nfosys employees and shareholders have fired Infosys management, after an annual performance appraisal exercise conducted last month. With employees and shareholders keen on maximization of companies revenues and share prices respectively, the entire top management of the company have faced the axe. Low tolerance to poor performance in the backdrop of global economic turmoil has contributed very significantly to the decision to fire Infy management.
Despite a 29% rise in net profits for the fourth quarter as compared to corresponding quarter last fiscal, the company suffered a drop in net profits by 1.7 % on a sequential quarter basis and reported a 2.7% decline in topline. EBIDTA on a sequential basis also dropped by 10 per cent.
"Prior to asking the the top management to quit, including the entire board of directors, we had asked them to achieve increase in net profit of Q4 on a sequential basis by over 20 per cent. But after the failure of the management in preventing drop in net profits and topline, the entire management was asked to put in their papers or face termination of their employment contracts" said R.Siva, head of PM Investments, one of the largest investors in the Bangalore based company.
"Tolerance to poor performance has come down to zero given the current economic scenario," said V.Balakrishnan of CEO of Instantex which holds 7 per cent equity stake in Infosys. Usually, the top management is given some more time to improve themselves, but this time there had been no such consideration, he said.
"In a downturn, management has to adapt, cut costs, identify new markets and generate new revenue sources. Our management is guilty of not identifying the changes early and reacting accordingly. They had failed to adjust to client pricing pressure resulting in lesser profits and drastic fall in share prices."
The management appraisal was conducted for the board of directors and heads of all departments. All of them were found unfit to manage the company during a period of an economic downturn and were pip-squeked out of the company.
According to V. Balakrishnan, managers who are pip-squeaked are those who the shareholders and company staff believe do not have the attitude or the capability to demonstrate any improvement if put on a 'Personal Improvement Plan' (PIP). Those who are found fit for PIP are put on that and those unfit are PIP-squeaked.
Pip-squeaking is a new jargon used by shareholders and employees of companies, which means cutting down to size highly paid managers, departmental heads and directors by firing them.
