Corporate India: A challenge to Ethics and Morality?


This has been a tumultuous year for the corporate world - with sting after sting leaving companies and corporates red-faced, and running helter-skelter to check the damage. Ranbaxy and Cobrapost, taken together, have hit some of the biggest names in our corporate world. This is nothing to celebrate; neither is it anything to mourn. It is in fact an opportunity for corporate India to introspect and put in place systems and processes that can lead to an image improvement, as well as better on-field performance. 

Are these incidents systemic, or are they sporadic? And, if they are systemic, what are the systems and processes that are causing this? First of all, the Cobrapost sting affected almost the entire banking spectrum without exception. Something so widespread cannot be a sporadic happening. This alone forces me to painfully conclude that this is a systemic failure on the part of corporate India. The question that arises from my declaration above, is that is this constricted to the banking sector, or does this spread outside it as well? While there will be differences between industries, can we spot come commonalities? And can we spot the precise root cause without resorting to sweeping generalisations such as "falling moral standards of society"? 

The first external hint came from the Ranbaxy episode. This leads to the assumption that something, somewhere, is not right. At this juncture, it becomes important to specify, as a serving member of corporate India, that such reactions as you have seen in the above 2 cases, are not the norm; they are only the outliers in the range of responses of employees to corporate pressures and realities. These responses range from the idealistic, to the practical; from the practical to the amoral; and from the amoral to the illegal. In other words, they span the entire spectrum. We are interested in the modal response - that is, the most frequent response and the general trend. 

There is one common string that runs through both cases: the pressure to perform, the pressure to deliver results. This leads to the automatic assumption that there is a problem in the Performance Measurement Systems of corporations. Well, yes - true; there is a  very serious issue there; but that is but one factor. The pressure to deliver results hails,  in addition to the PMS, from Competition and Job Security as well; in addition - all these three factors are intertwined together. Let us now look at all these one-by-one

Competition
This word refers to internal as well as external competition. External Competition refers to the competitive scenario in terms of both competing products as well as competing product categories. This much-ignored factor is the real culprit; competition is increasing by leaps and bounds. Even a cursory glance at management concepts will tell you this is par for the course in a growing market. New competing brands will come up; competitors will continuously innovate in the product variants, brand communications, distribution etc. New categories also come up that frequently challenge that very basis of your business model, or fundamentally alter the business environment in terms of market size, obsolescence etc. The factor of internal competition and the PMS has to be seen in this all-pervading atmosphere. And, as we shall see later, it is the modern corporates' failure to effectively produce processes and systems to tackle the pressures arising out of this external atmosphere that lies at the root of the problems. The icing on the cake is that we are in a relatively young nation, with the large number of people ready to replace you (with skills comparable to yourself) - with some of them being jobless.  Taken together, this is a recipe for a pressure-cooker like atmosphere where the winner takes all. 

Internal competition refers to the pressure to get ahead, the pressure to excel, get solid increments and promotions. In a pressure cooker scenario such as exists now-a-days as outlined above, this will cascade on employees - challenging the very basis of their thoughts and their business approach. No one enters a job with the explicit intention of breaking rules; it is something that you pick up on the course of your normal duties - it is a survival instinct, a reaction taken to ensure continuity. Not every person is blessed with the obstinacy and the obduracy to avoid the pulls of a slight moral detour - esp when everyone is doing it. Each employee wants to succeed; that is a given. It is this desire that motivates actions seen above in some cases...

Job Security
The manifest lack of Job Security in the modern workplace is also another core reason for this. Threatened with the fear of a loss of a job, quite a few employees do compromise on their values, and take the easy way out. The very fact of the presence of such tactics is mute testimony to this reality. It is relatively easy to get fired, or to get replaced - even without fault. And once out, no one looks to see the base reason; getting a replacement job becomes extremely difficult. It is this cruel reality that fuels and adds fire to the already smouldering embers described above. These 2 combine in the catalysing presence of the PMS to create a full-blown fire...

The Performance Management System
Any Performance Management System should be an aid to performance, a guide-stick for a future plan, an opportunity to increase salary and perks, and a fearless chance to correct mistakes. It should also be a tool to ensure that the organisation proceeds along the right path. Given the pressure-cooker atmosphere described above, it needs to be sufficiently robust, providing a framework for the basic prevention of unhealthy activities as well as a tool, a guide towards the correct operational method. 

Most PMSs I have seen fall way short of this. Inordinate emphasis is laid on the short-term end-result; and consequently lesser emphasis is laid on the process that goes into the result. Most I have seen measure the result to the tune of 60-80% at the lower levels, while altering this only at the senior levels. This creates a lower employee base that is interested in only results; with a senior base that professes to be interested in both. Upto middle levels, this is the unfortunate reality. Obviously, when you are being measured only on results, there will be a tendency to take unethical and even illegal short-cuts. If the Key Result Areas are 60% numbers, 20% processes, and 20% people skills - then it becomes relatively easy to tweak then process, achieve the 60% at the cost of the other two parameters. Net result is that you are safe; and further, at the back of the mind is the knowledge that the corporate will prefer number achievers over the process guys. 

Summary
Thus we can see that in an atmosphere that provides the opportunity for unscrupulous  ladies and gentlemen to get ahead, the pressure to perform colludes with the external and internal pressures to create unethical conduct. Here we run into one fundamental objection: organisations exist to achieve objectives, targets, numbers and profitability, and are operating in a fast-moving and dynamic external atmosphere, which accounts for the emphasis on numbers. To this, let me clarify: numbers are the be-all and end-all of the organisation; but it is also the core task of the same organisation to ensure sustainability of performance over the long term and avoid crises, losses and damages to bottomline and image. Short term tactics cannot ensure long-term success; unhealthy practices if exposed can cause regulatory and business losses, as we have seen in the examples above.  

In conclusion, it can be said that the playing field changed- as seen by the changes in the external competitive atmosphere. And the corporates have been slow in responding with adequate changes that can reflect the new business reality that now faces them. We have seen The PMS in this article, and the lack of Job Security.  The lack of human, friendly processes that de-stress this hard reality and motivate employees seems to be at the root of this. The PMS, Hire-And-Fire, Rewards and Recognition Programmes, Employee education and training  to deal with competive stress are in dire need of updation. We shall look at these in the 3rd part. But these arent the only ones responsible; there is one other factor that needs to be considered to make this picture complete: the bedrock to which this is linked; the overall organisational and societal culture; and the secondary organisational processes like competition monitoring, employee mentoring etc. This is what I shall attempt in the 3rd part of this topic...

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