Article (April-2018)


Ethics in business enhances the credibility of the organisation

Dr. T.V. Rao

Designation : -   Chairman TVRLS & Ex- Professor

Organization : -  IIMA, Ahmedabad


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BM Do you see a radical upward shift in doing business with ethical values in present scenario?
TV Not sure. There is definite focus on encouraging honestly doing business. However, the way most organisations have increased their prices (for example in food industry) after GST and charge more on food and keep adding GST on the top of it makes me feel that there is a legalized way of fleecing the customers in the name of GST. I am not sure how much the GST benefits are passed on to the customers.
However, there is a definite drive towards more honest reporting and tax paying. In real estate business, there is more ethics coming up as people value cheque transactions more than before. I am sure if the tempo is maintained and the political parties are not amassing funds and government seen to be more honest than before in managing NPAs in Banks in future one can hope for more ethical business in the country.
BM Is there a perception building around that business profits can only be accumulated with unethical practices? If yes, how organisations can counter this?
TV I don't think so. Many who may have not been so ethical before having now become more professional and when you become professional you need to be more transparent and therefore more ethical. I think ethical orientation is certainly going up. If it does not, it is bad for our country.
BM What is the role of HR in instilling business ethics in employees?
TV No alternative but to promote HRD as Competence, Commitment and Culture building. We have always stressed OCTAPACE values and being open and transparent, trusting and trustworthy makes you more ethical. HR should promote these values and culture. Ethics in business enhances the credibility of the organisation and builds long term intellectual capital. Ethical corporations need to spend less time, money and energy on management or governance or overheads and they can do business with low costs and high value and maintain good image.
So, I believe ethics have and economic value in the long run. HR should explain the intellectual capital value of being doing business ethically and inculcate the sense of ethics in all employees. First, they should begin from top and get them to articulate the same and develop mechanisms for review and renewal. 360 Degree feedback to top management is a good tool to caution them if they do business unethically.
BM Should HR act as employees' champion or custodian of employer's business interest in times of ethical crisis?
TV They should be custodians of Employees and not merely Employers. In crisis time, they should be custodians of value - based business. When L&T Construction Company in late eighties lost money in constructing Bahaii temple, they celebrated it as they were proud to build a good temple without sacrificing their honesty. HR talked about it to all employees and others. That should be the spirit. If values and ethics are lost everything is lost. Once lost business can be built but not values and character. It takes long time to reestablish credibility.
BM What are the challenges for HR fighting unethical practices in organisations?
TV First challenge is to have a credible HR department that does not make false promises and lives the OCTAPACE values. Manipulations begins in HR departments when they present selective information or make promises that they cannot fulfil at the time of recruitment. Second time they get into issues in allocating resources and rewarding and recognizing employees. Third at the time of promotions and increment. HR constantly faces challenges to be ethical.
HR is a high - risk profession in terms of perceptions of being ethical and hence they must walk an extra mile. Most HR resorts to restrict their communications to revel as les as possible to employees. Some time they do the same thing with employers and hide the truth through ranked employee engagement surveys and the like. These surveys mislead the top management through comparisons and the focus gets shifted to improvements in rankings than in genuine grievances and difficulties of employees.
If CHROs can be more honest, get their own 360 Assessments done properly, put themselves though Assessment and development centers before they organize of their line managers, and do their KPAs and KRAs on time and with good quality, and apply all that they preach to themselves, half the HR battle is won. It is them easy to confront the top management when required and help them to be more ethical. How can a CHRO or his team who keeps changing jobs more frequently be credible to talk of and manage attrition of employees.
BM In an unethical organisation what is the way forward for HR - should HR keep quiet or speak up for employees' interest?
TV Speak up and even champion employees. If they can't they should quit. Speaking up also includes speaking with and taking along the employees. They should have the employee interests a lot more in mind than their unions and should think long term which the union leaders often may not be able. So, they should be HRD managers also for unions and associations.