Thursday, May 23, 2013

Analysis of Phaneesh Murthy and similar other case, sexual harassment policy in the organisation and crisis management

This entire week was full with one of the most (in)famous corporate news that how a most successful CEO has to leave the job after founding guilty of sexual harassment at workplace. It is followed up by the reports of loss to the company.
The corporate need to take a serious lesson from this and understand the gravity- the loss a company may suffer. Mr. Murthy has his own version of the story, his story/chapter is ended at i-GATE however, the company is paying heavy price for the same.

Let us look what is the whole story is:

i-GATE, Phaneesh and the whole incident
Who is Phaneesh Murthy
I know most of the people know about it, but to understand in details, we must know basic about him.
Phaneesh Murthy is a mechanical engineering graduate from IIT Madras and a management post graduate from Indian Institute of Management, Ahmedabad. He started his career with Infosys and worked there for decades handling his role successfully. He served as a Director of Infosys (since May 2000) and as a Director of Infosys BPO Ltd. As the Global Sales Head of Infosys, he has been widely credited as the one who was responsible for taking the organization from just $2 million in revenues to $700 million in under 10 years. He was fired from Infosys in 2002 after the company settled a case of sexual harassment with Rekha Maxmovitch. Rekha was executive secretary. This clearly shows him as a most successful professional in the industry.

The previous issue during his tenure with Infosys
Murthy'  former executive secretary Reka Maximovitch. Maximovitch filed a sexual harassment lawsuit while during his Infosys tenure.Infosys, settled the lawsuit out of court for $3 million & fired him in 2002.He strongly denied the accusations throughout proceedings.

Controversy now
Araceli Roiz, currently head of investor relation at i-GATE's US office (as on her profile) has filed a complain of sexual harassment against Murthy. i-GATE did investigation externally and found him guilty of not disclosing relationship and fired him. Nowhere the i-GATE has mentioned that he is guilty of sexual harassment. There are also reports in media that Roiz is pregnant and planning to file a lawsuit against Murthy.

It is not just a matter related to Phaneesh Murthy now. I do not want to fall in the debate whether Phaneesh is guilty or not, whether it is case of sexual harassment, whether it was a consensual relationship or not, however it has damaged the organisation (i-GATE) extensively. No doubt, Phaneesh helped a lot to grow the company and bring glory to it but we cannot simply ignore the outcome of this controversy. 

The damage so far
  1. Phaneesh Murthy has to leave the job
  2. He does not have a clear answer about this except saying that his only fault is he did not disclose about the "relationship" allowed as per the policy but need to disclose (In India as well as in US Polygamy and adultery is not allowed and may become one of the reason for divorce too, so if it meant to say physical relationship then I doubt having such clause in the company policy really help.
  3. According to a US-based analyst who closely follows i-GATE, the company has lost one $200 million technology outsourcing contract they had recently won and is likely to lose another one of similar value.
  4. idoti has cut its price target on iGate shares by $5 to $16, less than what the company was trading at before Murthy was fired. It has resulted into loss of the share holders and valuation of the company.
  5. i-GATE is getting lot of negative publicity on social media and news paper. Few people are supporting Murthy and many abusing and cursing (and I do not know how many of the people cursing Murthy do not have lust for women ) There are big claims too like he was a womeniser, he is a victim, it was already known.  Now look at one of the comments on online version of Times of India
His wife has known about this but ignored due to lack of proof. Now he himself has come out and said he was screwing around with Araceli Roiz. In iGate Fremont office, everyone used to be cautious about her because she was sleeping with this guy. There were instances when people were eased out because Roiz was not in favor of them. It's not last few months, but it's been over two years. He is trying all technicalities to describe this affair. Silly fellow. He was arrogant and sXRewed it up big. He sxrewed not only Roiz but also his wife, kids and ghe company. Everyone in the company knew from the beginning of the affair, including the HR head. HR head, Srini Kandula, in fact, protected Peenish Murky all thru past two years along with his peers like Sean Narayan and Sujit. I am still bewildered how his wife and kids take him. Look at his stupid statements above. He doesn't feel a bit of remorse about the damage he caused to so many people in the co and in the family.

6. People are pointing figure on other senior management as they have planned this (so the other top management are also gaining wrong popularity) and it also points out at Srinivas Kandula - Global HR head. Now I again wish to clarify, I am not sure the people commenting about all these on social media are how much truthful or know about them really- insider or outsider. 

7. Bad reputation: The damage it at such an extent that the HR team need to tell people that they must not comment anything on social networking to stop further damage.

8. The lawsuit on i-GATE is expected and may go to billion dollars. It is very difficulty to prove such charges. If Araceli Roiz is claiming that she was forced for abortion and she is pregnant and the child belongs to Murthy- if DNA finger printing matches, then it may cause a lot of trouble to Murthy as well as to i-GATE.

How much you have prepared your organisation to safeguard from it?

1. You need to have Sexual harassment policy at work place in place
Indian companies are weak in policy formulation, implementation and execution. As an HR, first of all you need to check that is there clause of sexual harassment in your employee handbook and is there a separate sexual harassment policy in your company?
In India, it is mandatory to have such policy in place. 
The Hon’ble Supreme Court in its order dated 13-08-1997 has passed an order laying down the norms and guide lines to be followed by the employers for tackling the incidents of sexual harassment of women at workplace and other institutions. The guidelines issued by the Supreme Court included setting up of a complaints Redressal forum in all work places and amendment of the disciplinary / conduct rules governing employees by incorporating the norms and guide-lines.

What is definition of sexual harassment in India (related to work place)

For this purpose, sexual harassment includes such unwelcome sexually determined behaviour (whether directly or by implication) as:

a) physical contact and advances;

b) a demand or request for sexual favours;

c) sexually coloured remarks;
d) showing pornography;
e) any other unwelcome physical, verbal or non-verbal conduct of sexual nature.

Where any of these acts is committed in circumstances where under the victim of such conduct has a reasonable apprehension that in relation to the victim’s employment or work whether she is drawing salary, or honorarium or voluntary, whether in government, public or private enterprise such conduct can be humiliating any may constitute a health and safety problem. It is discriminatory for instance when the woman has reasonable grounds to believe that her objection would disadvantage he in connection with her employment or work including recruiting or promotion or when it creates a hostile work environment. Adverse consequences might be visited if the victim does not consent to the conduct in question or raises any objection thereto.

What should a guideline/ policy contain:
1. Duty of the Employer or other responsible persons in work place

2. Definition (Given above and you may elaborate it more than this)

3. Preventive Steps

4. Criminal Proceedings

5. Disciplinary Action

6. Complaint Mechanism

Complaints Committee:
The complaint mechanism, referred to in (6) above, should be adequate to provide, where necessary, a Complaints Committee, a special counselor or other support service, including the maintenance of confidentiality.

The Complaints Committee should be headed by a woman and not less than half of its member should be women. Further, to prevent the possibility of any undue pressure or influence from senior levels, such Complaints Committee should involve a third party, either NGO or other body who is familiar with the issue of sexual harassment.

The Complaints Committee must make an annual report to the Government department concerned of the complaints and action taken by them.

The employers and person incharge will also report on the compliance with the aforesaid guidelines including on the reports of the Complaints Committee to the Government department.

8. Workers’ Initiative:

9. Awareness

10. Third Party Harassment

2. Are you incorporating enough clauses and clarity in employee handbook- if not, please do necessary amendment
Please revise it if you have not done. Not only that, inform, train employee, circulate the sexual harassment at work place, process to them on time to time, get signature from people that they have read and understood it. This will protect the organisation in future if any employee say that they were not aware about it. 

3. Are you ready with the crisis management handbook
I recently designed crisis management handbook and clearly mentioned there what employee should do while doing any kind of official communication and who is authorised to release official communication on behalf of the company. It also includes use of social media and using company's name, logo and brand on social media. It has a very clear guideline that except the designated person, nobody is allowed to talk to media and outsider for anything related to company unless they are assigned the task by top management. This helps in further damage. Today, due to social media wrong information, wrong news, misleading information and rumours easily spread rapidly. Repairing such damage is a biggest task and one must strategically manage this. To remind again, just making handbook does not help, employees need to train and remind on such points on time to time (for new joinee, at the time of joining and for existing employee at least once in a year). 

4. Do you have a code of conduct policy in place and does it cover all necessary points
 Every organisation irrespective of the size and sector should made such policy and remind people about it. I think one should not do the mistake i-GATE has done (relationship is allowed but need to be disclosed). During my initial career as an HR, one of my friend, co-worker Prasad Narkar has advised during an informal chat- "You must not flirt at workplace and make relationship at work place on purely professional basis. You must not maintain physical contact including touching women at workplace. You do not know what you need to face in future"
This is a very old thing several years back. Now we all are working at different organisation but I still remember his advice and still follow. It was a matured advice and make sense too. In Phaneesh case, if he would have kept relationship with anybody else out from the organisation- even if it would have been an extra-marital affair, he could save his job as well as the company. His only mistake was- it was an insider both time. The above lesson should be learnt by everybody. 

5. This is for HR, Admin and senior management- Do you have enough policy to safeguard your company from lawsuit?
Such lawsuit comes with a cost. Last time, in Phaneesh case, Infosys paid US$ 3 million, it is equal to Indian Rs. of 167280000.00 which is a big amount. 
Check if you have Professional Liability or Employment Practice Liability Insurance policy. If not, buy it. It helps during such tough times. 

Other related cases:
Few other cases where company faced embarrassment and executives lost jobs in India are:
1. Pradeep Shrivastava, Idea cellular, Chief Marketing officer
2. Gopal Kanda and Geethika case
3. C Venkatramana, NALCO


I think I have covered the point required and whatever I could think. I may add more points later. Any suggestion, comments are welcome.

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