Building Ethical Business Organization – The Indian Way

Sudeep Jaiswal

Ethics or simple honesty is the building blocks upon which our whole society is
based, and business is a part of our society, and it's integral to the practice of being
able to conduct business, that you have a set of honest standards. And it's much
easier to do business with someone when you look them in the eye and say, "This is
what we're going to do," and you understand what you each mean, and you can go
away and get it done.

- Kerry Stokes, Chairman, Seven Network (Australian TV Station)

-
Ethics and It’s Genesis

Ethics is delving into the understanding whether what we are doing is right. If we look
into history, the ancient philosophers grappled with three areas of enquiry – Satyam,
Shivam, Sundaram – Truth, Goodness and Beauty. From these came out logic,
ethics and aesthetics. While logic tries to answer the questions regarding something
being true/ correct, aesthetics tries to judge a piece of beauty ; Ethics address
goodness – whether what we are doing is right. Ethical judgement comes from the
moral standards of the society. Why does the society have moral standards –
because they are for general wellbeing of the society. It lays down a set of norms of
behaviour that are more than laws. The moral standards have certain degree of
permanence and these are not established by any legislative body but they evolve
through a process of consensus in the society and therefore have of greater degree
of acceptance and adherence although most often than not they are unwritten. They
also guard the society against blatant exercise of self – interest. These therefore are
expected to lead to a better society.

Ethical values develop since our childhood. Our parents are the first ones in our lives
to voice, set and demonstrate ethical boundaries for us. They consider it as one of
their critical jobs to instil a strong sense of right and wrong in their children. Not just

Page 1 of 7
their telling, how they behave has an even stronger impact as children absorb their
actions for developing their sense of ethics. The customs and traditions of the
society we live in become ingrained in the psyche of the children and thus develop
the socially acceptable ethical norms. As the child grows, his ethics is further shaped
by his experience of life and feelings.

What is Business Ethics

To put it simply, business ethics is ethics applied in a business context. Business

Ethics concerns itself about how moral standards are applied to the conduct of
business organization and persons involved in these organizations.

As we discussed earlier, Ethics is something personal and it is for the individuals to

take decision and they are guarded by their ethical system to take decisions. In
business context, it involves about how the ethical standards are applied to the
conduct of business by the organization and also by the people involved with the
organization.

Off late, business ethics has become a very prominent subject for deliberations
because businesses are seen to be acting in their self-interest, bypassing all norms
of accepted moral standards, in the process bringing very serious consequences to a
large number of people, often in no way connected to the organization. These
incidents have re-emphasized the fact that mere formulation of regulations and laws
are not enough; the corporates need to act morally and ethically out of their own
volition.

Contemporary trends in Business Ethics

It is a great challenge for the business leaders to follow the ethical path, after all
business organizations are a part of larger society and with the present trend of
falling ethical and moral standards, businesses have found an easy escape route
and have started following this trend. It is not uncommon to hear the argument that
the very purpose of business organizations is to earn profit for the owner/
shareholders and profit and ethics never go hand in hand. Not just the common man
but also the employees believe that their employer puts financial goals above ethical
considerations. This astonishing result came from a survey of 2,500 workers by the
Institute of Leadership & Management and leading magazine Management Today in
Britain. Another disturbing trend that came out very prominently from this survey is

Page 2 of 7
that the employees believe that their organisation operated less ethically than it did
three years ago. Unfortunately, this trend is true for India as well.

None of the business organization will ever say openly that they don’t run business
ethically. Scratch the surface and the argument will be ‘if my competitors are not
acting ethically, how can we do so?’ When businesses talk about business ethics,
they usually mean one of the three things :

1. Avoid breaking criminal law in their business activity,

2. Avoid actions that may invite civil suits against the company and
3. Avoid actions that are bad for the image of the company.

Organizations are concerned about these three things as they involve loss of money
and company’s reputation. But such approach makes the issue of business ethics
too simplistic – I would prefer to call is instant noodle approach – which can be
handled by lawyers and public relations experts. We have already discussed that
ethics goes far beyond the statutes and rule book; it is more in the realm of intent
and spirit.

If we look into the history of business organizations from across the world, only those
organizations have survived for generations and have been highly successful who
have set and followed high ethical standards and the ethical practices are deeply
entrenched in the psyche of its people. Unethical business practices or Instant
Noodles approach can give instant and huge gains but it can never be sustainable
and wholesome in the long run. There are many glaring examples where unethical
business practices have destroyed the company, the employees, families, and
society. Is it really worth it to fake earnings and make huge amount of money only to
have it crashing down few years later and ending up in jail? I think it is better to
develop lifelong customers by building relationships based on trust and faith. It is
much more profitable to establish sustainable business practices to ensure that the
business has resources years later.
Building Ethical Business Organization

Page 3 of 7
Noted Harvard Business School professor, Prof. Joseph Badaracco in his book
Defining Moments: When Managers Must choose between Right & Right wrote -
“There is no ethical or unethical decisions, managers have to choose not between
right and wrong but between right and right, between wrong and wrong. These are
dependent on the personal values of the managers and cannot be uniform all over
the organization.” It means that choice of options of different managers in a given
situation cannot be same. What appears right for one may not appear the same for
another manager and here lies the challenge of creating an overall framework of
values – value system – for an organization which is distinct from an individual.

From ancient times great civilizations have delved into the subject and have
suggested different ways to develop personal ethical practices. In Indian context, in
the battlefield at Kurukshetra Krishna outlined to Arjuna a system of ethics that has
withstood the test of time. In the Bhagavad Gita, Krishna tells Arjuna not only how to
build character but also the root cause of ethical failure and how to avoid it.

Krishna outlines qualities of a gentleman – to be merciful, obedient, truthful,

equitable, saintly, magnanimous, mild-mannered, clean, simple, charitable and
peaceful. He should have surrendered to God and not be greedy or possessive but
remain steady and determined, free of the six bad qualities, not gluttonous, sober,
respectful, humble, grave, compassionate, friendly, eloquent, expert and concise.

It is easy to formulate a list of positive qualities that we all agree upon. Yet, when it
really comes to practicing them in our life, our character still fails because as Krishna
says in chapter three, verses 37 and 38: "O Arjuna, it is lust... later transformed into
wrath, which is the all-devouring sinful enemy of this world. As fire is covered by
smoke, as a mirror is covered by dust, or as the embryo is covered by the womb, the
living entity is similarly covered by different degrees of this lust."

To maintain good character, we must overcome kama, that is, lust or selfish desire.
Most people think kama means just sexual craving, but it simply refers to an
overwhelming desire for anything, such as lust for power. Greed, dishonesty and
corruption are all by-products of lust. To be happy, successful and well situated, the
Gita says, one must control lust. Gita's solution to the ethical failure and downfall of
organizations, society and family is controlling the senses with spiritual strength. The
Gita is as relevant today as it was 5,000 years ago. If only every manager,
administrator, politician, employee, worker start reflecting on the message of Gita,
one can experience the positive transformation.

We need to have a multi-pronged approach to create an ethical organization. We

need to channelize our efforts from three distinct approaches :

a. Creating a structure and system to enforce ethical behaviour – Organizations

need to define the ethical standards for their employees through Code of Ethics and
the employees must be educated about the Code of Ethics as well as consequences
of not adhering to the Ethical practice as defined.

Page 4 of 7
Sound Legal System, Ethical committees and Whistle Blowers are some of the
measures to ensure enforcement of Ethical practices. This approach works well in
the initial period and at a later stage with people who are not willing to follow the
company guidelines come what may – the rebels without a cause.

b. Creating a system of reward within the organization to propagate ethical behaviour

- Organizations need to put in place an attractive reward system to make good
example of employees who follow the ethical practices of the organization. This will
not only spur the rewarded employee to follow the ethical practices but will also
motivate others to follow this path.

The issue with these two approaches is that they have a very limited effectiveness.
The problem with the first approach is that employees will not follow the desired path
willingly but out of fear. They will try to find out system and the moment the
authorities are not around, they will not follow the ethical practices.

c. Defining the ethos and principles of the organization – We need an approach by

which we can ensure that employees readily accept the ethical practices and
assimilates and identifies with them. This approach works on the consciousness of
employees thereby ensuring acceptance and assimilation of ethical practices by the
employees.

The management system in today’s business organizations have brought in lure and
materialism and the race for higher and still higher production has brought in a lust
for profit without looking at the means. Ends rule supreme, means are discounted
Maximizing of profit has become the ultimate goal to the exclusion of all other
considerations. To the modern management, worker is all, human being stands
nowhere. The moment he ceases to deliver, he stands discarded like any
commodity. Such approach has brought to the forefront management and workers
as conflicting entities with conflicting interests and claims. It has therefore become
imperative that fresh thinking is done to underline the development of man rather
than mere development of a wage earner.

To become an ethical organization, the organization has to ponder over awakening

of consciousness, feeling of patriotism and nationalism, aesthetic values, creation
and satisfaction of higher aspirations, promotion of goodwill and oneness,
behavioural decencies, satisfaction of moral aspirations etc.

Page 5 of 7
The approach of the management has to be focused on development of human
beings and society. The people in the organization have to be made soul –
conscious that he is being guided by his inner being to serve the Divine through his
work and behaviour. The inner being of the people has to be suitably developed to
make them creative and responsive. Management can do so not by mere words but
by action. Management should do themselves what they want to be done by others.
The crux of the matter is – a good management with noble heart and soul will make
good and responsible workers and thus a good and responsible organization.

Explicit reference to human attitude and values in management thoughts will make
the organization profoundly humanistic. The western management system adopted
by India has remained in vogue for several decades and has also delivered goods.
As per this management system, their actions have been guided by mind which was
considered to be the summit of human evolution. But the Indian ethos says that
beyond the mind is the inner being – Truth Consciousness – which regulates all
human activities. Management therefore has to shift its reliance from mind to
consciousness so that the organization may become an instrument of human
development and global welfare. We have crossed over the age of mind and now we
have to enter the age of spirit – the realm of consciousness.

The question arises – how can consciousness approach to management be

implemented and practiced? The quality of the management depends primarily upon
the quality and approach of the top management. The people in the organization
expect from the man at the top a character of integrity and intellectual honesty,
selflessness, and objectivity so that he can be trusted and in difficult times to look up
to him. All these are the quality of heart and inner being. In Consciousness
approach, the beginning has to be made by the person who is at the helm of affairs.
First, the top management will have to have a positive attitude to develop his
consciousness - he has to be a Yogi. It is a battle to control the mind. In due course
of time this will percolate to the lower level of the organization. The top manager has
to do some very basic things –

a. Forming Basic Attitude – The Leader has to first define his own attitude
towards his business: whether his organization aims at amassing wealth and
maximizing profit or be a medium for social and national development. He has
to take the decision with intense aspiration, deep devotion and strongest
conviction towards global welfare. His choice and conviction will determine
whether he will be able to achieve the goals.

b. Search Thyself first – For any conflict, see within. The leader must peep into
their inner being and discover if he is on the right side or wrong side in any
way.

c. Decision making in peaceful silence – A leader comes across a variety of

situations pertaining to his day to day business working. He is required to take
a number of short term and long term decisions on a number of issues. To
reach solution, the leader must retire in perfect peaceful silence, identify with
the problem search for alternatives and come out with a solution.

Page 6 of 7
In a management process men, materials, machines, methods and money – all
require some minimum attention and care. This can be done very easily by
Consciousness Approach through simple steps -

i. Study every employee to learn his talents and untapped potentials. Each
employee should be conscious of what he contributed and what he got.

ii. Note simple source of friction and remove them by silent initiatives.

iii. Set all the physical paraphernalia and machinery in perfect working
condition.

iv. Examine each system to see that it is working at maximum efficiency

v. Work to increase cleanliness, orderliness.

vi. Remove all areas of distrust, secrecy, falsehood etc.

vii. Ensure quick response.

viii. For every difficulty or problem, identify the corresponding inner point in the
consciousness of employees

The basis of consciousness approach is the link between inner being and events in
outer life. By changing the inner condition, we bring about a responsive change in
outer world. Thus we can bring a harmonious, lasting and positive change in an
organization in terms of its ethical practices by changing the ethos and objective of
the organization. It is never going to be easy nor does it propound that managers
discard their traditional methods in one stroke because change is never pleasant and
unplanned change is even more unpleasant and chaotic, but a beginning has to be
made – sooner the better.

"A business that makes nothing but money is a poor kind of business.” Henry Ford
(1863–1947), US industrialist, automobile manufacturer, and founder of Ford Motor
Company

Let us take our first step.

Thank you

Page 7 of 7