BM Do you see a radical upward shift in doing business with ethical values in present scenario?
PS Ethical businesses have always been rewarded by society since times immemorial. Brands like Tata & Birla were built around trust. The omnipresent (and omnipotent?) media now encourages a wider dialogue on ethics and any breach is visible immediately, and up for social dissection on various platforms. That makes this shift seem radical. Our society and business processes are largely built around "absence of trust", as opposed to the western world where many business models are based on "I trust you". Look at the no questions asked return policy of Walmart. Many of our businesses still display "No exchange, no return policy". When businesses operate in a larger climate of increasing distrust between stakeholders, anger and voices become accentuated with the support of mainstream/social media. That such news is fodder for TRPs spreads the fire faster. So indeed there is a greater incentive than ever to be ethical in one's approach. Cost of rebuilding faith is also huge! Look at the Maggi or Dairy Milk (worms) or Max Hospital examples. Organisations know it is both social/ethical sense but also a good business case to remain ethical in how they deal with their stakeholders.
BM Is there a perception building around that business profits can only be accumulated with unethical practices? If yes, how organisations can counter this?
PS I do not think that businesses think unethical practices will allow sustainable profits. Society can be very unforgiving in such lapses, and no mature CEO will fund short - term at the cost of long - term. Let us look at the pharma industry. Data integrity was once seen as an issue in many pharma companies. Over the last few years the industry captains have worked relentlessly to address the issue at shopfloor. The cost of non - compliance is significantly higher than the cost of compliance. At Zydus, our Chairman has spelt out for us that our primary role is to preserve patient safety and interest. He will take full ownership of profits (or absence of them) but the CXOs must choose the right behaviours and ensure them at the shopfloor. Companies which have been cited for data integrity have been punished by the stock markets, have lost patient trust and market share. So clearly there is a huge motivation for the businesses to remain ethical and honest to the social good. I personally do not think that profits and social good are at opposite ends. They in fact go hand in hand. You create societal value through good business practices, and society will create good business valuation for you.
BM What is the role of HR in instilling business ethics in employees?
PS HR plays a pivotal role in this. Let me divide that in two parts :
1. HR is the torch bearer for culture in the organisation. It is also the conscience keeper of the leadership team. Consistent messaging from HR is often a great enabler. Often seen as a proxy for the CEO's message, it carries great weightage and empowers the organisation to choose "right" over "good". This begins right from staffing your key roles with leaders committed to uphold highest moral standards. This is often one of the strongest roles of HR. The fight of "short term performance" against "intangible value system".
When HR is the custodian of this role modelling, it ensures seamless cascading down the organisation. This does consist of ensuring that organisations have a widely - known set of values that employees swear by. But it also means that HR does not convert this value system into just a poster. It should ensure that it reaches out to recognise such values when employees demonstrate them and celebrates these.
HR must create a documented Business Conduct Policy understood & signed off by all employees so there is never any ambiguity of interpretation. Ignorance can never be an excuse. But HR must ensure that the entire organisation has access to the same belief system and understands the consequences of violating the ethics code. This must also be a strong part of the induction process, as well as refresher courses.
2. At Zydus we partnered with NGOs, reached out to our employees' homes and organized "Street Plays", created customised content on TVs placed across entire sites to help our employees become aware of Data Integrity Issues, and how to solve them.
3. The other role is transactional. This role ensures that individual behaviours and deviations are addressed appropriately and swiftly. This role also ensures that there are appropriate platforms for any employee to share a concern without any fear of reprisal. Many organisations have whistle - blower programs. A strong HR can convert this into a "real" practice and ensure that any deviations across the organisation are reported immediately, and employees know that HR will ensure a fair evaluation.
BM Should HR act as employees' champion or custodian of employer's business interest in times of ethical crisis?
PS First and foremost, HR must align the employer's business interests, value system, and employees' value system. The value system, must be consistent with societal values. It must create the right environment built upon a coherent and ethical foundation. Psychometric trait profiles, BEI (Behavioural Event Interviews) can be used for selection and role advancement to ensure that right people occupy the right roles. Rather than converting this into the employer vs employee question during a crisis, the HR function must be the conscience keeper in helping everyone choose what is RIGHT vs what seems to be GOOD. It should partner with the CEO and CXOs in helping them see the entire perspective, get social as well as human insights in making the right decisions which pass the test of the organisation's value system. My belief is that if the value system prevails, the business interests will be served sustainably.
BM What are the challenges for HR fighting unethical practices in organisations?
PS The biggest challenge would be vested interests which prioritise short term over sustainable long term. There could also be genuine gaps in understanding or interpreting laws which are ofcourse easier to handle since then it is a matter of black & white, and getting access to right skill set will solve such ambiguities. If the CEO and the board want to do the right things, and HR is aware of malpractices in the system, it is imperative that the relevant HRBPs bring it to the attention of the system, while working closely with the wrong - doers through coaching and counselling. There are enough case studies that can be shared, discussed in larger forums which will make the organisation sensitive to the pace with which an unethical practice can derail an organisation's existence and put all employees at risk. Workshops can be organized which help people understand the stakes. The HR team itself should continue to be a role model of appropriate behaviour and walk the talk. If the CEO himself has misplaced interests, the CHRO must get into a polite but firm dialogue and help the CEO see the big picture. If needed, the board needs to be informed. The last resort is ofcourse to move on if one's own value systems are not in congruence with the organisation's value systems.
BM What is the way forward for HR in performing as strategic business partner in unethical business organisations?
PS HR must understand the business deeply. In my view, some of the unethical business practices happen because of our own lack of understanding of our organisation's true intent, lack of knowledge of dealing with tough situations, lack of experience & maturity in dealing with external agencies including government bodies, unreasonable professional goals etc.
If HR knows the business well, it can help the violators provide viable and ethical alternatives. Preaching is a weak argument and has low conviction. If the sales person is not competent and is bribing as an easy way to achieve his sales targets, that requires not preaching but helping him with the right capability building. Are we consistently building an ethical image with all our external interfaces or buckle up easily in few cases because our own internal governance is weak? Can HR work with internal business partners to help them build robust & compliant processes so they never need to take short-cuts?
My own view is that some CHROs themselves do not exert beyond being a preacher with little understanding of core processes, and what is motivating the deviations from expected ethical norms. These CHROs have little buy-in from line managers, who then develop water - tight compartments designed to not let HR know of wrong doings before it is too late and blows up in everyone's face.
Sometimes HR itself has triggered such implosions when it has gone for irrational manpower reduction to gain brownie points. I know of at least one organisation wherein employees fudged data because there were just not enough people to do what was supposed to be done. So, the biggest contribution HR can do is to know business as and where it happens, and not in its ivory tower.