Infosys Founder N R Narayana Murthy Should Take Retirement Seriously

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Narayana Murthy
Infosys founder N R Narayana Murthy

Infosys Founder N R Narayana Murthy has criticised the salary hike of COO Pravin Rao. When you opt for retirement, it is better to keep bitterness within you and allow the world to pass by.

Narayana Murthy
Infosys founder N R Narayana Murthy

Infosys founder N R Narayana Murthy is once again peeved; this time, along with other co-founders. But one point before I move on to the issue on hand. People who opt for retirement or retire, often find fault with things around them, especially in the companies they had worked before. The fault-finding mission becomes bigger when one is the founder. But when new people are at the helm, they have new ideas which may seem wrong. One should look at a broader prism and allow the world to move on. This time, the grouse of Murthy is directed at COO Pravin Rao and his salary hike.

Murthy has come down heavily on the decision of the Infosys management to offer a hefty salary hike to Chief Operating Officer Pravin Rao. The latest missive is indicative of the continuing rift between the management led by Chairman R Seshsayee and CEO Vishal Sikka.

“Giving nearly 60 per cent to 70 percent increase in compensation for a top level person (even including performance-based variable pay) when the compensation for most of the employees in the company was increased by just 6 per cent to 8 per cent is, in my opinion, not proper,” Murthy said in a letter that many see as a move to wash dirty linen in public.

Infosys CEO Vishal Sikka and COO Pravin Rao

“This is grossly unfair to the majority of the Infosys employees including project managers, delivery managers, analysts, programmers, sales people in the field, entry level engineers, clerks and office boys who are toiling hard to make the company better. The impact of such a decision will likely erode the trust and faith of the employees in the management and the board,” Murthy said in the letter.

Murthy should leave the impact factor to the new management. If Rao has received a hike, there must be a reason and rationale. Not that staff in Infosys have huge trust and faith in the organisation. That had eroded long ago when Murthy himself was at the helm.

The deepening Murthy-created rift between the founders of the country’s second-largest software exporter and the management on governance issues is surely not a good sign. Vishal Sikka should be given a free hand and as long as he and Rao deliver results, Murthy should take retirement as a serious `business’.

In his letter, Murthy said: “Without compassionate capitalism, this country cannot create jobs and solve the problem of poverty”. But it is debatable if Murthy practiced true form of compassionate capitalism.

Here is the full text of Murthy’s letter explaining his stand on COO Pravin Rao’s pay hike

Dear Folks,

I have lots of affection for Pravin. Let me state you the facts.

I recruited Pravin in 1985 and had nurtured him throughout my stay at Infosys since then.

He had been sidelined. He was not even a member of the Executive Council at Infosys in 2013 when I came back. Kris, Shibu snd I encouraged him, elevated him to the board, and made him the COO when we recruited Vishal as the CEO. So, this abstention has nothing to do with Pravin.

Infosys
Infosys office: The crisis at the top would seriously impact the software major.

Those of us who have always stood for fairness in compensation and practised it, right from the day Infosys was founded, will have to demonstrate it when needed. This is a time when it is needed. Nothing more and nothing less.

I believe in striving towards reducing differences in compensation and equity in a corporation. You may not know that my Infosys salary at the time of the founding of Infosys was just 10% of my salary in my previous job. I ensured that my younger, co-founder colleagues got 20% higher salary over their salaries in their previous job even though I was 7 levels above them in my previous job and was 11 years older than them. I gave them huge equity compensation the like of which has never been replicated in this world. So, this abstention comes from somebody who has walked the talk.

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. Experts tell me that capitalism may come to an end in the not-so-distant future if the current corporate leaders do not heed this advice in India.

Further, giving nearly 60% to 70% increase in compensation for a top level person (even including performance-based variable pay) when the compensation for most of the employees in the company was increased by just 6% to 8% is, in my opinion, not proper. This is grossly unfair to the majority of the Infosys employees including project managers, delivery managers, analysts, programmers, sales people in the field, entry level engineers, clerks and office boys who are toiling hard to make the company better.

The impact of such a decision will likely erode the trust and faith of the employees in the management and the board. With what conscience can a decent person like Pravin ( a man schooled in Infosys values for over 30 years) tell his juniors that they should work hard and make sacrifice to reduce cost and protect margin? I have got so many mails from these people asking whether this resolution is fair. No previous resolution in the history of the company has received such a low approval.

Finally, given the current poor governance standards at Infosys, let us also remember that these targets for variable pay may not be adhered to if the board wants to favor a top management person.

Thanks.

Narayana Murthy