Anna movement is about better corporate governance !!!

Better governance at the macro level will mean demands for better governance at the micro level as well.

Interestingly during the tumultuous weeks of the Anna Hazare movement, corporate India was very quiet. None of the media panels had corporate CEOs. There were no opinions sought from, or expressed by, the captains of industry in that capacity. The draft Jan Lokpal Bill is also silent on corporate involvement in bribery. Does this mean that corporate India is immune from this mass movement?

Nothing can be farther from the truth. The most noteworthy feature of the Anna Hazare movement is that it has brought the issue of governance to the drawing rooms of the common man and woman in India. In addition, it has broadened the scope of the governance paradigm and thereby increased the expectations of the society on this front from different constituents of the country, including corporate India. So what then are the implications of this movement for team corporate India?

BUSINESS DISCONTINUITY

The most immediate impact is likely on businesses that have been getting away without complying with the laws of the land using unfair means. For example, a business that has not been meeting effluent control norms. Or a restaurant that has not been meeting health and hygiene standards. It is quite likely that the government officials involved will no longer turn a blind eye to such instances, given the risk of being exposed by the media or the judiciary.

Not only will officials refuse to allow continuation of such breaches, they are most likely to try and appear above board by bringing punitive action. Therefore, a scenario of medium to severe business discontinuity cannot be ruled out.

LEVEL PLAYING FIELD

One of the reasons for India attracting lower foreign direct investment (FDI) relative to its inherent potential is the perceived difficulty of doing business in terms of various regulatory approvals. This is a well recorded fact.

The Lokpal Bill is likely to change this, by bringing a more favourable investment climate where businesses can expect to commence operations faster. Also, businesses that believe in doing things the right way would not be penalized for being so.

CONSUMER FRANCHISE

The Jan Lokpal movement has awakened India's growing middle class to their rights. Where this will manifest most potently is in greater advocacy of consumer rights. Corporates are, by definition, easier to hold to account, and therefore will have to face the brunt of this fallout.

Companies would have to set up effective consumer grievance redressal mechanisms. There is also a risk of young, educated Indians avoiding brands or products of companies that are perceived to be indulging in unfair business practices. Companies with a clean image would stand to gain consumer confidence. One may also see companies that have a clean image trying to gain maximum brand mileage out of this by coming out with advertisements alluding to this strength.

CHOICE OF EMPLOYER

The youth have a wide choice of who they want to work with. The Jan Lokpal movement will add a new dimension to this selection process.

Talented youngsters are likely to check if the employer they choose to work with has a clear and unambiguous position on bribery. They may weed out employers who do not measure up.

Well-governed companies may attract better talent, and more importantly also retain them for longer periods, as remuneration may cease to play as key a role as in the past in job changes.

CORPORATE GOVERNANCE

At the end of the day, the Anna Hazare movement is about better governance. Corporate governance is an essential sub set of the bigger governance structure of the country.

Therefore better governance at the macro level will mean demands for better governance at the micro level as well. The role of corporate governance is likely to get a significant boost, and boards are likely to pay greater attention to this facet in the days to come.