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VOLUME - I, ISSUE - V `50/- Director TodayJuly 2015 A Journal of the INSTITUTE OF DIRECTORS India Pages:60 IOD Celebrates 25th ANNIVERSARY an overview 12 Interview This Month's Articles tailored for you of the Month 32 Directors’ Dilemmas: Why integrity is Board Opportunities in Reconciling Competing Claims good for business the United States? Prof. Colin Coulson-Thomas 6 Richard Leblanc 16 Dr. Larry Taylor 18 R R JUB E IL V E Building L E I S Scan with Tomorrow’s 2years5 Smart Phone IOD Since 1990 QR Reader Institute Of Directors Boards App: www.iodonline.com R JUB E IL V E L E I S 2years5 Since 1990 Contents Director Today FEATURES A Journal of the INSTITUTE OF DIRECTORS India July 2015 Directors’ Dilemmas: 6 Reconciling Competing Claims EDITORIAL BOARD Prof. Colin Coulson-Thomas Lt Gen JS Ahluwalia, PVSM (Retd.) Manoj K. Raut What Sets IOD Apart: Pradeep Chaturvedi 12 Ashok Kapur, IAS (Retd.) IOD’s 25 YEARS - An Overview Lt Gen J.S. Ahluwalia, PVSM (retd) Prof. Colin Coulson-Thomas Dr Graham Wilson EDITOR Why integrity is good for business 16 Manoj K. Raut Richard Leblanc SUB EDITOR Reji Mathew Board Opportunities in the United States? Dr. Larry Taylor 18 GENERAL MANAGER PUBLICATIONS Joel Shalom Aligning Corporate Social 20 MANAGER DESIGN Responsibility with Affirmative Action Teena Lejo Soumitro Chakraborty IOD (HEAD OFFICE) New Delhi Environmental Sustainability M-56 A, Greater Kailash - II, (Market) J.S.Ahluwalia 22 New Delhi - 110048 Tel: +91-11-41636294, 41636717, 41008704 • Fax: +91-11-41008705 Felicitations E-mail: [email protected] 27 Website: www.iodonline.com REGIONAL OFFICES The Compliance Confusion - 28 Mumbai Obscure Indian acts you Need to Comply with 1092-C Wing Oberoi Garden Estate, Suryaprakash Kukyan Chandivali Andheri – East, Mumbai - 400072 Sustainability Focus Case Study Tel : +91- 22-40238141 / 42 / 43 34 E-mail: [email protected] Marks and Spencer Group PLC, UK Bengaluru Corporate Governance Focus Case Study # 201, Oakland Apts, Ulsoor Road, 40 Next to Vidyadeep College, Cummins, Inc., USA Bengaluru - 560042 Board Nos: +91- 80-25092234. Fax: +91- 80-25583490 IOD announces appointment of 50 Email: [email protected] Chairman for UAE & Qatar Chapters STATE CHAPTERS Kerala Tamil Nadu 32 REGULARS SUBSCRIPTION RATES FOR DT India Interview of the Month Annual Subscription Rs 500 32 Each Issue Rs 50 News & Views Page 60 52 Owned by: Institute of Directors Appointments & Movements Printed at 57 Maximus Packers Okhla Phase-1, New Delhi, India Disclaimer: The opinions expressed in articles/ stories are the personal opinions of the author. IOD / Editor is not responsible for the accuracy, https://www.facebook.com/iodonline completeness, suitability, or validity of any information on those articles. The information, facts or opinions expressed in the articles do not reflect www.iodonline.com the views of IOD/ Editor and IOD/Editor does not assume any responsibility or liability for the same. From the PRESIDENTS DESK As it completes it's 25th year, IOD is proud to have made its mark on the corporate landscape in many ways. It's mission has been to lead a holistic transformation of boardrooms, through a spate of initiatives and corporate strategies. IOD has been preparing Directors for the turbulent business of tomorrow's world, and believes that business should be put centre stage, to drive social, environmental and ethical agenda, treating it as a competitive differentiator. IOD's business plan includes a strategic networking component that helps directors grow their business. Conferences provide opportunities for networking with a diverse range of industries and experiences. Boards must also actively engage with how the issues of climate change impact their operations, risk, and strategy. SMEs growing at the rate of 8% per year have an immense potential to bolster India's economic progress to contribute 15% of India's GDP, by 2020. The present Modi government's plan to build a strong business eco- system for SMEs provides a single point of reference for the industry, and it is also pushing PSU banks to connect with SMEs for their loan requirements. Corporate governance is the key to determine the effectiveness and sustainability of a company. Too often governance debates have been dominated by the concerns of MNCs. There is a need to put more emphasis upon the governance of family owned companies, and SMEs. The Organization for Economic Cooperation and Development (OECD) came out with a revised set of 'Principles of Corporate Governance' in November 2014,with greater emphasis on 'Comply or explain' approach, (no 'one size fits all'). IOD supports the OECD 'Principles of Corporate Governance', rather than the 'Rules'. Appraisal of Board Performance includes defining individual and collective roles and responsibilities of it's directors, and creating awareness about their expected levels of performance. An annual board evaluation will contribute significantly to improved performance at organizational, board and individual director levels. IOD will be building on it's success so far. It's strategy will be to influence government and industry alike, to deliver significant improvements in the functioning and effectiveness of corporate boards. We plan to continually work closely with leading professional organizations, to drive responsible performance. At present, there is no institution in India to speak up collectively for the community of company directors, and represent their distinct interests and concerns. IOD as a professional organization of directors now plans to fill this gap. IOD Publications have played an important role in providing well researched, peer reviewed informative surveys and reports, in the form of a series of books, handbooks and monographs. IOD's monthly journal 'Quality Times' has been one of the leading corporate periodicals in India. It has now been replaced by 'Directors Today', a larger professional version, coinciding with the Silver Jubilee year of the IOD. It covers professional events, seminars, workshops, and includes articles on corporate governance from eminent industry and thought leaders. I thank you for your continued patronage of 'Quality Times', for the past 25 years. I am sure 'Directors Today' shall open still wider avenues for our communication, to promote higher J.S. Ahluwalia President, IOD standards of skill knowledge, and professionalism in directors. Article Directors’ Dilemmas: Reconciling Competing Claims Prof. Colin Coulson-Thomas Director General, UK and Europe Operations, IOD India Directors face challenges and dilemmas in and out of the boardroom. High among them is achieving a balance between Directors have to think competing claims and/or contending forces. Boards have to simultaneously create opportunities and avoid risks. They must about both the structural and be both commercial and responsible, and consider the demands the behavioural aspects of of different stakeholders. Directors have to think about both the structural and the behavioural aspects of governance. They governance. need to juggle priorities in relation to what is possible with [ Our focus will be upon balancing opposing forces and different accessible resources. considerations, rather than achieving a balance in the Striking the right balance between different considerations can membership of the board in terms of factors such as age, sex, result in harmony, progress and satisfied stakeholders. Putting experience, nationality and length of service. The choices we too much emphasis upon particular requirements can lead to will consider are those that may face most directors at some frustration and disappointment. Indicators of imbalance could point in their board-level careers. Their relative importance include frustration and alienation. Responses can range from will vary according to situation and circumstances and the opposition to revolt from staff, customers and investors. challenges & opportunities facing a particular board. DBoards that fail to achieve the required balance often have to work harder and the more they struggle, the deeper into the Width versus Depth mire they may sink. A key issue for both individuals and nominations committees is Making the Right Call the number of boards a director should sit on. Holding more than one directorship, and a series of directorships over time, In this article we will examine some of the areas in which can result in a rich diversity of experience, especially if the directors have to make choices such as deciding how far to appointments are complementary and past lessons are relevant travel in certain directions rather than others in a multi-polar to future aspirations. Too few external commitments can situation, or along a bipolar spectrum. An example of the narrow a perspective, while too many at the same time can former is a project manager's juggling of cost, time and quality. result in insufficient time to give proper attention to the affairs My 2001 book Shaping Things to Come identified a number of of any one board. Put simply, a director has to achieve a balance bipolar situations in which a balance has to be achieved between width and depth. between different factors. Examples include activity and While insufficient effort may create certain problems, going reflection, change and continuity, and risk and return. beyond a tipping point might trigger other adverse consequences. One can devote too much time to details and DIRECTORS WHO ACHIEVE AN become so involved in them as to lose sight of the whole and the EQUILIBRIUM IN THEIR “big picture”. Directors should know enough to be accountable and answerable for their decisions. They need sufficient WIDER LIFE ARE THE ONES WHO MAKE engagement to be aware of what is going on, but not so much as to risk “going native”, losing objectivity and ending up not BALANCED JUDGEMENTS IN being able to see the wood for the trees. THE BOARDROOM. Width versus Depth Experience of serving on boards and working with boards suggests that often the directors who achieve an equilibrium in Individuals vary in their motivation for seeking boardroom their wider life are the ones who make balanced judgements in appointments and deciding whether or not to join particular the boardroom.

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