Business ethics


Value and Ethics are nurtured in the organization by the owner and the leaders.

The positive trend of the last decade has been the increasing importance attached to values and ethics in business. What’s more, as we move ahead into 2020s and beyond, this aspect will become even more important. When we speak of ‘the soul’, two thoughts come to mind.

One, that the soul is something that is permanent and indestructible, whereas the body ages and finally perishes over time.

Two, the soul represents something deep within and fundamental, which urges you to move towards what is right, like the voice of conscience.

Though both these thoughts may sound spiritual they have a direct relevance to business. Some of the major economic scandals involving large corporations have proved that a flaw in character can run something that has taken years to build. Sustainability and ethics are inextricably linked. You cannot have one without the other.

The community in general, evaluates a business on the following seven yardsticks.

1. If the basic notion of compliance with the law is not embedded in the culture of the organization, it cannot go very far in serving shareholder interest. At Wipro a reputed software company of India, any willful violation of law is treated as a breach of code of conduct and separation is the only end.

2. While a business may operate within the minimum legal requirements, propriety demands that it should also be engaged in ‘right’ things. For instance, when you discover that an infant formula manufacturer is selling its product through a sales force dressed as nurses, you ‘know it’ as a violation of propriety.

3. The manner in which a company treats its customers is telling. For example, in the case of Intuit, when a flaw in its tax program was revealed, the company apologized and offered full refunds or exchanges. Its quick response, beyond its technical liability, is indicative of a culture that treats every customer with respect.

4. If the company is not disclosing relevant information which has direct impact on them to its shareholders, customers, and employees, it is clearly not serving the interests of its immediate stakeholders.

5. It is not sufficient that the company has a sense of propriety; it has to ensure that its business associates, suppliers and vendors also have a similar sense of what is right.

6. The issue here is not how much or to whom, but how honest is the company’s engagement with the community. Again coming back to Wipro it has openly declared its commitment to community initiatives. One of the Wipro’s initiatives is to provide quality education to every child. The organization says that the amount they are investing for the initiative every year is not large but the money is utilized strategically to push the right levers to bring about the largest change.

In the process Wipro forged relationships with individuals and groups who are working outside the government for the same objectives. They are happy working with us as they find our intentions honest.

7. Some companies say nothing when faced with a crisis some others deny its existence or attempt to cover up the problem, or charge public for over-reacting. An ethical company would respond immediately even if it believes the crisis is blown out of proportion. It would acknowledge the problem and apply appropriate corrections. We have an example in Johnson & Johnson’s sensitive response to the Tylenol episode. The test for a company is how well it responds to stakeholders’ fears and anxieties, not just whether it confront the technical reality of the problem. Its responsiveness is a measure of its character.

These seven yardsticks, by which society measures any business, are also the ones that shareholders should also be using to judge the long-term sustainability of the business.

In the ultimate analysis, it is ‘trust’ that constitutes the soul of a business. Trust not only unites all stake holders but also builds a firm linkage with the rest of society.

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