Dear all, Now that the govt has superceded the Satyam Board, there is an opportunity for external and internal PR. Satyam Scam- Corporate Reputation Risk Management Perspective This Cyberabad scam has multiple dimensions. It is not just IT industry's own reputation that is under a cloud. Reputation of many others including that of SEBI,Union Ministry of Corporate Affairs, The governments ( present and predecessor) of Andhra Pradesh, the Institute of Chartered Accountants of India, independent directors of Satyam board that included an ex-cabinet secretary to union government and Director of ISB have come under the scanner. The business media is also an accused in this scam as it failed to undertake due diligence in its reporting of Satyam's success. It has global ramifications because IT is global in its business reach in terms of services, clients, supply chain and investors.PWC, the company's auditors have international arms. None of the international audit firms in the recent past have distinguished themselves in their independent scrutiny function. There is an international history to this audit lapse. Second, Satyam like many other competitors was listed on bourses abroad. In the Flat world of knowledge power, success and scams flow in many directions. Cities like Hyderabad,Bangalore ,Singapore have become international IT capitals because of their global reach and what happens in those cities vitally affects the world. Satyam scam is not just a corporate scam .It has deep political nexus. The company promoters politically leveraged its iconic IT status to derive benefit from land deals that were possible because of political patronage.DMRC chief Sridharan had pointed out this when Mayta properties had won the bid for Hyderabad metro bid.Ramalinga raju is still a freeman,15 days after the scandal broke out; this hints at political nexus. The Golden Peacock Award for Governance won by the company recently clearly show the worth of such awards. Most media houses and channels have begun the doubtful habit of sponsoring awards to corporates and corporate leaders. Often such channels seek money and sponsorship of awards from Corporates and brands themselves. There is bound to be suspicions about possible quid pro quo arrangements and PR effect of such exercises. Therefore, getting any such awards is no assurance that the corporate has or can live up to the acquired image. The awards and their sponsors have perhaps lost their luster. Satyam scam perhaps can be traced back to the promoter's brazen move some six years ago to acquire an unknown small IT entity owned by their own relatives by paying hundreds of crore in cash. But no serious probe was instituted then and no one wanted to scrutinize the deal because Satyam was rated as the fourth IT major of India and earnings were comfortable for investors and auditors. The media after a brief interest in the story buried it. The Satyam scam clearly shows that in the present political and business governance environment it is possible to avoid reputation risks by surrounding the corporate with appurtenances necessary for gaining reputation without actually working on it. That is because the fence is eager to eat the seasonal crop.
The Govt itself can do with some effective international PR.This is becasue it had honoured Satyam with Golden Peacock award for Governance.Its own regulatory arms and Clause 49 of companies Act udner which it wan ted indepndent Audit boards and independent directors on company boards, have fared poorly.The political governance in India is itself under cloud.ICAI that wanted self regulation of auditors has not distinguished itself not just in Satyam case but in many others.As an investment destination India has to reassure the global ivnestor community that its company regulation is of international standards not just on paper but in effect.The current global finacial meltdown has happenned becasue the regulators slipped and slept and colluded.A demosntrated effort to overhaul the company regulation ina transparent manner will go a long way.It is not enough to say that Satyam was a stray case.
2.As to the query what rolePR should play at this juncture, there is a good case study of how Silicon Graphics was nursed back to health from bankruptcy. The company engaged independent journalists to work in its PR dept to ask management probing questions ona daily basis and share all critical information about restructuring and reviving the firm with all employees and clients and supply chain through e- bulletins.Every body took massive cuts in salaries and took home the bare essential sum until the firm restrated earning.There was no firing.Some voluntarily left the firm without asking for compensation.
The new Board should follow some of these.
3 Incremental bad news is very damaging.Therefore there should be an attempt to down load the entire bad news.Support it with what is beign done to repair the damage.
4.Company is not bad.It was Governance.Drive home this point.
5. A reborn entiry needs re branding based on new corporate governance valuesBuild a wall between the yesterday and the present -future.
6 Company management in India are not very democratic and believe in hierachy and secrecy.This creates a distacne betweent eh company and the personnel.Break this cultrue through innovative PR that works in tamdem with HR and marketing.
7.The new Captain must not only bat from the top but ensure that 10 others in the team play their role in PR.PR should not be a hole in the hierachy but an empowered entity for crisis management.If only the captain speaks or fails to speak when needed,PR suffers.
S.narendra
From: narendra None <sunarendra@gmail.
Subject: [prpoint] Satyam and Corproate reputation risk management
To: prpoint@yahoogroups
Date: Friday, January 9, 2009, 2:00 PM
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