It strikes Wharton management professor Jitendra Singh as ironic that most of India’s top executives were trained in management schools that based their educational philosophies on lessons from American big business.
As America’s companies struggled with the downturn, the India economy did not see even one negative quarter and Indian businesses reported increased revenues and profits.
Maybe, Jitendra Singh and three of his Wharton colleagues believe, America could learn a lesson from how Indian chief executives view their responsibilities.
That’s the opinion they express in their recently released book, The India Way: How India’s Top Business Leaders are Revolutionizing Management. Singh and one of his coauthors, Harbir Singh, presented their findings last weekend at a daylong Wharton-sponsored conference in Philadelphia on Indian business practices. The other authors are management profs Peter Cappelli and Michael Useem.
The four interviewed 150 top Indian executives. A stunning finding: They do not consider their top priority to be maximizing shareholder value. That’s number five. Number one is a feeling of responsibility to all stakeholders — employees, shareholders, their communities and the nation.
“I think in the U.S., chief executives have gone overboard” in their emphasis on shareholder value, Jitendra Singh said. The growing trend of tying executive compensation to share price gives them an incentive to take short-term actions that benefit them, but might not necessarily have the long-term interests of the company at heart, he said.
Useem suggests a small, but courageous, step for CEOs that would help them escape the Wall Street treadmill:
Stop offering guidance, at least for the quarter. How often do share prices swing wildly for no concrete business reason other than they are within points of Wall Street expectations?
Today is March 31, the close of the first quarter and earnings season is nigh. Maybe it is time to try the Indian way. Instead of “guiding” Wall Street, execs might focus on “guiding” their companies by taking a longer-range view.