Article (April-2018)

Articles

Ethical corporate conduct must flow from the top down

Dr. Aquil Busrai

Designation : -   CEO

Organization : -   Aquil Busrai Consulting, 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?
AB Adhering to high ethical standards has always been the safe bet for any organisation that wants to retain a sustainable positive image. There are however, some who have taken undue liberties and in doing so, many such organisations have paid very heavy price when confronted with unethical practices. Most often it has been too late to salvage organisation reputation and even business.
Awareness about the consequences has been one reason for increased number of organisations that are consciously aiming to remain fully ethical. The changing workforce profile is another reason for this tendency to be compliant - millennial workforce does not want to get associated with organisation that are tainted with any form of unethical practices.
Increased digitisation in the government agencies and consequent tracking has also been a significant reason for decrease in unethical practices specially of financial nature.
Any shift in trend of doing business in the context of ethical values is at best a guess work. Ethical violations only come to light after it is detected. But there are certain pockets and activities in industry where the incidence of unethical practices is visibly high - whether such practices are on decline is a matter of guesstimation.
BM Is there a perception building around that business profits can only be accumulated with unethical practices? If yes, how organisations can counter this?
AB I feel this perception is on the decline. New start-ups should get credit for this shift. Smaller businesses are opting to remain ethical right from the start. Although they are impatient to become successful - yet, they are apprehensive about the price to pay if any unethical practice is detected and gets public. They thus opt to exercise caution and demonstrate patience for their business to get roots and be successful. Even legacy organisations that tended to indulge in financial aberrations are getting cautious and avoiding infringements.
Changes in law pertaining to responsibilities and liabilities of Independent Directors has a lot to contribute towards this shift to remain on the right side of ethical practices. Far more questions and scrutinise are being raised in the Board Room and that has been a strong deterrent. This however, does not imply that all businesses are squeaky clean. But the trend is moving towards compliance. Top management in organisation must commit to ethical principles and institute sufficient checks and balances to ensure ethical compliance. They should be prepared to support action against any employee if they violate these ethical guidelines - without exception. Well defined policies and communication of the same, at all levels in the organisation is very critical. Special attention needs to be paid to new employees to induct them into the ethical standards they would be required to maintain. If an organsiation is committed strongly to maintain high level of ethical standards - than it is not at all difficult to adhere to those standards irrespective of the external environment. I have been fortunate to work with some of the most ethically upright organisations like Unilever, Motorola, Shell and IBM. All these organisations had zero - tolerance policy towards anything unethical or non - compliant. It was no surprise therefore that we managed business efficiently with full ethical compliance. All that is needed to be ethical is strong determination with sufficient checks and balances.
BM What is the role of HR in instilling business ethics in employees?
AB HR is the custodian of ethical practices in any organisation. It is a watch dog function for ensuring that the ethical norms are first conveyed across the organisation and then monitored. It is also the responsibility of HR to ensure that any infringement is dealt with in a swift and yet fair manner - uniformly across the organisational hierarchy. It is the role of HR and expectation from the function that it would obtain full concurrence from the top management on the ethical standards and then ensure that appropriate awareness is generated amongst the employees about these standards and about the consequences if they are infringed. This role is a significant factor for building a basic ethical culture in any organisation. Commitment of HR to maintain high ethical standard is a key success factor. But it must act in a fair and non - partisan manner. It needs to establish sufficient credibility that it has power to act if any aberration is brought to its attention. That is why I use the word 'watch dog' and not a 'bloodhound' while describing the role of HR in areas of upholding ethical values.
BM Should HR act as employees' champion or custodian of employer's business interest in times of ethical crisis?
AB There is no choice for HR in cases where there is an ethical crisis. It has only one option - to act in a manner that safeguards the reputation and sustainability of the organisation. 
An ethical crisis could be life threatening for an organisation and therefore HR must play a swift, yet fair role in addressing the issue and mitigating consequential implication. HR needs to determine where the ethical violation has occurred and who are involved in this infringement. Identify, not only those who have committed the infringement but also those who were in the know and could have prevented. This is the crucial role of an effective HR.  Having done a thorough due diligence to determine who are involved, the next and the most important step for HR is to initiate corrective action - to bring those guilty to book. The test of true HR lies in this action. How courageously it acts against any offender, irrespective of the level of employee in the organisation. HR must be a custodian of organisation's interest. That supersedes all other interests.
However, one crucial step prior to this is fair play and thoroughness with which facts are determined. I have had an instance in early 2000, of separating a mid management employees for falsely claiming Rs 400 in his medical reimbursement claim. I did not hesitate to approve an expense of Rs 40,000 to ensure that all evidences were correctly collected and the investigation was fair to the employee. One more role of HR is to look at ethical behaviour not only from financial angle but also ensure that ethics is practiced in dealing with all stakeholders. An instance of workplace harassment or even worst, an act of sexual harassment is as much a ethical violation as financial misdemeanour.
BM What are the challenges for HR fighting unethical practices in organisations?
AB If the top management of the organisation is not committed to un-compromising integrity, then it is a big challenge for HR. No amount of employee awareness and fancy lectures will withstand the test of credibility if an act of infringement is deliberately overlooked. Nothing remains a secret in any organisation. And if the employees sense that there is dual standard in enforcing ethical compliance than it is unlikely that they will be committed fully to be compliant. Even if the top management is committed, often we find that an anomaly creeps up at operational level. To chase their targets and show better performance, employees at lower level in the hierarchy may resort to unethical practices. It is HR's responsibility to educate employees and inculcate in them a pattern of behaviour that uphold ethical integrity.
BM What is the way forward for HR in performing as strategic business partner in unethical business organisations?
AB It would be unfair to term a whole organisation as unethical. There are individuals within that organisation who have a different perspective of ethical compliance. If the culture of an organisation is such that there is tolerance it is the responsibility of HR function to convince the top management about how essential it is to be ethical. It will not be easy but that is where perseverance would count. HR should use its influencing skills to garner support from various stakeholders. This will call for high level of courage and conviction. Despite these efforts if the top management ignores the advice and pleas of HR then there would be only one option left for HR - stop being party to something that is not in consonance with one's professional belief and part ways with the organisation. Last thing HR can afford is to become part of the system, citing compulsiveness or helplessness. Upholding professional values is sacrosanct and not negotiable.