A century and a half after the birth of Mohandas Karamchand Gandhi (1869-1948), he remains as a god-like figure for us, but only on October 2nd—when we recall his great principles without realizing that we are moving against them.
Is Gandhi reliable for us, the corporate leaders and the people who are working in jargon village? I think, yes! But how are the Gandhian principles reliable for our corporate world?
We are following the truth, but we can see that our actions are contrary. See our balance sheet, and see the faces of senior management and leaders. They are lying most of the time to stakeholders, to subordinates, to shareholders, to staff. Now we are looking at bankruptcy, crisis, defaults. The total inactive companies are 6, 83, 317 as of May 2019, and these include IL & FS, DHFL, Cox and Kings, Altico etc. Wilful defaulters have jumped by 60% in the last five years.
Can we combine truth with data, policy, compliance, balance sheet, profit, shareholders, customers, and employees? This Gandhian principle can save our companies and corporate. Truth from the ethico-spiritual bondage can change our status and reach stability.
Moral power can change our mindset. It can eradicate autocratic, conservative, inhuman, unethical, oppressive leaders from this place. Let us look at some truth about autocratic leaders and their companies.
In 2001, Enron with 29,000 employees and more than 100 billion net worth went on to file for bankruptcy at the end of the same year, but how did it happen?
Enron’s executives were using accounting loopholes, special purpose entities, and false error reporting to hide billions of dollars of debt from failed deals and project. If they built a power plant and it was expected to make $2 billion in revenue that was what was reported—rather than the money it actually made. Enron’s executives didn’t just mislead the board of directors; they also pressured their auditors to shred, delete and hide any evidence. The $63.4 billion Enron had tied up in assets made it the largest corporate bankruptcy in American history until WorldCom’s bankruptcy in 2002. Blockbuster, BHS (British Home Stores), Woolworths, Kmart, Lehman Brothers, etc. faced a similar fate.
Mahatma Gandhi said, “We may never be strong enough to be entirely nonviolent in thought, word and deed. But we must keep non-violence as our goal and make steady progress towards it.”
Gandhi applied morality in every field of life, be it social, political, religious or economic. He believed without a strong basis of morality “religion cannot exist”. Corporate governance can be driven by morality; we can see in the case of recent defaulters—the major cause are poor, unethical corporate governance. About 17% of the directors on an average attended less than 75% of the board meetings. The average board attendance in 2013 was 88% for companies forming a part of the nifty indices. Companies have had the same statutory auditors for more than 10 years. In this condition, can we expect good governance? This principle can push to hygiene and healthy corporate governance.
Sarvodaya means rise or welfare for all. CSR (Corporate Social Responsibility) is the emblem to welfare of people.
Companies that have a net worth of at least ₹500 crores or turnover of ₹1000 crores or net profit of ₹5 crores have been required to spend 2% of their net profits on CSR programmes compulsorily since 2014–15. Now let’s check the truth of CSR.
Looking at the total number of companies, the shortfall in spending on CSR is ₹488.77 crores out of 340 NSE-listed companies in 2018–19. The required CSR spending is ₹5,891.65 crores in 2018–19. Similarly, the shortfall in spending in 2018–19 is ₹279.34 crores for 32 Nifty 50 companies. However, required CSR spending in 2018–19 is ₹3,782.51 crores. This is just a sample of our CSR. We can imagine the CSR status of the rest of the companies.
The story behind the corporate world is dark. We are chasing progress, but we often bite the hand that feeds us. I can assure you if we do ethical business and practice with employees, we will not see the profit percentage we are looking in balance sheet nowadays in some companies. These are turbulent times. We should follow Gandhian principles if we want to see stability in our corporate world.