“Culture needs to be anchored on meritocracy, openness and trust”: in conversation with Mr. Harsh Mariwala, Chairman, Marico Ltd.

BoardMatters Quarterly – Volume 8

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Marico has transformed from a traditional commodity-driven business into a leading consumer products company with strong brands and an international presence spanning key geographies across Asia and Africa. Apart from other factors, a key defining aspect that has contributed to creating this successful enterprise is the active role of its board. The journey to develop a strong and independent board started from a considered focus few years ago. Mr. Harsh Mariwala, Chairman, Marico, shares insights about the continuing journey that has led to establishing an effective board.

Q. What aspects have been important to establishing an effective board at Marico?

The success of a board depends on all stakeholders. It is anchored on a combination of three different aspects: guidance from the chairperson, the value of inputs from the executive management, and the independence and commitment of board members. A few years ago, we started our journey to put this belief into action. The board was invited to actively engage in a transparent discussion to debate Marico’s strategy and even discuss the organizational culture and what needed to change. This formed the basis for a 12-month agenda with two or three key topics the board takes an in-depth look at. The topics tend to change each year depending on their relevance and impact on Marico’s business. This approach has led to greater board engagement on aspects of immense value to Marico.

Q. How crucial is it to have diverse skill sets on the board? How does that reflect from Marico’s perspective?

The diverse nature of a board can be a significant advantage. When different individuals combine their unique skill sets into an over-arching collective whole, it can be extremely effective. At Marico, there are specific parameters defined as being imperative: commitment, independence and the ability to add value. In addition to a professional managing director, there are currently six independent directors, many of whom are either former or current CEOs at other organizations. Functionally, they are diverse, including a venture capitalist, a retail expert, an HR specialist and leaders at FMCG organizations. With the average age of the board members in the early 50s, they are a good blend of being relatively young and experienced, and are extremely well connected to business realities. As I mentioned, how these different individuals come together as a team is important. Aspects such as strong interpersonal skills and a consensus-driven approach help raise the efficacy of the deliberations among the board members.

Q. What is Marico’s approach to keeping the board stay truly “connected” between board meetings?

It’s true that in between board meetings, people tend to lose touch sometimes. To address that, we prepare a monthly synopsis of key developments at the organization that keeps them connected to Marico. The board members are also encouraged to share an outside-in view of Marico basis their interactions with analysts and other stakeholders in the market. That has been very helpful as apart from gaining insights from relevant quarters, it does keep the company in the mind space of the board members in a very real manner.

Q. How has Marico ensured that the board and the management continue to play a complimentary role?

That is a good question as it is important that the board and the management are able to optimize each other’s strengths so as to deliver value. Being clear on the areas for which the board is accountable also helps separate it from areas that should be under the purview of the management. Generally, boards should help strengthen brands and identity, but they should not formulate the company’s strategy. The board can definitely challenge the management by asking questions as part of a healthy introspection process, but it has to restrict itself from involvement in operational aspects. This approach can keep the board fully abreast of the organization’s strategic direction without impacting the management from functioning effectively.

Q. How have the Marico board and the executive management gone about assessing each other, with an eye on delivering any improvements that may be required?

The company engages in an annual board insights study, which entails a questionnaire being sent to the board members and the MD’s executive team. The objective of the exercise is to collate a comprehensive view of how the board and the executive management assess each other. This is followed with an annual two-day retreat. While the first day is a strategy session in which the board engages with the executive management, providing feedback on the performance of the individuals and the aspects key to organization’s continued success in the future, the second day focusses more on the board’s effectiveness and the independent directors. Such an engagement tends to be very thorough and has been very valuable for all involved. As far as the board committees on audit and nomination and remuneration are concerned, we have independent directors presiding over these meetings so as to maintain a very fair sense of objectivity.