The Sources Of Ethical Issues in the Corporate World

I have been consistently highlighting the ethical aspects of a professional workplace in my writing. In the course of writing these articles, I came to realize that this is not a topic too many people like to discuss openly; this is a raw nerve for many people, due to various reasons. These reasons may be due to fear or worry of impact in their professional careers, but it is real. I too have felt this raw fear whenever I write on this topic – Ethics. Rare is the person who joins with my thoughts on this matter; I would certainly like to connect on a social plane with other such like-minded people.

My articles have introduced me to many such people, happily – which has helped me to gain a far more positive outlook towards Corporate India. I am pleased to note that there are many people out there who have the same outlook, and are silent for various reasons. I  have had many conversations on this or related topics on various social media; most I cannot place on my blog, as these people are not known to me personally, and I cannot breach the trust they placed in our conversation.

It was one such conversation wth an established Senior Professional on SM that told me that these matters are not so simple, and have deep roots, rooted in Organisational Culture, various Processes {Not just the PMS} and the environment. This was a deep insight for me; someday, I hope to document a detailed take on that. Another conversation I had with another person – Mr Milind Kher, also took this far forward, and into deeper zones of The Corporate Complex.  As I know Mr Kher personally, I have taken his approval to document the entire conversation we had verbatim, suitably edited and converted to a QnA format for easy readability. This is documented below, as part of a 2-part article on Business Ethics in the current scenario.

1) What is the scale and red scope of the Ethical Issues in Corporate India nowadays?

The malaise of ethical challenge is widespread in India nowadays. It is a challenge in all sectors and across domains. These challenges can be of various types fake vouchers, fudged expense statements, dummy quotations, kickbacks, insider trading - you name it!! Usually, when this happens it is across the organisation. Each link in the chain supports the other. This is organisation wide. Either, as a whole the organisation is clean or it is corrupt. It goes without saying that the culture is top down. Whatever the thinking and culture at the top, it ultimately percolates down

2) Are these issues truly widespread, and if they are - how did this come about? Who can be said to be responsible?

There are definitely some organisations that are very clean. Nevertheless, there are many who are not very clean. It has all come about because of the way things are at the top. People always take their cue from the behaviour of their seniors, and they then emulate this. It is difficult for the superiors to crack down on the juniors on account of the practices they themselves indulge in. Once the malady spreads, keeping it in check is very difficult.

3) What are some of the systemic reasons for ethical issues to arise?

There are many systemic reasons why ethical issues may arise - There is not stringent enough due diligence as far as accounting systems are concerned. This could be internal as well as external. As far as external audit is concerned, there is a    need for many more forensic audits to happen than are currently happening.

- Certain unhealthy practices have become the norm. When this happens, underhand practices are allowed to run, without anybody really questioning them.

- Sometimes a closed group of people operates a racket. This is known only to the inner circle, and therefore can perpetuate itself.

-  Insider trading and granting undue favours is something that is difficult to trace, and practised at the top level very difficult to stop

4) What are some of the other reasons why ethics has become a challenge in the corporate world nowadays?

-  Employees who feel their salary is insufficient use this to increase their income

- Disenchanted and disgruntled employees use this as a method to hit back at the company.

- People find chinks in accounting systems, and think of it as a good Opportunity

Q5) It is indeed a link, self supporting and self-sustaining... and goes to the top. The Question then arises, why and how did these unethical people rise to the top? What set of circumstances, systemic flaws caused this to happen? How did these people rise?

In many of the organisations, they did not have to rise. They were already there, at the top. They are people who are running their own organisations. In these kind of organisations, the malaise is more at
the top. In larger, limited companies, the rule of hitting the numbers and living the values is not followed. Top management is impressed as long as people hit the numbers. Ethical challenges may be ignored in such a
situation.

Q6) Is the external environment a factor in the presence of lack of ethics?

It is certainly a factor. People tend to emulate and replicate what they see happening in the world around them. This becomes a vicious, interconnected bad influence

Q7) Due Diligence, Audits, unhealthy practices as mentioned in your answer above : isnt this a cross-functional issue, and not just  limited to accounts?

It most certainly is a cross functional issue, and external bodies must carry out forensic audits where deep malpractice is suspected

Q8) Isnt the race to get ahead a fundamental part of the problem?

That is the prime driver. Most people commit crime under motivation, and this definitely is motivation

Q9) You mentioned values; I am reminded by the observation of a Naval Officer, that MBA courses do not focus on Values. Do you think there is a case for a strong Value focus in the hiring process?

There is a dire need for values to be very closely assessed in the interviewees. Values create trust and trust builds business. People not perceived to be ethical are not perceived to be good people to do business with either

Q10) Should we have value focussed intake even in MBA courses? Is this doable?

It is eminently doable. A concept note to the HRD Ministry and a curriculum for the subject should do the trick

Q11) What are your opinions on the Performance Management System and its link to this problem?

The Performance Management System  is totally numbers driven and task-oriented. There is really no way to assess the character or ethics of people. This leads to a very skewed approach

Q12) What is your take on the Organisational Culture, and its link to this issue?

Organisational Culture has a direct bearing on how people in the organisations behave. Therefore, very clearly, their ethics will also be driven by the culture. Hence the need for a good organizational culture.

CONCLUSION

This conversation reveals the intricate and involved nature of this beast; it also raises some deeply troubling issues, perspectives and problems. Namely, the source of the problem near the top of the tree; difficulty  in assessing values in the hiring process; the nature of most PMS Systems; Organisational Culture; faulty internal processes – all of these contribute to the problem we are facing nowadays. None of these are easy to tackle; in fact – they are the closest to impossible in terms of finding a solution.

But there is hope; at least, now people {as shown by Mr Kher above} are willing to come into the open and ask these hard questions, and identify the problem areas. This list above isn’t exhaustive; it cannot be. This problem, as we have seen, is multi-layered and complex in its dimensions & scope, and extremely deep rooted & fundamental in its core nature. A recent article by Mr TN Ninan which ripped into Corporate India is another indication of rising change towards a more value- and process- driven future for Corporate India. I don’t have the answers - but am willing to learn; I also realize a sudden change would be disastrous. We need to craft a steady path to change. In my continuing hunt for answers, I hope to bring other Top People’s views on my Blog – for that is the level at which change needs to start…   at the very top, and percolate down slowly….

ABOUT MR KHER

Mr Kher is an Ex-FMCG specialist, now into Training, Learning & Development – as the CEO / Head of a Training Company {HQ India}, as well as an initiative called called Wellness for Caregivers plus is at a  Senior Level  as a Mentor in 1-2 others. Milind Kher is on a mission to change the way in which we approach Learning and Development.  He believes that there needs to be a scientific basis to theories and processes and that everything needs to be evidence based. This is the reason why he focuses on the human mind and human relationships. Milind Kher works extensively with Emotional Intelligence and Emotional Intelligence applications as well as with Neuro Linguistic Programming and Neuro Linguistic Programming applications.