Could Sebi’s HR Have Done Better?

The recent internal crisis at the Securities and Exchange Board of India (Sebi) has raised serious concerns about the HR department’s handling of employee grievances, the workplace culture and the disconnect between leadership, the human resources (HR) department and staff. With allegations of a toxic work environment, mistrust in leadership and failure to resolve growing discontent, it is time to ask a critical question: Did Sebi’s HR department fail its people?

Employee grievances are not just whispers in the hallway—they are warning signs of deeper organisational issues. The grievance letter titled ‘Grievances of SEBI Officers – A Call for Respect, submitted by Sebi employees to the finance ministry, accessed by BW People, reveals an alarming disconnect between leadership and staff. Employees voiced frustrations over a lack of transparency, feeling sidelined in decision-making processes and the absence of an effective grievance redressal mechanism. Despite these clear signals, Sebi’s HR response seems missing, raising questions about its role in addressing these deep-rooted issues.

The Hidden Costs Of A Toxic Work Culture

According to Ritu Anand, Sr. Director HR, Administration & Corporate Communication, Terumo India, the hidden costs of a toxic work environment can have devastating long-term impacts. “In a toxic environment, turnover increases, absenteeism rises, and burnout becomes rampant. Over time, the organisation faces not just higher recruitment and training expenses but also suffers from a damaged reputation, making it difficult to attract top talent. In contrast, fostering a people-centric, supportive culture promotes engagement, creativity, and loyalty.”

Sebi’s employee grievance letter explicitly mentions the “burnout and frustration” that employees faced due to unaddressed complaints, which mirrors the exact scenario Anand outlines. The HR department's failure to prioritise well-being not only hurt employee morale but also affected operational efficiency. By allowing the work culture to degrade without intervention, the HR became complicit in the escalating unrest.

Leadership Disconnect

A core complaint from the employees was the perceived lack of accountability among senior leaders. Several staff members expressed disappointment that HR did not hold leadership accountable for dismissing employee concerns, further deepening the divide. This situation could have been averted if Sebi’s HR had ensured stronger leadership alignment with organisational values.

Ravi Parkash, Group Head HR, Group L, emphasises how poor leadership can erode workplace culture. He says, “A leadership always affects the workplace culture; you will see suddenly top performers called as non-performers if the leadership is not good. Sebi incident is purely politically driven in my point of view, where management allowed external elements to get involved and the things happened. We should avoid the situation where we know the solution ourselves, but we are involving external elements to solve it.”

At Sebi, this sentiment rang true. Employees described how high-performing individuals were increasingly sidelined and labeled difficult when they raised valid concerns. The HR, tasked with fostering fair performance assessments, could have been the buffer that protected these employees from the impact of leadership’s dismissive attitude. However, HR’s lack of action in preventing top talent from being marginalised raises serious doubts about its effectiveness.

Ineffective Grievance Redressal

The grievance letter clearly stated that employees had no faith in the HR department’s ability to resolve internal conflicts. This is where Sebi’s HR missed a golden opportunity. 

Deepshikha Thakur, Chief People Officer, Bikaji Foods International, suggests that one of the most important roles HR plays is ensuring that grievances are not only heard but addressed without fear of retaliation. She highlights, “Making employees feel heard is critical. An environment where people can speak without fear of retaliation is essential, as is ensuring grievances are closed with a rationale agreed upon by both parties.”

Sebi’s HR fell short of creating this environment. The employee letter detailed how staff hesitated to approach HR due to fears of being labelled as troublemakers or facing repercussions. This environment of fear is a direct indictment of HR’s failure to establish a safe and transparent grievance redressal mechanism. By not addressing these fears head-on, Sebi’s HR allowed tensions to fester, leading to an organisational breakdown that could have been avoided with proper intervention.

What Sebi’s HR Department Could Have Done?

An important takeaway from the Sebi debacle is the need for HR departments to take ownership of the organisation’s story, particularly during crises. 

Deepshikha Thakur advises that during times of change, HR must lead the narrative. She says, “Own the story. Every time an organisation goes through any kind of change, be it complete transformation or smaller changes, ensure communication keeps flowing to all stakeholders.”

Had Sebi’s HR taken ownership of the communication during leadership transitions or internal challenges, employees might have been less inclined to feel marginalised. Instead of allowing rumors to spread, HR could have proactively communicated why certain decisions were made and how employee concerns were being addressed. By failing to step up, the HRD allowed distrust to build, making resolution nearly impossible.

A Missed Opportunity

Muniinder K Anand, President at Chrysalis, highlights how future-forward leaders drive growth and adaptability. “Leadership plays a pivotal role in shaping workplace culture by setting the tone for innovation, empathy and inclusivity. Future-forward leaders drive a culture of growth and adaptability, encouraging teams to embrace new ideas and cutting-edge solutions.”

Leadership, particularly in HR, must set the tone for an organisation’s culture. 

Shashwat K. Mitra, Global Head of HR, KPIT states, "A great leader is authentic in their approach, vulnerable to the journey, and laser-focused on outcomes while maintaining unshakable trust across their ecosystem. A lack of any of these qualities creates stress by depleting the psychological safety one needs to perform."

If Sebi’s HR had championed this approach, they could have cultivated a more resilient, innovative culture. Instead, employees described feeling stuck in outdated processes and stifled by rigid leadership. Sebi’s HR failed to encourage a forward-thinking mindset that could have transformed workplace tensions into opportunities for growth.

The Critical Role Of Accountability In HR

At its core, HR’s responsibility is to ensure accountability at all levels. 

Praveen Purohit, Dy Group CHRO, Vedanta Group, underlines the importance of HR setting the tone for accountability, “Leaders must take responsibility for failures and give the team credit for success. Maintaining an open-door policy and ensuring strong whistleblower protection guarantees that ethics, respect, and well-being are never compromised.”

Sebi’s HR, instead of championing an open-door policy, reportedly created an atmosphere where employees were hesitant to speak up. The whistleblower protection mechanisms were ineffective, leading to a breakdown in trust between employees and management. If HR had embraced accountability, from both leadership and within its own department, it could have restored some of the lost trust.

Learnings For HR

Sebi’s HR department had ample warning signs—employee grievances, a toxic culture, leadership disconnect—but failed to act. As industry experts have pointed out, the hidden costs of ignoring these signals are too great to overlook.

Going forward, the HRD needs to critically assess its role in the organisation’s culture and take actionable steps toward fostering a healthier, more inclusive environment. The lessons from this crisis are clear: when HR fails to protect its people, the entire organisation suffers. For Sebi, the time for transformation is now.