As Infosys and its co-founders led by NR Narayana Murthy may be preparing for a lengthy war of words, experts feel the company's brand is likely to take a hit with the battle coming out in the open after Vishal Sikka's resignation last week.
The resignation has brought forth the battle that has been brewing between the company's board and the co-founders for the last few months.
The board has accused Murthy of continuous assault, resulting in the exit of its CEO and MD.
"Murthy's continuous assault, including this latest letter, is the primary reason that the CEO, Dr. Vishal Sikka, has resigned despite strong Board support. Murthy’s letter contains factual inaccuracies, already-disproved rumours, and statements extracted out of context from his conversations with Board members," the board said in a statement.
Murthy has hit back saying corporate governance remains an issue with the company during the tenure of the new management.
In a long letter that he has penned which was out in some newspapers, Murthy has been quoted as saying: Businesses will go through ups and downs and that is par for the course; but bad governance is not. We just want the board to protect the institution rather than protecting some individuals like the board is doing today.
Also, Murthy has said that he will reply to the board's allegations at the right time. Clearly, the battle is not over and that is the precise reason why brand experts feel it would take a while before things clear up for Infosys.
Promoters vs professionals
One of the reasons for the tussle between promoters and professional CEOs is that the former finds it difficult to let go. However, it is not that easy too, says N Chandramouli, CEO of TRA Research, a brands insights company, formerly Trust Research Advisory.
“This is what happens with the Steve Jobs of the world. In the case of Infosys, the issue is of a generation gap which leads to differences in thinking about strategies for the company. So it is vital that there are means to arrive at a resolution when there are differences,” he said.
The last time a company went public with differences with its chief was at the Tata group after Cyrus Mistry was removed as Tata group chairman. The difference here is that Sikka decided to quit himself.
Alpana Parida, managing director, DY Works, says that the old-guard manner of doing things was usually behind closed doors. “All these tell-all interviews on both sides have damaged the company’s reputation,” she said.
When issues become as stark as old guard versus new guard, it starts polarising a generation, and creates rift between employees who start talking about the ‘right’ and ‘wrong’ manner of doing things, said Parida. She likened the situation to Ratan Tata versus Cyrus Mistry where all the warts were up for the world to see. “Wouldn’t closed door conversations and discussions be better,” she asked.
Santosh Desai, managing director and CEO, Future Brands, concurs with Parida and says that the image of Infosys will take a beating on account of Murthy's fracas — seen synonymous with Infosys and held in high esteem — with the current management.
The gloves are off and the tempered talk between the Board and its co-founder Murthy is off. “Sikka has spelt it in no uncertain terms his view of the battle. He was cornered and a sustained position taken against him by an individual has forced him to resign.”
The reactions on Twitter also point to a reputation hit for Infosys. Mahesh Murthy, Co-Founder, Seedfund, for one, pointed out that the promoters were becoming obstructers of the company’s progress.
The promoters of Infosys are now the demoters of Infosys.
— Mahesh Murthy (@maheshmurthy) August 18, 2017
Some likened the row to school boys' pettiness on the playground.
— Indraneel B (@Unwise_cracker) August 18, 2017
Anand Deshpande of Persistent Systems Limited faulted Murthy:
— Anand Deshpande (@anandesh) August 18, 2017
Challenges for successor
The speed and forcefulness with which the Infosys board has reacted is unprecedented, feels Desai. But Sikka’s exit will make the incumbent’s job challenging as it is not clear who is in charge at Infosys, he says. “Is it the Board, the co-chair or the promoters?” The bigger challenge is how do you fix this problem, he reiterates.
However, Infosys veteran Mohandas Pai, Chairman of Manipal Global Education and former Member of the board of directors of Infosys, feels that nothing will dent the image of the company or its brand.
“Infosys will bounce back. Vishal Sikka’s resignation was his choice. Murthy wasn’t the trigger at all. In fact, Murthy is being made a scapegoat. This is only a temporary setback in Infosys and it will bounce back soon,” he reiterated.
Updated Date: Aug 21, 2017 08:10 AM