Ethics and Board Culture

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

2. 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

3. 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

4. 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.

5. Why Bother?When to Fire a Top Performer Who Hurts Your Company CultureEric C. Sinoway

6. 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.

7. 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 …

8. 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

9. 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

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

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

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

14. Survival of the Fittest?

15. 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

16. No Cheating is the basis of life

17. Co-operation is Life

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

19. Thank You