Article (April-2018)

Articles

Business ethics : One size does not fit all

Bimal Rath

Designation : -   Founder and Managing Director

Organization : -  Think Talent, Gurgaon

01-Apr-2018

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BM Do you see a radical upward shift in doing business with ethical values in present scenario?
BR Certainly, there is an overall apparent shift towards doing business more ethically. It appears that this is driven more by external pressures of need for cleaner governance, transparency requirements and laws that are harsher towards those crossing the lines. Also, social media, and the ease and possibility of any incident or event going viral helps. The need to maintain and enhance a 'clean' image is important for today's businesses. It has implications with respect to external independent ratings for the business, valuations/brand, attracting right kind of talent and business partners and overall reputation risk.
There are broader issues of environment and societal impact and ethics of businesses in that context. These are complex subjects and while there is an overall shift towards more ethical business, in many sectors, it is not very clear as to what exactly that mean. Many businesses would perhaps see ethical behaviour as following the laws (with all the loopholes appropriately exploited) of the land and just that. Basically, if there are no lines crossed, it's fine. Also, what may be ethical by one, may not meet the standards of another, certainly at individual levels.
BM Is there a perception building around that business profits can only be accumulated with unethical practices? If yes, how organisations can counter this?
BR This is not a new debate. Loopholes in laws and any kind of governance mechanism have always been exploited by those in the know or in power, or 'smart businessmen'. In recent times, there have been many such cases and social media helps spread the news much faster and wider. It is important to understand that human greed and need for power are inherent and deterrents are important to check these in a meaningful way. However, the popular perception is that laws and deterrents are more applicable to those who run businesses cleanly and even the government goes after those it can, leaving alone the rich and powerful. There are enough examples of businesses and associated people getting away with unethical and even immoral behaviour.  As a principle of natural justice, those enacting and implementing governance rules and laws must be independent of businesses. This, by definition, means no nexus between businessmen, law makers and government bodies, independent audit bodies etc. This in practice has not worked in many cases. Organisations can help by educating employees, especially leaders and have internal governance and audit mechanisms, but they operate in the context of competitive pressures and external checks and controls without loopholes are extremely important.
BM What is the role of HR in instilling business ethics in employees?
BR In any society or institution, education is the really the only long term solution, coupled with a strong reward and deterrence mechanism. This is where HR can play a role. There are a few doable things clearly :
  • Framing of appropriate policies and implementing them consistently.
  • Clearly laying out behavioural guidelines, and communicating them, especially positive stories.
  • Educating employees, managers, leaders and other business associates.
  • Not being party to brushing small transgressions under the carpet due to business pressures.
  • Ensuring that the consequences of unethical conduct are clearly spelt out.
  • Helping drive ethical dialogues at the top most levels, and helping leaders to consistently coach and send messages around this aspect.
BM Should HR act as employees' champion or custodian of employer's business interest in times of ethical crisis?
BR There is no one answer, since this assumes that these two factors are inherently in conflict. That is not the case. So, action in each case must be very contextual. I think both can be managed together, i.e., employer's interest as well as protection of employees' interest. E.g., many organizations have well laid out whistle blower policies. When an incident happens and an employee speaks up in to right forum and in the right way, organizations are forced to act, and protect the employee as well. Mature organizations see this as a long - term benefit for the institution and leaders in fact encourage such employee behaviour.
Sustainability of good business practice is not really a choice. Especially for large organisations, being guided by well laid out values and ethical behaviour is almost a given. That said, not everyone will follow the path, and employees and leaders both make mistakes. The employee should not be seen to be at conflict with larger organizational objectives. In terms of HR, the organization must clearly lay out the role and expectations from HR in this context, and not leave it to individual interpretation.
BM What are the challenges for HR fighting unethical practices in organisations?
BR Since the word "fighting" has been used in this question, it somehow assumes that HR is a bit holier than thou, and almost the only upholder of ethical practices in organizations. To be blunt, many unethical practices in organizations start with HR. There are basically three core challenges, true for all functions and not only applicable to HR folks.
Fear of personal consequences in driving or raising ethics related issues, stemming from natural insecurity. A more inherent secure person may well not face this challenge, at least feel it as severely.
Clarity on guidelines in implementing policies, especially balancing short term business interests with action on erring employees. What really needs to be done? Processes and guidelines are often vague and with lots of grey, making it difficult for HR.
Managing leadership alignment. Garnering support from the top leaders is tough in many of these cases. Very often the unethical actions/path may well be known at top levels, or even have some degree of involvement from these levels.
BM In an unethical organisation what is the way forward for HR - should HR keep quiet or speak up for employees' interest?
BR My view is that speaking up is the only answer. When such issues are raised (individually, and even better if collectively), they always create positive change, however difficult the situation may seem initially. Having said that, how the issue is to be raised requires a few key preparation steps :
a) gathering all the information in the case and verifying the accuracy and validity.
b) understanding the impact and implications of both the issue and the sharing/speaking up--really thinking through.
c) following a process set by the organization/law and not in any random method.
d) keeping backups, and maybe 1 or 2 trusted friends/ family members informed, especially in case a forensic investigation is later required, as also for security reasons.
e) be mentally prepared for the best and the worst.
f) deal with the issue with a cool calm head. These issues can often be very close to one's values and principles and it is important to deal with such cases keeping away personal emotions, and not treat it as a personal battle.
One additional point which is relevant to make here is that each of us have our own compass on what is ethical, moral and right to do. It is important to be clear about what one stands for, especially for those that are in-charge of policies and implementing them, like HR. There may be inherent personal conflict otherwise leading to unintended consequences.