Arun Sudhaman 23 Jan 2014 // 10:30AM GMT
Rajeev Dubey is president of group HR, corporate services and the aftermarket sector at Mahindra Group, the $16bn Indian conglomerate that launched a new corporate brand in 2011 to try and unify its image across various industries. Along the way Mahindra has garnered a reputation for good corporate behaviour, led by high-profile CEO Anand Mahindra.
Dubey sat down with the Holmes Report at the World Economic Forum to discuss why reputation is a such a critical element of Mahindra’s business strategy, and how strong leadership is crucial in this regard. He also warned companies of the perils of cutting corners in order to chase short-term gains, noting that they should be prepared to “pay a price” if they want to benefit from a strong long-term reputation.
How important is leadership to a company’s reputation?
No matter how you define leadership, it’s absolutely critical. The reputation of a company depends on what the company is, what it does, how it communicates what it does and what it stands for to its constituents. And, in all of these, leadership is absolutely critical, in first deciding who we are, and then making sure that everyone in that organisation and the organisation as a whole, behaves and lives out what we say we are. And thirdly in communicating. Whichever way you want to look at it, leadership is absolutely critical. Now, is it sufficient? I’d say no, because you also need processes and systems and metrics to make what we say we are comes alive. So you need something beyond leadership to convert a dream and a vision into reality. But leadership is absolutely necessary.
I’ve been in the corporate world now for 39 years and there was a stage when I thought it was processes and systems and metrics that matter much more and it doesn’t matter what kind of leadership you have. That was of course a childish and silly thought that I had. Now, I’m totally clear. With the same processes and systems and metrics, you can have absolutely different cultures and behaviours, depending on what the leadership is.
What do you think are the traits of leaders who understand reputation as an important intangible for the company, like you’ve just described?
The first is to be aware that this is so. And then to be alive and be clear as to what decisions and what behaviours and what actions determine reputation. Having done that, you walk the talk. Make sure you incentivise others in the organisation also.
In a lot of companies it seems like reputation is delegated to the communications department.
Communications is just one aspect. That is one part of the food chain. First you have to be clear – who are we? Because that determines business decisions, it determines who we are in everyday life. Then when you’re clear, you have to a do a lot of internal – getting people on board and having a lot of clarity. And then behaving that way, which is where processes and structures and metrics come in. And then the external communication. So the external communication, in a sequence, comes at the end, and it becomes a loop.
How important is a visible CEO? A lot of CEOs are quite low-profile. Your company has a CEO who is very comfortable taking on that public role.
I think there are many ways in which a CEO can behave. One is the person who stands up front. We have a CEO who takes the lead in some things but he will empower much more than other CEOs. It’s a choice. I think our CEO comes up front when it comes to defining the philosophy, when it comes to defining the culture, defining the brand. Then he delegates a huge amount. In fact if you ask me, two very important pillars of the Mahindra culture — one is empowerment and the second is respect for people. And then it is about sustained business outperformance while showing extreme care for all stakeholders, whether it is customers, suppliers, our own employees and even society. But doing all this with clear focus on what our core values are. Whatever we do nurtures and strengthens the core values of the group.
In some company the CEO is only there for two or three years. Surely that must make it difficult to have that link between CEO and reputation?
One could say that there are some organisations that already have a very strong and powerful brand. The importance of the CEO in that situation vs a company where you are creating the brand — there could be a difference. Different CEOs have different styles. I don’t think there’s any style which is best. More than the style, its the substance of what the CEO does.
You’ve talked a lot about values, vision and reputation. Do you think that mindset is put under pressure by the focus on maximising profit and on quarterly reporting?
It used to be thought that the two are in conflict. But I think increasingly now, while in the immediate short term there can sometimes be conflict, I don’t think you’ll find anyone who will say that in the medium or long term, there is a conflict between good solid business performance and governance and values. The two support each other. If I had a choice, I would certainly sacrifice short term gains for the longer term benefits which values and reputation bring. I have been observing this very closely. Losing out on your values, your reputation and the brand has such severe repercussions on your sustained business outcome. There is no question.
What kinds of repercussions?
So for example, if one values is quality. If you have any problems with quality, even if it means recalling your product or admitting there’s a problem, you have huge issues. Often times in India we have pressure to make shortcuts, or to use different means of persuading government agencies who have discretionary power. If you succumb to that once, then it becomes very difficult to resist it in the future. There are some companies and groups who have taken a stand. Once you’ve taken a stand then the other side knows they can’t expect this behaviour from you and then they don’t badger you too much. But you have to pay a price, and you have be prepared to pay a price, is the view I would take.
Some companies, caught in corruption scandals, would say that’s just the price of doing business in a market. You have to behave as the environment demands.
Well that’s one view. There is another view which says we can do good business without necessarily resorting to things that are not acceptable to us, to our value system. And we’re going to stick to our value system, and still we’ll produce good results over the longer term.