Ethics and Board Culture Presentation by Prashant Saran

Ethics and Board Culture Presentation by Prashant Saran Former Whole Time Member - SEBI

Development of the Markets over the last Quarter Century Breadth - MFs etc. Depth Increased Volumes Liquidity Low Spreads Certainty Both money and shares Settlement T+2 Fairness Insider Trading, SAST Rule of Law Surveillance, Punishment Transaction Cost Greatly Reduced Shadow Markets Dabba, CIS Transparency ICDR, LODR Governance Clause 49, LODR

Unfinished Agenda Incremental Work in the established areas of success User-friendliness Going beyond mere financial reporting Tackling the 400 pound gorilla in the room – Trust Deficit

Why Bother? Regulation? 4(2)(f)(iii)(2) LODR The Board of Directors shall set a corporate culture and the values by which executives throughout a group shall behave. Business Case? Intangible assets such as intellectual property, customer base and brand 1975 - 20 -40% 2015 - 80% reputational crisis now can wipe out 80% of value of a company.

Why Bother? When to Fire a Top Performer Who Hurts Your Company Culture Eric C. Sinoway Vampires Stars Zombies High Potentials

Why Bother? Peter Eckel and Cathy Trower . the whole does not equal the sum of its parts. it is not what boards do (or don’t do) but how they do that really matters. having the language to make elements of culture visible and thus actionable.

What is Culture? …ethical behaviour, efficiency and agility. Sir Michael Rake, Chairman, BT Group … How it feels to work here. Ian Durant, Chairman, Greggs … Values, beliefs and behaviours: it’s an amalgam of intangibles. Andrew Page, Chairman, Northgate … The way people behave and how you expect them to behave towards you Stephen Hemsley, Chairman, Domino’s Pizza Group …

What is Culture? The umbrella under which behaviour, standards and principles come together. Philip Rogerson, Chairman, Bunzl … the most important ingredient in an organisation’s success. Alastair Lyons, Chairman, Admiral … the principles which underlie how people act and make decisions. Peter Johnson, Chairman, Electrocomponents “Culture is the embodiment of what we are trying to achieve and how we get it. ” Mike Evans, Chairman, Hargreaves Lansdown

Three Idiots – A study in Contrasting Cultures Culture Represented by Chatur Aim of Life – to earn maximum money Hyper Competitive Ruthless and Dismissive No Fun Obsequious Culture Represented by Rancho Aim of Life – to gain knowledge Fun loving Open to experimenting

Cultural Indicators Is it a way of life to be Ethical?

Talking of Ethics Who Can Talk? How Often Should we Talk? Where should we Talk?

Being Ethical Being Fairness is Innate Why Not to lose yourself in maze of Ethical Dilemmas Being Ethical is being co-operative

Survival of the Fittest?

The popular Notion of Darwinism is a Caricature Multi-level Selection I against my Brother I and my Brother against our Cousin I, my Brother, my Cousin against the Stranger

No Cheating is the basis of life

Co-operation is Life

Being Fair subsumes Human Resource Management Customer Relationship Management Supply Chain Management Relationships with the Community Relationship with Nature

Thank You