Ramakrishna Karuturi, Chairman and Managing Director of the Rs 370-crore Karuturi Group, knew that dreams die for many reasons. But being hollowed out by his own top man was not among them. The man had hired a ceo for his group company, Karuturi Networks, to make a go of VOIP telecom technology in the international call market. He had invested a claimed half-million dollars in R&D to develop a proprietary 'black box' for the purpose. Little did he worry about its ownership. So imagine his shock when the CEO quit to set up his own company with the same blueprint, based on the same device.

"More than one year's work and an Intellectual Property worth at least $10 million had been stolen," Karuturi recounts, bitterly. He sought legal help, has filed charges, but no redressal can come soon enough to save his dream.

Brains Can Go

Sometimes, it's other less defined intellectual matter that a company loses with a top-level departure. Intimate knowledge of processes, the little trade secrets that go undocumented, knowledge of specific market needs... a whole tissue-mass of grey matter that is not exactly the company's property, in legal terms, but is definitely of very high value to its success prospects. When Phaneesh Murthy, Infosys' sales whizkid in America, left the company, he took away intimate details of the US operations, and some suspect perhaps even the sales success formula. Murthy has now joined Quintant, a rival in the BPO space, as its advisor, and has not only won multi-million dollar deals for his new company, but also lured four senior Infosys employees away. Infosys has lost its UK operations head, Sanjay Vishwanath, and global brand manager, Jessie Paul, to Quintant. Two more people have also switched over.

Infosys declined to comment on the issue, citing its silent period obligation (under sec regulations). Also, it can be assumed that most clients use Infosys' services for reasons far more strategic than personal equations with individuals. But still, it is hard to deny that Murthy's departure has injured the firm.

No matter how professional and systemised business operations get, companies lose a lot when they lose genuine talent. More often than not, this is because genuine talent is independent of corporate systems.

Independence Of Individuals

Individual competence may lie behind the most exciting business success stories, but the archtypal company sees it in its interest to ensure that it runs as an institution. To the outside world: as a corporate brand, with consistent constitutional values, regardless of incumbents. To the inside world: as a self-perpetuating profit machine, in which success is a function of the way business resources are coordinated and programmed to operate. A function, that is, of systemised team effort.

Part of the human resource system, say hr managers, is to ensure that shock departures are minimised to begin with. Explains Rajnish Kohli, Head (Strategic Planning and Communications), HCL Perot Systems: "The process should start at the time of hiring. It is a standard practice in HPS that senior personnel have to sign a contract that they will not join competitors or lure talent away from us for a specified period." A system of constant feedback and monitoring provides early warning signals, feels Kohli. Switch decisions are typically long in planning, and that's enough time for damage control. "So if early signals can be detected, efforts can be made to retain the person or ensure that the departure has no significant impact." Ensuring a mutually pleasing separation, he adds, helps the company.

Others, though, suggest an even more proactive policy. Pratik Kumar, Corporate VP (HR), Wipro, favours heavy institutionalisation of business processes. "Attrition is a fact of life which cannot be wished away," he says. "For example, with a key marketing person who interfaces with clients, one has to ensure that there are multiple touch points within organisations for clients. No single individual should be allowed to become a star." Documentation is critical. Every manager ought to file regular reports on the status of projects, decisions taken and the information and reasoning on which these were taken. Digitised, much of this can be made part of a knowledge management (km) computer system. Managed well, such intensive e-documentation shortens the learning curve of the next incumbent, who gets ready access to the databases and decision-making algorithms of the departing executive. Wipro also has a policy of identifying three people for each key position who could take on the task in case of a sudden exit. "Since these people would be mentored and would be aware of the work being done by their mentor, replacement becomes easy," says Kumar.

Chips Of The Block

To tech buffs, km systems are the most promising tools that can be deployed by companies to combat top-level departures. What a km system does, in brief, is map the management's collective mind, to the extent possible, for digital storage. Elaborates Makarand Padalkar, Chief of Staff (Executive Management), iflex Solutions: "km ensures that knowledge is not centralised, and is channelised companywide, on a need-to-know basis. A proper km process also ensures that corporate results are independent of individuals."

KM systems, though, still depend on human judgement, especially for their security. "A company's proprietary information needs to be protected by a well-defined confidentiality and access policy," Padalkar says. A hacked km system can do far more damage than a manager leaving with a xerox set of customer files.

In the end, recruiting people of high integrity is the only foolproof mechanism to pre-empt knowledge spills. And every company has beans it does not want spilt-making every firm a 'knowledge-based company', as Gautam Sinha, CEO of TVA Infotech, a technology recruitment firm, points out. Appointment letters do have protective clauses, and there's a whole lot of other policing that can be done. But before any of that, businesses need to ask themselves this: whatever happened to loyalty?