.