By the stylised Indian model of management, what a CEO should do is ensure that the institution performs well, and the rest would look after itself. This is the guidance the Gita offers. It also seems a somewhat purist thing to do. If markets were perfect and information was readily and instantly available, that might even work. But that is clearly not so. Businesses, especially public companies, need public confidence in the institution?especially investor confidence. It is critical for institutions and their leader be perceived to be performing. Yet, many CEOs in India neglect this part of their responsibility.
I observe four types of CEO models in India. There are those who perform poorly, are judged as such and do not seek or obtain media attention. There are those who perform poorly but seek and obtain positive media/external attention. There are those who perform well and yet do not seek or obtain external attention. And finally, I see that there are those whose institutions perform well and also seek and obtain external stakeholder praise.
Many CEOs are media shy, and when they reach the top position, have no idea how to go about cultivating the media and important external stakeholders. They often stupidly believe that they will just do their work and allow it to speak for itself. Sometimes this works. Mostly it fails. In a frenetic world, if you don?t tell your story, no one else does either.
A CEO whose institution actually performs poorly and yet manages to elicit a positive perception of performance amongst external stakeholders is actually doing himself and his institution a service. Regulators must ensure that he doesn?t do this by cooking his books. In fact, they should punish any breach or dishonesty on this. But CEOs who manage a positive perception without cooking their books cannot be blamed, however unfair it might seem. Investors need to inform themselves on a company?s true performance via management interviews and a careful reading of the company?s books, before deciding whether to sell the stock or hold it. Media can play a helpful role in this, but given how lax business reporting can be, a savvy though poorly performing CEO often manages to get away without market censure for a couple of years.
On the other hand, the CEO whose institution is performing well but cannot get investors to believe his story is doing a bad job for the institution. If he does not know how to manage the media, then he is adversely affecting the institution. It is even worse if investors fail to value his company properly. This does not mean, of course, that there is only one style of operation with external stakeholders. Too much exposure can backfire. But the CEO cannot shy away from this important aspect of his job and must develop his own style and approach towards it.
To do this job well, there are four stakeholders a CEO must inform. These are the press, the employees, the investors and his regulators. Each is equally important. The CEO needs to have a strategy for the company and a good process to inform these stakeholders. A PR agency may work for the media and set up some systems for employees, but he needs to work with his CFO to develop an investor communication strategy, and requires a compliance department that can understand and inform regulators. Managing perceptions of the company amongst external stakeholders is one of the most important parts of the CEO?s job. He has to be personally proactive in overseeing it for it to be really effective.
Given that only God is all-perceiving, the CEO needs to decide whether he wants to wait for the afterlife for his just rewards, or actively manage perceptions within this lifespan to get his rewards now.
?Janmejaya K Sinha is managing director, Boston Consulting Group India. These are his personal views