Infosys chief mentor N.R. Narayana Murthy has a favourite quote. “We follow one principle,” he says. “The softest pillow is a clear conscience.” There are several other sayings in his armoury. Sample another: “We would like to be (first) known as decent, honest and trustworthy people and then as smart people.”

Murthy is a role model not just in India but in the West also. A decade ago, he wouldn’t have been. That was the age of “Greed is Good” Gordon Gecko. In the 1987 movie Wall Street, Gecko (played by Michael Douglas) told shareholders of Tedlar Paper: “The point is, ladies and gentleman, that Greed — for lack of a better word — is Good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms — greed for life, for money, for love, knowledge — has marked the upward surge of mankind.”

Superficially at least, Gecko was a crusader against corporate greed. His targets were the executives of Tedlar, which had 33 vice-presidents… “with their luncheons, their hunting and fishing trips and their corporate jets...”.

The Geckos and his targets — both of whom were crudely questing for money — went into hibernation after corporate scandals such as Enron swamped America. They appear to be back. All surveys show that executive pay is increasing at a rapid pace. The perks of the corner office are also growing. According to the Watson Wyatt 2006 Executive Reward Survey, boardroom pay levels in the UK’s top companies have raced ahead at twice the rate of the average worker. In the US, the top 100 companies increased their CEO pay by 25 per cent, says USA Today. The average worker saw a 3.1 per cent hike.

India has still a long way to go. According to the Mercer 2006 Global Pay Summary, Indian companies are amongst the lowest paymasters when it comes to heads of, say, HR or finance. The average finance director, for instance, has an annual base salary of $53,800, against $250,000 in the US.

All this may not have mattered if the bosses had been delivering. They are not. Though a large part of the CEO pay is supposed to be linked to performance, the reality is different. Consultancy firm the Hays Group conducted a study two years back. It found that average basic CEO salary in a large firm in the US was around $1 million, while the variable component (related to performance) was $4 million. There should have been a fluctuation in this component in good years and bad. There is no evidence of that.

Driving home the point is another recent study by Right Management. The career transition and organisational consulting firm found that only 47 per cent of board-level executives over six countries said that they were fully committed to their jobs. More than a sixth fell into the “benchwarmer” classification. What’s worse, the disengagement grew with the number of years the individual had been with the company.

“What is clearly lacking in all these companies and executives is a sense of moral purpose,” says Mumbai-based HR consultant Shashi Rao. “We have been lucky in India. Family-run businesses have a commitment to their employees and the community. Besides, there are some large professional groups like the Tatas that have always upheld ethical values, even at the cost of growth.”

But the trouble, she adds, is that moral purpose is difficult to define or understand (see box). Andy Hanselman, writing in Management Issues magazine, says that companies can make happy profits (which the customer doesn’t mind) or crappy profits (a rip-off). Crappy profits are counterproductive in the long run. But too many companies today echo John Maynard Keynes and his memorable “In the long run, we are all dead”.

A SENSE OF PURPOSE

The four categories of moral purpose which are most successful and influential in today’s business

Discovery. Here the type of morality is “the new”. The moral basis for actions is “I have freely chosen it”. Typical examples include innovative, technological companies such as IBM, Sony, Intel and Virgin.

Excellence. Here the type of morality is “the good”. The moral basis for actions is that it constitutes fulfilment. Typical examples include professional and creative companies such as Berkshire Hathaway, The Economist, Apple and BMW.

Altruism. Here the type of morality is “the helpful”. The moral basis for actions is that it increases happiness. Typical organisations include many political movements, charities and also Wal-Mart, Marriott, and the Body Shop.

Heroism. Here the type of morality is “the effective”. The moral basis for actions is that it demonstrates achievement. Typical examples include ambitious and daring companies such S.G. Warburg, Microsoft, Ford, and Exxon Mobil.

Source: Purpose — The Starting Point of Great Companies, by Nikos Mourkogiannis