Opinion: Character and Competence
Pure economics defies answers to many problems confronting society but behavioural economics does offer solutions.
By B Yerram Raju
Hyderabad: The Global Inequality Report 2022 mentioned that the top 10% earn as much as the bottom 64%. India’s policy reforms during the last two decades saw high growth and high inequality levels intermittently. Quite often we also witness a confrontation between the Legislature and the Judiciary. We have also come across persons of acknowledged high competence landing in jail. Why?
Sustainable and inclusive growth demands both competence and character. To define competence and character, and seeing the paths of their convergence, some storytelling becomes necessary.
The McKinsey Global Institute’s latest research on human development in Mapusa, a small town along a historic trade route in Goa, and in Porto, the second largest city in Portugal, unfolds “the story of both places that had virtually the same GDP per capita of $33,000 in 2019. At the country level, they are worlds apart: India’s GDP per capita was $6,700 (purchasing power parity) or $1,941.82 in 2019, compared with $34,900 in Portugal — overall more than five times less.”
Nevertheless, we are witnessing a few reputed leaders of self-aggrandisement and self-esteem directing the nation into the debris of material prosperity while a few others are wedded to the development of society. Hence, there is a strong need for recalling the basic principles of living that our inherent culture taught us emphasising competence with character.
S Radhakrishnan, the philosopher-statesman of India, said: “The ideal man of India is not the magnanimous man of Greece or the valiant warrior of medieval Europe but the free man of spirit who has attained insight into the universal source by rigid discipline and the practice of the disinterested virtues. He has freed himself from the prejudices of his time and place.” Indian heritage lies in humanism and universality. This sets the tone for redefining character and competence as traits of individuals and corporates.
Wheels within Wheels
Meta, Amazon, Google, Wipro, Microsoft, etc, are in no mood to keep their roasters intact. Jobs are removed in tens of thousands. NINJA (no income, no job, no asset) had set in again. Banks and real estate companies are scared of their recoveries. Rising interest rates, lowering consumption sentiments, volatile markets and untamed inflation are at the beginning of a new end.
India, for the moment, seems to make a difference, raking in higher than expected revenues in GST and GDP growth forecast from CRISIL placing it at 6% and Nomura at 5% in 2023-24. When winter sets in, can spring be far behind? Pure economics may not offer answers to many problems confronting society, while behavioural economics does offer solutions if character and competence move like two wheels of the forgotten bullock cart.
If persons of character are afraid of their shadow and fail to take decisions keeping in mind the three ‘angel-robed demons – Central Vigilance Commission, Central Bureau of Investigation and Comptroller-cum-Auditor General’, competence in them takes a back seat. Autonomy, transparency and timeliness in taking decisions never mean ignoring rules and regulations.
Lack of character is different from failure of character. Lack of character is unpardonable while failures are remediable. People who fail should be given an opportunity to correct and they should be made clear about the boundaries and consequences of the failure.
In Chapter 13 of Bhagavad Gita, (‘Kshetra, Kshetragjna Vibhaga Yogam’), Lord Krishna defines the character: ‘Amanitvamadambhitvam, Ahimsaakshantirarjavam, Acharyopasanam, Saucham, Sthyryamatmavinigrahah’. The substance of the sloka is that a person with character should be devoid of pride and disrespect; be humble, patient, and steady; should be able to have control over his self; be clean and clear in thinking and have restraint. We are at a point where we know what is right but are hesitant to adopt it. The Supreme Court had to pull up a plaintiff over the penalty sought on YouTube for airing what he preferred to see.
High Character, Low Competence
How do we handle people on our leadership team who evidence the highest character, and the best motives, but are incapable of doing effective work? In a matrix of competence and character, fixing such people would be difficult. Organisations also skip them while mapping coaching and mentoring persons for results and sustainable growth. The loss is to the organisation and not to that person.
If we can draw a matrix of high character with high competence, high character with low competence, low character with high competence, low character with low competence in a Board of Governors, we will be able to establish the reasons for the failure of many corporates who got the best ratings but ended up as disasters.
The high character-high competence scenario will automatically lead to a high corporate governance (CG) scenario. But one without the other will not lead to a good CG scenario. It is said, “Economics without ethics is empty, and ethics devoid of economics is limp”.
We did not learn our lessons after the 2008 recession. The proverbial Vijay Mallyas proliferated and none of the cases of misgovernance and colossal bank losses got resolution. Over a decade of arguments in the highest courts of jurisprudence, involving malfeasance, misappropriation, corporate failures and bad governance still defy resolution. On top of it, even the Insolvency and Bankruptcy Code gives the longest rope for resolution, and those resolved, benefitted the errant.
It is hard to disagree with EV Ramasamy Naicker, a Tamil philosopher of the 20th century, who said, “When I used to carry heavy bags during my younger days, my back would bend due to the weight, but not due to shame. Being straightforward and having less food is far better than diluting our character and taking lots of rich and quality food.”
The history of today’s wealthiest nations tells us about what happened between 1923 and 1948:
– President of the largest steel company, Charles Schwab, lived on borrowed capital for five years before he died bankrupt
– President of the largest gas company, Howard Hudson, went insane
– One of the greatest commodity traders, Arthur Cutten, died insolvent
– President of the New York Stock Exchange, Richard Whitney, was sent to jail
– The greatest ‘bear’ on Wall Street Jesse Livermore committed suicide
– President of the world’s greatest monopoly, Ivar Kreuger committed suicide
– President of the Bank of International Settlement, Leon Fraser, committed suicide
It was the pursuit of money to the exclusion of other goals that caused them their downfall.
Market behaviour largely depends on individual investor behaviour like buying-high-selling-low or buying-low-selling-high. Behaviour here largely is related to the character and not pockets. This character is typically born out of greed and not need. It is more like a honeybee that flits from one flower to another, sucking honey as it flies. But when it perches on its hive, it stops humming.
Man is made by his own beliefs. ‘As he believes, so is he.’ (Bhagavat Gita). Henry David Thoreau may have told in different words, the same thing: ‘What a man thinks of himself, that is which determines, or rather indicates, his fate.’
We need resilient boards that can build teams of executives with foresight, virtuous and timely response, and adaptation capabilities.
India is at the cusp of change and the dream of India 2050 has to be realised by a generation that is seeing the garbage at the foot of the hill. They should be directed to reach the top of a mountain and every step counts. It is competence with character that should enable a crowning future.
