Leadership in Crisis: What SEBI Can Learn from Microsoft’s Cultural Transformation -Part I

The on-going crisis at SEBI is right on our face.

As a communications expert, we cannot but look at how this is being managed.

Toxic work cultures, characterised by micromanagement, internal conflicts, and lack of empathy, are not new really.

Remember Byju’s? The Indian edtech giant has been accused of fostering a toxic work culture, particularly in its sales team. Employees have spoken about the pressure to meet unrealistic sales targets, long working hours, and micromanagement, leading to high attrition and burnout.

Globally, Tesla’s intense work culture under Elon Musk has often been criticised for extreme micromanagement and unrealistic expectations. There have been reports of employee burnout due to long working hours, a demanding environment, and a lack of empathy from leadership.

The SEBI saga

The Securities and Exchange Board of India (SEBI) is facing a significant internal crisis. A letter signed by over 500 of its employees has brought allegations of a toxic work culture under Chairperson Madhabi Puri Buch into the spotlight. The claims include public humiliation, verbal abuse, and unrealistic work targets, which have resulted in employee resentment and poor morale. Over 500 employees filed a letter with the Ministry of Finance, alleging a culture of verbal abuse, harsh language, and unrealistic work demands. Employee protests followed, signalling a severe breakdown in communication and trust between SEBI’s leadership and its workforce.

Despite SEBI’s attempt to respond, the message has not been well-received, leading to continued protests. The response seen as denial and defensive, failed to address the underlying issues, contributing to further unrest. For corporate communicators, this incident presents critical lessons on managing internal crises and fostering trust among employees. For, the spill is out on the open where the external stakeholders are also now privy to the shenanigans of SEBI.

I am reminded of a similar situation years ago at Microsoft under CEO Satya Nadella. Let us look at both cases and see how SEBI could have handled this situation better.

Microsoft’s Approach

Microsoft faced a similar toxic work culture crisis during Steve Ballmer’s tenure, marked by fierce internal rivalries and a “stack ranking” system that encouraged unhealthy competition. Employees were discouraged from collaborating, and morale was at an all-time low when Satya Nadella took over as CEO in 2014.

Nadella’s approach was transformative. Instead of denying or minimising the problem, he actively acknowledged the issues and made fundamental changes in how the company approached work culture. He introduced a growth mindset, emphasising learning and collaboration over internal competition. Nadella’s focus on empathy, listening, and inclusive leadership helped rebuild trust within Microsoft, which not only improved employee satisfaction but also contributed to the company’s resurgence.

Lessons Learned from Microsoft and SEBI

1. Acknowledge the Problem Head-On

One of SEBI’s key failures in its crisis management was its reluctance to fully acknowledge employee grievances. Dismissing the allegations as unfounded or claiming that the issues had already been resolved without concrete details exacerbated employee dissatisfaction. In comparison, Satya Nadella recognised Microsoft’s cultural problems immediately upon taking charge and publicly committed to transforming the company’s toxic environment.

Lesson: The first step in addressing a toxic work culture is to acknowledge it transparently. Leadership must resist the urge to be defensive and instead demonstrate an authentic willingness to listen and understand the issues employees face. Denial can deepen the divide, whereas acknowledgment opens the door to productive dialogue.

2. Engage in Active Listening and Open Dialogue

A significant element of Microsoft’s success was the leadership’s ability to foster open communication. Nadella implemented town halls, listening sessions, and encouraged employees to speak up about their concerns. By prioritising active listening, he created an environment where employees felt safe to express their views. In SEBI’s case, the absence of such dialogue and the leadership’s defensive stance created an environment of distrust.

Lesson: Leaders must engage in two-way communication, where employees feel heard and respected. Creating forums for open dialogue—whether town halls or anonymous feedback channels—allows for a better understanding of the workforce’s concerns and demonstrates a commitment to transparency.

3. Implement Measurable Actions

Microsoft’s decision to abolish the harmful stack ranking system was a decisive and tangible step in reforming its toxic culture. This action sent a clear message that the leadership was serious about change. In contrast, SEBI has not announced any significant policy shifts that address employee grievances. Without clear, measurable actions, trust cannot be rebuilt.

Lesson: Words alone are not enough to resolve a crisis. Leaders must take tangible steps that align with their communication. This might include reviewing punitive policies, introducing leadership training, or establishing clear mental health support systems to show that the organisation is committed to improving the work environment.

The SEBI incident illustrates how crucial effective communication is in managing internal crises. Through active listening, transparency, and measurable action, organisations can transform crises into opportunities for growth and improvement.

The views and opinions published here belong to the author and do not necessarily reflect the views and opinions of the publisher.

Sarita Bahl

Sarita Bahl is an alumnus of Tata Institute of Social Sciences and the Swedish Institute of Management Program. An experienced and versatile leader, she comes with nearly four decades of professional experience. She has over the years successfully overseen the communications and public affairs function and led the corporate social responsibility strategy for Bayer South Asia, Pfizer, and Monsanto, among others. Sarita has held multiple roles across diverse industries, the public sector, trade associations, MNCs, and the not-for-profit sector. Her areas of interest include advocacy, stakeholder engagement, sustainability, and communications.

As an Associate Certified Coach (ACC) from the International Coaching Federation (ICF) and Senior Practitioner (Mentoring) from the European Council of Mentoring and Coaching (EMCC), Sarita specializes in career transition, inner engineering and life issues. Sarita enjoys writing and is passionate about animals, books, and movies.