Case

Advanced IT Systems Limited: Asian Journal of Management Cases

17(1) 9–16, 2020
Case of Ethics and Conflicts © 2020 Lahore University of
Management Sciences
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DOI: 10.1177/0972820119892703
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S. Patanjali1 and Pooja Gupta2

Abstract
Advanced IT Systems Limited (AISL) was a family-owned software solutions and services company
based in Mumbai, and was in business for about 10 years. The chief executive officer (CEO) had ambi-
tions of growing the company into one of the large Indian IT companies. Apart from concentrating on
the business growth, the CEO with the help of his HR head introduced several people-oriented policies
and hoped that these would lay a good base for further growth of the company.
The case describes a conflict of interest that got exposed when one particular business head was
championing a young computer science graduate for nomination as a high potential and accelerated
promotion but kept hidden that he was in a personal relationship with the lady.
Should such a relationship come in the way of the career progression of an individual who was otherwise
talented and deserved the promotion?
The case covers issues of the setting of corporate ethical and cultural standards, leadership and decision-
making, policy and pragmatism, and of meeting client needs and organizational propriety.

Keywords
Conflict of interest, corporate culture, decision-making, ethics, HR processes, leadership, values

Discussion Questions
1. As the HR Head, what are all the options available before the Rachna Rawal which she could
advise the CEO to follow?
2. The CEO believes that his decision would probably set the tone of the company’s culture in the
long run. Do you agree with this view?
3. Should Vijay Khare be asked to resign or even sacked?

1
Research Scholar at Xavier Institute of Management and Entrepreneurship (XIME), Bengaluru, India.
2
Symbiosis Institute of Business Management, Bengaluru, India.

Corresponding author:
S. Patanjali, Research Scholar at Xavier Institute of Management and Entrepreneurship (XIME), Bengaluru, Karnataka 560100, India.
E-mails: patanjalis@yahoo.com; poojagupta@sibm.edu.in
10 Asian Journal of Management Cases 17(1)

4. Should employees in relationships be allowed to work together: in the same company or in the
same department/group within the company? Please formulate a policy based on your view on
the subject.
5. Would Advanced IT be liable to charges of sexual harassment? Analyze this from the point of
view of Ms Sheikh, as well as other male and female employees of the company.

On a typically hot and humid April 2017 afternoon in Mumbai, the Chief Executive Officer (CEO) of Advanced
IT Systems Limited, Ram Shenoy contemplated the various options which were available before him in the
vexing situation he found himself. Should the promotion of a talented young employee be put on hold because
her business head had enthusiastically championed her cause while concealing the fact that he was in a personal
relationship with her? While awaiting the recommendations of his team, the decision would remain his—and it
would set the tone for the future culture of the fledgling company.

Advanced IT Systems Limited

Advanced IT Systems Limited (AISL) was a Mumbai-based software solutions and services company
promoted by a family-owned engineering group, as part of their diversification strategy. The flagship of
the group was the Navbharat Engineering Company. The chairman of AISL was the patriarch Gangaram
Shenoy who was also the Chairman of all the group companies.
Senior Mr Shenoy was well-reputed as an upright industrialist within that community. One of the rare
figures who would not bribe for the assorted licences and permission needed to run the business. With
the various inspectors from sundry regulators, he was, however, very friendly and ever willing to lend an
occasional vehicle or help with hospitalization expenses, but never cash, and only when he was person-
ally convinced that genuine help was required. Within the engineering units also, he ran a tight ship and
meetings were known to be short and to the point. He did not tolerate large committees.
The CEO of AISL was the younger son, Ram Shenoy. The CEO had earned engineering and
management qualifications from top US colleges. He had also gained experience by working for one of
the top consulting companies for about 5 years in the US. Shenoy had inherited some of the traits from
his father and he admired the egalitarian work culture he had seen in the west. He surprised many by
driving himself to work instead of having a driver (only a short distance, but it made a point). Within the
company he was known to be quite tolerant of contradictory views with his set of direct reports.
Advanced IT Systems Limited started operations by first placing IT professionals within the group
companies. As they gained expertise, AISL slowly took over the responsibility for, initially minor and
later all IT hardware and software support requirements of these companies. With the support of the
group Chairman AISL expanded into other companies where Gangaram Shenoy had influence.
Advanced IT Systems Limited had about grown to just over 600 employees and worked in four verti-
cal businesses, including the original placement business. About 250 employees were placed in the vari-
ous engineering companies and this group was headed by Colonel Rana. It was the original, steady
business that helped establish the other operations.
The Enterprise Solutions (ES) division was headed by an industry veteran Rajendra Kumar. With
about 150 employees the ES business boasted a few mid-sized companies amongst its clients. It was the
most profitable business of the fledgling company and financially supported the other forays.
The Engineering Solutions group was headed by one of the Chairman’s (and the CEO’s) most trusted
hand—Arun Subramanyam who had grown from within the Navbharat group. This group was small in
size (about eighty employees) but worked on a few engineering software products. While the business
Patanjali and Gupta 11

made little money as of now, the CEO believed that if any of these products were even moderately suc-
cessful, they would be in a different trajectory altogether.
Advanced IT Systems Limited’s latest venture was the E-Commerce division. It comprised about thirty-
five engineers and was headed by Vijay Khare as the Vice President. Khare had a post-graduate degree from
IIT in software engineering, had worked with two of the top companies in India. At 40 years he was ambi-
tious, enthusiastic and even charismatic and somewhat younger than the other division heads.
The CEO also considered himself a hands-on people manager, directly supervising the HR head,
Rachna Rawal whom he had sought out and appointed after spotting her at an HR conference where he
had been invited to be a keynote speaker.
The rest of the employees were spread across the finance group, the CTO’s office, HR and marketing
and communications and miscellaneous other activities.
At the time of the case, AISL was a ten-year-old company, though its serious foray into non-placement
business was only 5 years old. The CEO had great plans for the company.

Key Players
Vijay Khare was the leading, rising star in AISL. A recognized domain expert in the high technology
e-commerce space, he was a prize find for the CEO who was happy to recognize his potential during the
interview and gave him a business head responsibility, an opportunity that Khare had longed for—Khare
was grateful and determined to do well.
Salma Sheikh was one of the smart young engineers hired from the campus of a leading engineering
college—one of the top five colleges for computer science. She was smart and belonged to a rich busi-
ness family, she had been to a top school and was good in both academic and co-curricular activities.
While she did not consider herself very ambitious, she definitely wanted to do well.
As per the policy of AISL, Sheikh was assigned to one business unit for her first year with three
different supervising and mentoring managers, to hone her technical and programming skills. At the
end of the year, she was offered a choice and, accordingly, transferred to the e-commerce division to
strengthen the growing team. Her senior manager—cum—mentor for the first year, Rajendra Kumar had
noted in his regular progress reports that she was a very contentious employee and rated her higher than
her batch mates in terms of future growth potential, provided she continued to put in the efforts and
showed necessary ambition. Sheikh’s transfer was also in line with the company’s policy—that one
manager mentor the freshers in the first year and then the engineer would be moved to a different
division or department.
As it happened, for most of the subsequent year Sheikh and a team of four others were placed at a
client location in Dubai. The team was led by another of AISL’s rising stars, Vivek Singh, who, in turn,
reported to Khare.

AISL’s Performance Appraisal Process

After Rawal joined AISL she met several employees and managers to get a feel of the company’s
working. One area where change was needed was for a robust appraisal process, yet no one wanted to
get involved in the rigorous and often tedious paperwork. Rawal proposed a new appraisal process that
she felt would be fair, flexible and also scalable as the company grew bigger.
12 Asian Journal of Management Cases 17(1)

The first step in the new process (which included employee self-appraisals) was the quarterly ‘Quick
Check’, a one-page form with quantitative and qualitative ratings. These forms were reviewed by the
respective business heads along with Rawal, in order to get early information on performance,
development needs and future potentials.
The second important element was the ‘Open Day’. Once a year, Rawal called a full day meeting
attended by the people who directly reported to the CEO to discuss the final performance appraisals. They
would validate the views of each of the leaders regarding their teams—asking questions, seeking information
and clarity—and at the end of the day, there would be a commonly agreed list of employees for increments,
transfers, promotions, and who would get the best projects. In fact, with the active involvement of the
senior management team, the Open Day had developed into a day for discussing all people-related topics.
The last step was a ‘Finalization Meeting’ in which the CEO and Rawal signed off all the decisions of
the Open Day. As a bonus, the CEO also used the Open Day as an important step in evaluating his own
direct reports. Open Day exposed their ability in evaluating employees and keeping the overall organi-
zational interests in mind. As each business unit or functional department employees were being dis-
cussed, the CEO shared his observations on the corresponding senior manager with Rawal who then
added her inputs. This, Rawal was aware, was her own appraisal day.

A Dilemma
For Khare, it was his first Open Day. He made a very positive debut having taken the effort to get briefed
by Rawal on how the concept worked and speaking passionately and professionally about members of
his team. Apart from the other team members, he singled out Salma Sheikh for special mention as a
standout potential and made out a strong case for her promotion to a Team Lead. Bolstering the case of
Sheikh was Rajendra Kumar—her first manager—who fully backed the observations of Khare. Kumar
further observed that Salma Sheikh could be considered as a ‘consistent high potential’ having been so
evaluated by two different business heads.
(Advanced IT Systems Limited’s policy was not to promote any fresher within 3 years of joining. This
had evolved when it was observed that some young employees would threaten to resign if they were not
given a promotion and the policy helped the business leaders resist being ‘pressured’.)
In line with the process laid down, the CEO and Rawal met before the Finalization Meeting, to review
the decisions of the Open Day.
When the names of the e-commerce employees came up, the CEO observed,

Khare has been a good find. He is good with the customers and now I observe that he has a good grasp of his
employees and has been very fair in his evaluation. Almost all of his recommendations were backed up by other
business heads, and that is a good sign.

He was proud of his selection of Khare and Rawal agreed wholeheartedly on this observation.
As the discussion moved to Sheikh’s name, the CEO joked that Khare had made a strong but good
case for ‘his girlfriend, Salma’.Rawal felt taken aback by the remark. She felt these were callous and
inappropriate comments by the CEO. It was not fair to Sheikh to be called a ‘girlfriend’.
She was aware that the team had been on-site most of the year and Sheikh was the only woman in the
group, and Khare flew down every 2–3weeks for a review, spending a few days in each trip to also catch
up with the client and other prospective customers and meet with the team. But somehow she had not
heard of this story—what did the CEO know that she did not?
Patanjali and Gupta 13

Rawal confronted the CEO who then admitted, a bit sheepishly, that this was supposed to have been
a secret, and that both Khare and Sheikh were being very discrete about this relationship. Khare was
already married, much older than Sheikh and they were from different religions. The impact on both
families would be very difficult indeed.
Shortly thereafter the meeting dissolved; Rawal could no longer concentrate. The CEO did not seem
to make much of the Khare/Sheikh issue, but for Rawal, it was a lot to take in. They decided to continue
the discussion on the following Monday.

Weekend Reflections
Over the weekend Rachna Rawal had tried to resolve the issue in her mind.
First, she felt Khare should have disclosed the conflict of interest at the meeting. It was wrong of a
manager or boss to talk glowingly about a team member when being in a relationship, even when the
praise was seemingly objective. This was unethical. Where were the checks and balances in case some-
thing went wrong?
She was still uncomfortable with the CEO’s choice of the phrase, ‘girlfriend’ to describe an employee,
and if there was a relationship, it was a poor choice of words. But she was satisfied that the CEO was
being pragmatic in not insisting on the 3 years waiting in a genuine case (though she did not agree to the
term ‘silly policy’ used by Khare).
She was angry and disappointed with Khare. Rawal was acquainted with Khare’s wife and knew that
the wife would be devastated. ‘This Khare was an idiot!’ Rawal said to herself.
On Saturday morning Rawal, aware that some employees would be in the office decided to spend time
there. She would benefit by keeping her eyes and ears open and made herself available in case anybody
wanted to talk to her. Sure enough, as she went to pick up a cup of coffee, Rita Madhukar, an articulate
employee who had been one of the first employees of AISL casually picked up a cup and said, ‘I hear
Salma Sheikh is being promoted as Team Lead?’
With a smile, Rawal invited Madhukar to continue the conversation in her cabin. No point in asking
her where she got the information. Madhukar was well networked. ‘What’s on your mind?’ she asked.
Madhukar was tentative that she had heard that Khare was recommending a promotion for Sheikh.
‘She’s a good girl,’ Madhukar opined, adding, ‘I don’t care much what she is doing with Khare. I hear
some stories. People talk, you know. They say she got promoted because she’s Khare’s, well, you know.’
Rawal decided this needed no response and waited. Meanwhile, she saw a couple of employees ten-
tatively looking into her cabin and at a nod from Madhukar, she invited them—finding a receptive HR
on a quiet weekend in the office was tempting and they brought their coffee along!
Madhukar continued, now that she had a bigger audience, ‘Would Khare have recommended Sheikh if
she was any other employee?’ Quickly catching on to the topic, another lady employee Sanjana chipped in,

I hear she is very good with the customer. Salma (Sheikh) was also great in the (employee) programmes we held
in this office. Always taking initiative. Once the cake did not turn up in time for a birthday and she just went off
on her own and got it from another bakery. The other kids were just looking at each other.

She added with a laugh, ‘But you cannot promote her for bringing cakes!’
Another male employee Krishna, who had joined them added, ‘Vivek (Singh) is a good friend of
mine. I asked him yesterday and he says Salma (Sheikh)’s coding skills are good. Her way of dealing
with customers is also very good. That Dubai customer is a bit crazy.’ ‘Aren’t they all?’ asked Madhukar,
14 Asian Journal of Management Cases 17(1)

and everyone laughed. Krishna continued, ‘Vivek says Salma manages to pin down the customer in the
meetings and does not give up till specs and responsibilities are agreed.’
Madhukar asked, ‘The question remains, would Khare have recommended her if it were someone
different?’ Then she turned to Rawal, ‘HR needs to take a stand on this.’
Rawal realized that they were all waiting to see her response and asked, ‘What do you mean? Or
suggest?’
‘Well,’ said Madhukar, ‘there is a rule that there are to be no promotions for the first 3 years. That
could be used to delay this proposal.’
‘Is that so? Is there such a rule?’ asked Krishna.
Sanjana brought the debate back,

How’s that going to solve the problem of Rawal and Sheikh? Not all employees may know that Sheikh is a
deserving candidate. They will come to know that Rawal and Sheikh are a pair and then start alleging a bias!
It’s a bad example to set. Some other young girls will feel this is the way forward. The boys will feel only such
a girl gets ahead.

‘I don’t think that’s what all the boys will imagine!’ Krishna became defensive, ‘But some of them may.
But I hear it was an open secret. Why did the management allow Khare to do this in the first place?’
Rawal was used to hearing about ‘what management should do’ over the years. She said, ‘Not every-
one in management knows everything, always, Krishna’.
There was a moment’s silence at this mild rebuke before Madhukar started,

If Khare did not keep the other senior management members informed then that not okay, right? The senior
management must be open and honest at least with each other! The Shenoy’s are quite open, very strict about
having a clean business and open to suggestions. So far that’s been the case, now with more employees coming
in, who don’t understand the culture of Advanced, this is bound to happen! I’ve been here since the beginning.
Subramanyam Sir, Pankaj Jain, Rajendra Kumar and our CEO have been good friends and would share every-
thing with each other. They would never have pulled a fast one as Khare has.

Madhukar continued after taking a breath, ‘It’s sad because Sheikh probably deserves this promotion
more than anyone else this year.’
Rawal decided to push a bit. ‘So, if we keep Khare and Sheikh’s relationship away from this, that
would make the promotion okay?’ The answer was a unanimous ‘yes’ from all the three.
Krishna then added, ‘I don’t see why Khare should not propose Sheikh’s promotion. I don’t agree
with this thesis that just because you like someone he or she should be kept out. There’s no such logic
or morality!’ Madhukar quipped, ‘More than just “like” in this case.’ ‘Even so,’ Krishna short back,
‘that’s an accusation that can be used against anyone. No boss would be able to say positive things about
a woman employee at this rate—or vice versa with a woman boss.’ He had a worried expression as he
said this.
There was a silence as others absorbed this. Shortly thereafter the group dissolved into their respec-
tive activities.Rawal felt her decision to interact was useful and had given her a fresh perspective.
Ram Shenoy, too, had been mulling this over the weekend. He realized that Rawal was right in many
ways. There was also pressure from the client to finish the project which was already delayed by a few
months—not least because of the client’s own design and functionality changes. These were the last
weeks and the client would not take kindly to a top engineer being moved from the team and resulting in
further delay.
Patanjali and Gupta 15

Monday Musings
On Monday morning, as often when confronted with a dilemma the CEO went over to Arun
Subramanyam’s cabin and over a cup of coffee had a frank chat with him. Subramanyam was wise, more
experienced, totally loyal to the group and always gave a balanced view. He suggested that as soon as
possible Sheikh should be transferred out of Khare’s domain. ‘It was not a good thing for the two of them
to work in the same group,’ he opined. He also felt that Khare was being a little too clever and the CEO
needed to send a message to him. Subramanyam also made it clear that this was not only his opinion.
At their scheduled meeting, Rawal briefed the CEO on another perspective. She had also attended a
short programme on ethics some time back. Her understanding was that Authors ‘fairness’ was expected
by the employees. Rawal got the feeling that the employees respected Shenoy for his clean image and
personal simplicity but ethics was not only about clean business. She had also understood that any
proposal which resulted in an unfair result should be reviewed and changed for the better. Finally, she
had understood that whatever the decision, it should be based on sound logic (and not on beliefs or likes)
and be acceptable because it was the right thing to do.
At her urging, the CEO called Khare for a meeting and pointed out to him—as delicately as possible
—that there was pressure to review Sheikh’s promotion, and, in fact, to transfer her out to another team
because of an obvious conflict of interest. The CEO admitted that he had no perfect solution to the prob-
lem and asked both Khare and Rawal for alternative proposals, keeping in mind all the issues, including
the pressure from the client. ‘Think like a CEO,’ he advised them.
Needless to say, Khare was angry. He forced himself to calm down, while he made his recommenda-
tions. How was this even a conflict of interest? Should he accept the decision to promote Sheikh but
move her out of the team? Or that she may not get a promotion even though she deserved it because of
his support of the proposal? Would Sheikh be satisfied with, say, a hefty hike to compensate for the lack
of promotion? Or should he insist that since the Open Day had endorsed the decision and even Rajendra
Kumar had backed him up, the promotion decision should hold?
Khare, in fact, felt that there was no boss—subordinate issue at all. Sheikh had been appraised by
Vivek Singh, who had submitted a similar recommendation to Khare. How could that be wrong? And
yes, the client’s concerns were paramount—that was a solid reason to retain Salma in the team.
In Khare’s previous company, there were specific policies that forbid two employees from remaining
on the same team—even the same business unit—if they were in a relationship. There was no such policy
in AISL, so what was the problem? Rawal had argued that AISL was a small company and these policies
evolved, and, therefore, this was not about policy but propriety.
As he awaited the return of Rawal and Khare with their recommendations, the CEO foresaw a poten-
tially bigger headache—a demotivated business head, and a talented young employee who may be
demotivated or even worse, embarrassed and disappointed that her relationship had been exposed.
The CEO realized that this was one of those decisions which would set the tone for the culture of the
company in the years to come.

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of
this article.

Funding
The authors received no financial support for the research, authorship and/or publication of this article.
16 Asian Journal of Management Cases 17(1)

Enclosed: Organization Structure of Advanced IT Systems Limited

Appendix

Source: The authors.