eFE INTERVIEW — ALAN THOMPSON

‘Value-based management is built on leadership’

Tarun Narayan in Mumbai

Integrating internal governance efficiency of corporates with the objective of delivering shareholder value is the key to instituting the process of a strong-knit corporate governance system. “But this purpose can be executed in its totality only with a competent leadership that can ensure precise planning and create an adaptable culture amongst the corporate workforce,” says Mr Alan Thompson, regional director, South-East Asia, Stern Stewart & Company. He further adds that “once the integrated process is fuelled into action, the corporate enterprise is said to be value aligned.” Value-based management is the process of integrating domains and processes to create a value-aligned corporate establishment.

In an interview with The Financial Express, Mr Thompson illustrates the contemporary realities and the initiatives that corporate India needs to undertake to enforce “value-based management”. Stern Stewart & Company is an international consultancy business with clients like Godrej, Sony and Tatas working with them. Mr Thompson was in Mumbai to address a seminar on “Creating Shareholder Value: Best Practices”, hosted by the Confederation of Indian Industry (CII). Excerpts:

What is the level of operational efficiency with which value-based management is enforced in Indian companies?
Value-based management in systems with less rigid hierarchy and flexible and accommodative culture have been creating excellent frameworks in value alignment. The transition they have made from near unprofessionalism to dynamic enterprises has been a tremendous achievement. But more than getting into distinctions between Indian companies and foreign companies, what is imperative is that there has to be a futuristic understanding of the extent to which the concept helps in attaining an all-encompassing success for business. That level of unified understanding and a resolve to implement has not taken off to a full start.

How much of influence does a leadership in an organisation wield towards contributing to the success of value-based management?
Leadership is the support system or the foundation on which the super-structure of value-based management is built. The power to persuade, change and implement a productive process rests entirely with the leader. If the leadership is not based on effective competency parameters, then a full stop should be put to the
whole idea of value-based management. There cannot be any compromises and, therefore, no commas.

Creating a system of unparalleled corporate governance — how is this ultimate objective rendered by this style of corporate management that you have been recommending to corporates?
The very effort of value-based management is to create systems that are efficient in process, adept in people-related front, accountable to business decisions and hence successful in business performance. When all this is collectively executed with honesty, then the system of unparalleled corporate governance has been initiated into action. All I am finally saying is have a value-aligned corporate with a sincerity to adopt, the integrity to implement and the ethos will translate into unparalleled initiative corporate governance.