Satyam: a mammoth crisis
By Ganapathy Viswanathan on Jan 12, 2009 in crisis communications
No body on earth could have believed one of the worst corporate crisis in the history of corporate India. All of us know a few years back it happened in the US with Enron and World COM. Even in India again from the same state we saw the folding up of Global Trust Bank. Finally what happened, the government stepped in and the bank was merged with Oriental Bank of Commerce. First time it is an accident, second time it is a coincidence and we now need to examine if this happens again then there is particular pattern that this state is following and it is a clear sign that more irregularities will explode as the state in question is weak on the corporate governance.
Chandra Babu Naidu, who held the post of CM for 10 years and promoted himself as the CEO of Andhra Pradesh (Inc.), introduced corporate governance. Now how did he bring this in? He just focused on IT and got many big IT companies from Hyderabad to make everything computer enabled so that information was accessed with speed and accuracy.
He himself roamed with a laptop. It was brands like Satyam that catapulted Andhra as the IT capital of India in the global market. But in a matter of the last 6 weeks, the brand Satyam has not only eroded the entire pride of corporate India but has dumped India’s expertise and equity in the IT domain to its lowest levels. This is a major crisis and we need to protect the employees of Satyam and resurrect the image of India quickly before it goes out of control. The government needs to act at jet speed. They have done so by getting 3 stalwarts from the respective field to repair the damage. How soon and what strategy will the think tank bring to the table, only time will tell us that.
From public relations’ perspective, it is national crisis and not just isolated to Satayam. More shock may emerge as the Pandora’s box is opened when various bodies will investigate this corporate terrorism. To begin with, the government must come out with some very drastic and tough measures to control such unscrupulous promoters to tarnish the country’s image. While the law will take its own course to find the mystery, the public will forget as memory is short. But that should not dissuade the government is to enforce stringent punishments once the correct verdict is out.
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On Jan 12, 2009, Suresh Mangaladurai said:
The Satyam fiasco is not a standalone incident as it is made out to be. Neither was it an unexpected event as portrayed. The warning signals of Satyam’s downward slide were there for any trained professional to notice. However, we tended to ignore them as we Indians do of most wrong behaviour and practice. As a result we now have a national crisis on our hands. It is high time PR professionals in India moved from a crisis communication approach to one of risk communication.
On Jan 12, 2009, kapadiia himanshu said:
true,also satyam is the tip of the ice berg, i see opportunity in a crisis for all of us.
On Jan 12, 2009, Palin Ningthoujam said:
I also heard and read on some newspaper pieces that Satyam’s PR has been excellent. One reason why Satyam has been getting major awards all these years.
On Jan 12, 2009, Suresh Mangaladurai said:
Transparency International’s – “Bribe Payers Index – 2008” spells out the levels of corporate corruption in 22 of the world’s wealthiest and economically dominant countries which are likely to engage in bribery when doing business abroad. While Russia heads the table, India comes third.
According to a report released by Clear Capital, a subsidiary of the Noble group, more than hundred companies in the BSE 500 were resorting to creative accounting (a euphemism for malpractices) to flatter their results. Some of the creative tricks used were revenue and cash manipulation. The report also states that Nifty 50 companies were just as likely as small and mid cap companies to have suspect accounting practices. Clear capital has gone further and states that when they approached these companies to discuss their aggressive financial statements, the companies didn’t even bother to deny any wrongdoing but instead threatened about the reputational damage to the Noble group if it went public with the information.
As Himanshu has rightly said, Satyam’s case is just the tip of the ice berg and there are many more and far greater irregularities happening which have not been brought to the limelight due to lack of proof for we Indians believe that there is no harm in doing wrong as long as we do it right. Satyam’s case is proof of the rot that has set into Indian society and more so into corporate India.
Satyam’s fiasco was to be expected. The warning signals were there for all of us to see. However, we have deliberately chosen to ignore. The more we ignore these signals the more these kinds of irregularities will dominate centre stage in corporate India.
It is a pity that we Indians only wake up after the horse has fled the stable and then resort to crisis communication while the need of the hour is to bring to the notice of all concerned the signals of danger and risk through effective risk communication, thereby defusing crisis that may lead to disastrous proportions.
While most of my fellow practitioners including Himanshu have been pointing to immense opportunities in crisises and portraying crisis communication as the way forward, I believe that risk communication is the way forward for after all isn’t prevention better than cure? There are far greater opportunities in risk communication as the client will find this more beneficial.
Therefore PR agencies must back their ongoing efforts with systematic and scientific research to understand and handle the pressures that a company may be subject to. This can help them identify risks and enable scientific forecasting rather than current fortune telling.
I’m not denying that some companies are investing in research but it still remains highly unsystematic and unscientific.
Wake up my fellow professionals before it is too late.
On Jan 14, 2009, kapadiia himanshu said:
yes suresh what u say is true , but the companies have to realise that and satyam case is an eyeopener for sure. I have been trying to get something on lines of a business continuty program for my clients, and as sunny deol says in the movie damini, tarek pe tarekh, tarekh , tarekh, all i get is dates for meeting and they keep getting postoponed and more fires burn everyday to put off…..
On Jan 14, 2009, Suresh Mangaladurai said:
Himanshu, I agree with you completely for risk communication also entails educating the client of the dangers of ignoring the warning signals. In our urge to get more business we tend to let the client ride rough shod over us. We must make the client understand that we are the professionals and they have hired us to display professionalism and they too must reciprocate the same by exhibiting such professionalism. I agree it is a tough job but we have to make a start somewhere to change such mindsets. We should not be looking for short term gains but seek long term sustainable gains and this is possible only if we put our foot down. Tall order indeed!
On Jan 14, 2009, Sunil Agarwal said:
An editor once told us PR professionals, “what is bad news for you is good news for us.” The Satyam headlines will continue, and that is the real bad news. Everyone is entitled to his 15-minutes of shame, but 15 days… must an entire industry be sacrificed in the name of “responsible” journalism?
On Jan 14, 2009, Suresh Mangaladurai said:
Sunil, I’m sure you have far more experience and understanding of such issues than I do but given my limited understanding of things, I personally believe that the editor you have quoted has a rather traditional approach to the whole issue of the working relationship between Journalists vis–a–vis PR professionals as well as the relationship between the two sectors in communication. Things are changing and so editors are no more under the illusion of being independent of PR or better than PR.
This reminds me of a rather crude example that one of my friends who is a senior communication professional turned academic used to say, “The relationship between journalists and PR professionals is that of a dog and a lamp post. The only problem is that both of them think they are the dogs excreting on the other being; the lamp post”.
The highlighting of the Satyam fiasco by the media can be read as a great service being done by the journalists to promote PR as an industry by creating awareness of the need for preventive communication processes amongst top decision makers in corporate India. The watchword of most companies would from now on be,”Be prepared” and that is where PR and its use of risk communication can benefit.
In fact I would go further and say that PR professionals should now commence an institutional campaign and benefit from the current imbalances and uncertainty.
On Jan 14, 2009, Nidhi Mehra said:
Was just thinking how best this present situation can be handled at Satyam. Came across an article that had talked about the case study of Silicon Graphics going bankrupt. The article mentioned how the company had engaged independent journalists to work in its PR dept. The freelancers/ independent journalist’ job was to ask some probing questions from the mgmt everyday. Also the company would share critical information about restructuring and reviving the firm with all its employees, clients and supply chain through newsletters/ email blasts. This initiative kept their employees and partners well informed about the activities of the company. I think such activities will help Satyam as well.
Also the message that needs to be driven is that the company is not bad but it was the governance. The company needs an overall image makeover.
I feel internal communication is very essential for the company – Innovative PR by undergoing some initiatives with the marketing & HR depts. Need of the hour is to communiacte, communicate & communicate.
I feel Satyam has to agressively look at PR to get the message across and build the overall credibility once again.
On Jan 14, 2009, Suresh Mangaladurai said:
Ideally you should use independent communication researchers / analysts rather than journalists for such work. Such researchers / analysts can provide customised newsletters / reports on a daily, weekly, fortnightly or monthly basis which would result in saving of time, money, manpower and investment for such companies by using a systematic and scientific process utilising appropriate technologies. Anyone interested can contact me for more details.
On May 6, 2009, kol saati said:
Thank You..
On Sep 18, 2009, Web development lucknow said:
Oh it is great article,
But at present Tech Mahindra take over Satyam .