At India Inc, laissez-affaire too often gets laissez passer

Mumbai | Bengaluru: At a leading IT company, the office gossip mill was working overtime. The chief executive’s relationship with a much younger team member had begun attracting considerable attention. Colleagues noticed the two arriving and leaving together, often staying back at odd hours. What followed was harder to ignore: preferential treatment, acknowledgements in team meetings and out-of-turn promotions.

A counselling session with the chief human resources officer (CHRO) was hardly taken seriously. It was only when the woman was moved to another department, eliminating the direct reporting relationship, that the organisation appeared to have found a way to manage the situation.

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The controversy surrounding Nvidia founder Jensen Huang’s extramarital affairs has brought this question into sharper focus: when does a CEO's private life stop being private and become an organisational concern? For India Inc, this is hardly unfamiliar territory. Corporate affairs, including relationships involving senior executives, are among the industry's most closely guarded open secrets.

What is more revealing, however, is how organisations respond. Particularly when the individuals involved are powerful CEOs, CXOs or promoters, the preferred approach is often containment: a quiet transfer, discreet counselling, a negotiated exit or, quite simply, looking the other way.

“Most of the time, such matters are hushed up. Sometimes there is a financial settlement or a payout, and the person is quietly moved out. Unless somebody complains, there is little appetite to investigate,” a CHRO, who has dealt with such situations, said on condition of anonymity.

At a large Indian conglomerate, the corporate social responsibility (CSR) head found emotional support in a senior colleague while going through a tumultuous marriage. This support gradually evolved into an unofficial relationship that continues to this day. Colleagues allege that the senior executive has extended considerable professional liberties to the CSR head, at times bypassing established procedures.

“We all know about it, but there is not much to do given that their departments are separate,” said the conglomerate's CHRO, who did not wish to be identified.

A recurring pattern, according to HR veterans, involves senior executives and their juniors. The power dynamic in such relationships can make matters particularly complicated.

“When relationships become difficult to manage, the woman is often transferred to another department or location to avoid a conflict of interest. And often the woman does not complain,” said a former CHRO of an automobile manufacturer.

Monica Agrawal, chairperson and country head-India at global consultancy Sheffield Haworth, said that affairs among senior executives have always existed, with organisations largely looking the other way. What has changed, she said, is the degree of public scrutiny.

“Once an affair becomes public knowledge, the board has little choice but to be seen taking a stance,” she said, recalling an instance at a fast-moving consumer goods company where an executive was quietly moved out.

In another case, involving a different manufacturer, the CEO was known to take women colleagues on domestic and international trips. An official complaint followed, but the matter was handled discreetly. The company eventually opted for a financial payout through a negotiated exit strategy for the CEO. The executive subsequently took up the CEO’s position at a rival company.

Who pays the price?

The consequences of workplace relationships can be markedly different depending on where one sits in the corporate hierarchy. While a senior executive may negotiate an exit or move on to another organisation, the subordinate often has fewer options.

The CHRO of one company was known for having female employees spend much of their working day in his office. Rumours circulated about one of these relationships becoming serious, before the woman eventually left the organisation.

Former RPG Group CHRO S Venkatesh, now the CEO of an eponymous HR advisory firm, said that companies need to examine whether relationships have resulted in preferential treatment, out-of-turn promotions or misuse of organisational resources. “If a relationship is consensual, there are no current spousal implications and it does not cause damage to the company. There is no single answer that applies to every situation,” he said.

While industry insiders say that an executive dismissed, even quietly, can find it difficult to get another job if the affair is known in industry circles, many get away with their workplace indiscretions. One senior executive with multiple workplace relationships was dismissed by an organisation, yet went on to seamlessly secure a global CXO role.

Several CHROs said they had not witnessed a public confrontation in India involving a powerful corporate leader comparable to the Huang episode since the scandals involving Phaneesh Murthy, who exited two different IT companies over allegations of sexual harassment. Relationships continue, but organisations generally appear to favour quiet interventions over public fallout, they said.

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The dynamics can become even more complicated when relationships extend beyond the office. Relationships with vendors, suppliers and dealers can blur the boundaries between personal equations and business dealings.

When HR cannot confront the boss

A CHRO may find it relatively easy to counsel a middle-level manager. Confronting a CEO or a powerful promoter is an altogether different proposition.

Purely personal relationships are outside HR’s remit, according to former CHRO Prabir Jha. But when colleagues are involved, organisations must examine conflicts of interest, confidentiality and the possibility of business decisions being influenced by the relationship.

The legal position, too, is more nuanced than a blanket prohibition on workplace relationships.

Dimple Merchant, solicitor, Bombay High Court, and partner at I.V. Merchant & Company, said that personal relationships do not automatically amount to conflicts of interest. However, where they affect professional decisions, companies must ensure appropriate disclosures and safeguards.

“Where the CEO is involved, independent directors should oversee an inquiry through a separate board committee, supported by external legal counsel. HR cannot reasonably be expected to police its own boss,” Merchant said.

The Prevention of Sexual Harassment Act addresses sexual harassment and does not prohibit consensual relationships, she added.