Ethisphere’s Aarti Maharaj had the chance to chat with Chandramohan Ramanathan, Vice President – Controls , Compliance and Ethics at United Spirits, a Diageo Group Company, about his career and maintaining integrity across the alco-bev industry. In this exclusive interview, Ram highlights initiatives at Diageo that address challenges such as changing employee mindset. See the full interview below.
AM: Let’s begin with your role at Diageo India. What really inspired this interview was a conversation we had about your previous life before you joined Diageo, and I thought that was very interesting and would be very useful for our readers—especially those that have a background in risk management. In your role at Diageo, you wear many hats. How has your experiences in ethics, compliance and risk management molded you for this job in particular at Diageo?
CR: I joined Diageo since 2008 as a commercial business partner and also I was very keen in developing controls and standardizing the process spreading across commercial and manufacturing. That was, I believe, as my goal then. I see integrity something close to my heart. When I think about it, integrity it’s either you have it or don’t have it. The measurement remains binary, either 0 or 1. In short, integrity for me is everything. One big change that position gave me as a challenge is changing the people’s mindset. A lot of dialogues happen between myself and the business process owners, who have been in the system for the past 10, 15 years and working on the same profile. As I surveyed and interviewed, the first reactions from them is, why should I change it? People’s mindsets were very stubborn and they were static. Okay. I would often hear, ‘All along, I’ve been doing this for a number of years and everything is working fine. Why do I need to change?’ With this in mind, I also asked them, what are the key things you do in a process? In response, each member came up with 10 steps they do in an end-to-end process, which they had been handling over the years. As a business partner, I told them, let’s review these steps together and I will extract two or three steps of what we are currently doing. Instead of that I will replace with one step, which I wanted you to do—making the work that they do simpler, effective and impactful. From here, I started seeing people coming to me or buying my agenda. Then I understood that change management is all about selling your thoughts. Compliance also comes as a cultural change. It will involve a change of behavior of a person. Doing the right things in the right way is very, very important, which will lead to success of any organization. And when I look at Diageo India, trust and respect sit at the core of our performance ambition.
AM: When you said ‘change people’s mindset,’ what do you mean exactly? Can you provide an example of how you’ve done this?
CR: The code of business conduct for Diageo India has around five sections to it. One is on personal integrity, which talks about responsible drinking, conflict of interest and insider trading. Then there is our people agenda, It addresses: health and safety, personal security, discrimination and harassment and human rights. Then there is commercial integrity, leadership and partnership, and the last piece is about assets and information. When you think about our Code and changing the mindset of our people, they have their own understanding of each segment of the code. And any change which is conflicting to their person beliefs—will always come with resistance. If you want a change to be adopted, there are two ways of doing it. One, we can say that this is the policy of the company, which a straightforward, simple, to my mind a stick approach. The other way of looking at that is, how do we sell this thought or the principles to the process owners or to the employees. The first approach, which is a stick approach, is going to be a check-the-box activity. It may or may not sustain. But the second one is that if you are able to sell your thought and if you’re able to have a buy-in from the employees, then it’s going to be sustainable. To clearly explain, what are the benefits each of the principles will bring into the company and how is it going to help their values ecosystem. Then they will follow it without anybody monitoring them. My principles have led me to the second approach, which will be sustainable, changing their mindset in terms of making them clearly understand what each policy says about it, what each policy gives you as a value addition to it.
AM: When it comes to the alcobev industry, what makes India so unique when compared to other parts of the world?
CR: India is the world’s fourth largest economy and has been growing in the high single digits in the recent past. Despite its vast potential, the beverage alcohol industry including Diageo India, annually requires an overwhelming 200,000 government approvals, right from procurement of raw materials to final sale of end products. Moreover, price determination by state governments continues to be a major blockade in doing business in this sector. While all countries impose regulations on this sector, India is the only country being subject to taxation and price controls. It is difficult to increase prices even to offset inflation. Moreover, price approvals and increases are wrapped in opacity and discretionary powers, with little or no transparency, no clear process laid down in law and no guiding principles. Furthermore, the social stigma of advertising alcobev brands though the use of media like television, radio and newspapers also needs to be worked on. Another challenge is prohibition, which deprives governments of legitimate tax revenue, shifts much of the alcohol business underground and encourages illicit trade. It also forbids the majority of people who consume alcohol moderately and responsibly. However, it is clear that people have legitimate concerns around alcohol harm, which must be addressed and we are committed to doing just that. We believe that a balanced mix of intervention programs, policies and education are required to address harmful drinking.
AM: Why does leading with integrity matter in the alcohol-bev industry?
CR: Integrity is the backbone of every organization. Leaders with integrity actually strengthen the business. Companies with strong ethical management teams attract investors, customers and talented professionals. A good leader is a combination of many qualities including a vision for success and believes in creating a team that will just not follow you blindly, but also challenge and develop their talent and empower people to accomplish their goals. In the alcohol industry, which is always seen for the wrong reasons, Diageo India is leading the way in building integrity, in whatever we do.
AM: Tell us more about your initiative ‘Path to Pride’
CR: The objective of the path to pride is to enable the middle management to take the baton from the top management to reach the grassroots level. While you can have a strong tone at the top, you need to lead at the grassroots level. We also need to enable middle management in terms of taking that baton. There are various initiatives that have been rolled out in achieving this objective. This initiative enables and empowers middle management to talk about compliance. Now what is the impact this is going to bring in? Well, if a person from any function/location can confidently talk about compliance connecting to their personal experience, it connects well within the team and has a greater impact in terms of sustainability. We are also exploring opportunities to connect compliance closer to employees by linking principles of compliance to the tools that everyone uses in their day-today business operation.
Disclaimer: The views expressed here are personal.
About the Author
C. Ramanathan joined United Spirits Limited – a Diageo Group Company in January 2008 . He has over 20 years of experience in the field of finance across various verticals, which include plant finance head, commercial finance business partner, planner & controller. In his current role, he is responsible for delivery of SOX & IFC requirements and focuses on building culture that can make Diageo one of the most trusted and respected consumer goods companies.