How Can CEO/COOs Rubbish Compassionate Capitalism?

I admire Mr Narayana Murthy of Infosys for raising an open question, as in open to the world and not restricted within the four walls of the Infosys boardroom. He could well have discussed this with the management within closed doors but he chose to make it public. The question he raised was why should Infosys COO Pravin Rao get a 60% pay hike while compensation for most other employees was increased by just 6 to 8%.

What he emphasised is – “I have always felt that every senior management person of an Indian corporation has to show self restraint in his or her compensation and perquisites. He or she has to fight for maintaining a reasonable ratio between the lowest salary and the highest salary in a corporation in a poor country like India. The board has to create a climate of opinion for such a fairness by their actions. This is necessary if we have to make compassionate capitalism acceptable to a majority of Indians who are poor. Without compassionate capitalism, this country cannot create jobs and solve the problem of poverty.”

Why did Mr Murthy make this question so open? Because he wants those very questions that he raises to be asked, not only at Infosys, but in many other companies.

He is so right when he talks of compassionate capitalism. What does that mean? That people at the top are there at the top, not just to earn their crores and live their selfish lives but to see that prosperity spreads to people who need it most, that is the employees. You are the CEO of the company because you are more intelligent, more capable, more educated, more hardworking but you are also the CEO because you can with your capabilities help others in the organisation to grow and to prosper. That is the core duty of a CEO. What does success mean? Success not only for you but for the organisation.

The COO gets a 60% hike and other employees get 6% hike. HR executives argue that this is needed in a competitive world where CEO/COOs have to work in a more dynamic, complex environment and thus salaries will rise above the average median. This is not greed they say. But here a question that needs to be raised - if the CEO gets a 60% hike and managers get 6%, it shows that all the other employees of the company are not adding value and are not performing. Only the CEO is. So in that very complex environment, only the CEO works and all the others work their normal 8 hours and do their mediocre work. So in essence is the CEO not actually incompetent as his managers are not working and deserve only a small hike?

There is no complexity in the question that Mr Murthy raised and is very simple. The initial years of our career is largely all about money, status, positions, living in bigger and better homes, big cars. But surely after we have made a name, earned money, bought those plush houses, given the best education to our children, it should be about giving back. COOs/ CEOs definitely don’t need to do charity but they do not need to be greedy.

And yes this is definitely greed my dear HR executives!!!