Narayana Murthy and Infosys

People Management Contd...

To improve communication, the managing director sent mails every fortnight. There was also a concept called the Chairman's List¹³ and an annual excellence award. However, groupism was not encouraged. Narayana Murthy explained, "Everything is judged on merit. Ego doesn't come into the picture. Our transactions are zero-based so there is no history sheet. Different people compete, then they have a discussion, one solution is accepted, one person wins, they smile and go out to lunch. Because the group of people is very smart, there has to be a uniform distribution of wins. There are no overt or covert prejudices."¹⁴

Corporate Governance and Infosys

Analysts felt that Infosys became one of the most respected companies in India, through its corporate governance practices, which were better than those of many other companies in India. Narayana Murthy's move to adhere to the best global practices was driven by his vision to become a global player.

Infosys adopted the stringent US Generally Accepted Accounting Practices (GAAP) many years before other companies in India did. Infosys' corporate governance practices conformed to the recommendations of the Confederation of Indian Industries (CII) committee and the Cadbury committee¹⁵ on corporate governance with a few exceptions.

To maintain transparency, Infosys provided details on high and low monthly averages of share prices in all the stock exchanges on which the company's shares were listed. It was one of the few companies in India to provide segment wise breakup of revenues. Narayana Murthy believed in commitment to values, and ethical conduct of business. He said, "Investors, customers, employees and vendors have all become more discerning, and are demanding greater transparency and fairness in all dealings."¹⁶

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13] An annual list comprising outstanding performers who received employee stock options.

14] Business Standard – Strategist, December 2000.

15] The Cadbury Committee was set up in May 1991 in the United Kingdom. The stated objective of the committee was "to help raise the standards of corporate governance and the level of confidence in financial reporting and auditing by setting out clearly what it sees as the respective responsibilities of those involved and what it believes is expected of them." The committee had made 19 recommendations.

16] Business Today, November 7, 1999.

Case Details

Case Code : LDEN003
Themes: Corporate Social Responsibility, Great Leaders
Case Length : 8 Pages
Period : 1981-2001
Organization : Infosys
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Software

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