How Generational Differences can explain the Corporate Governance Issues in Infosys

The Genesis and the Root Cause of the Problems Faced by Infosys

In recent years, the venerable IT (Information Technology) firm and the bellwether of the Software industry, Infosys, has been in the news for all the wrong reasons.

Starting with the changes to the Board and the Management to the stepping aside of the founders, including the allegations about poor corporate governance, and the culmination of the saga wherein Infosys has agreed to “bury the past” and move forward, the going has been rough and turbulent for all stakeholders.

Indeed, the travails of Infosys in recent years represent the kind of problems that happen in organizations when there are competing visions over how organizations must be run and how corporate governance issues must be handled.

The fact that Infosys is now looking to the future albeit with a slightly tattered reputation means that other firms in similar situations can learn a lot from it regarding the way in which corporate governance issues can be handled.

Moreover, the fact that it is now neither confirming nor denying the allegations means that its decision to leave the problem in limbo can have severe repercussions in the future. As of now, things look settled though there is no guarantee of recurrence of such problems going forward considering the very different perceptions over how corporate governance must be handled in Infosys.

Indeed, the Infosys saga presents some lessons for other firms wherein such competing, and conflicting agendas between the different stakeholders can result in severe stress and trouble for everyone.

Thus, Infosys represents the typical case of a firm that has always prided itself on transparency and fairness to find itself having to defend its reputation and deny severe allegations of misconduct and ethics. It is clear that venerable and venerated firms such as Infosys have much to answer about why the lofty visions underlying its foundations have been sacrificed at the altar of expediency and why ethics and fairness have been subverted in the quest for growth at all costs.

Generational Divide and Need for a Debate When Firms Transition between Generations

Having said that, one must also note that it is impossible to run organizations when there is serious bickering between the Board Members and this is where organizations must make a choice between choosing to trod the beaten and well-worn path or take a new road less taken.

Indeed, the fact that the former represents stability and comfort whereas the latter represents growth and risk-taking means that there can also be a generational aspect wherein the younger members of the management often take high risk and high stakes routes to growth whereas the older members prioritize less risky and more predictable methods.

Further, mistakes are inevitable when one takes risks and hence, it is also the case that when the baton is passed to younger and newer leaders, there are bound to be some decisions that can upset the older and more conservative leaders.

Indeed, if not anything, there is a clear generational difference in the way the wider society has also come to accept issues related to poor governance, whether by governments or businesses.

For instance, while the Gen X members who are in their forties and fifties now and are increasingly at the helm of nations and firms prioritize growth and pursue risks to achieve that, there are the Baby Boomers and other members of the older generations who would like a more predictable course of action.

While we are not saying that Gen X and the Millennials tolerate unethical behavior, it is the case that they are more tolerant regarding living and coexisting with it whereas the older generations often feel that such behavior raises a stink that is best avoided.

Also, the fact that the newer generations make compromises as well as prioritize survival even when some deviations are present can be seen in the way Infosys is seeking to “move on” instead of jeopardizing the future of hundreds of thousands of employees and stockholders.

Of course, it can be argued that tolerating unethical behavior can lead to the very plausible outcome of the organization itself ceasing to exist means that one cannot also at the same time, take refuge in the explanation that it is better to move on instead of addressing the problems at the core of the situation.

Thus, it is clear that there are no easy answers as to how firms such as Infosys transitioning from one generation to the other can handle crises from differing perceptions and attitudes towards risk-taking, aggressive growth, and ethical and normative behavior. While the problem seems to have been solved, for now, we contend that all organizations and not only Infosys have a conversation and a debate over where they are headed especially now that the Gen X is transitioning to leadership roles across organizations.

Conclusion

Lastly, without an urgent reexamination of how such transitions can be handled better, such problems are going to recur in the future for all firms and hence, the view here is that when older generations make way for newer members, they not only leave behind a direction to the future but also let the younger generation decide on how they would take the organization forward.

To conclude, continuity, stability, predictability, growth, risk, and attitudes and generational differences regarding these issues are at the core of the problems being faced by firms such as Infosys and hence, it is high time the corporate world encourage a debate and a discussion over such issues.


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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.


Corporate Governance