A team of consultants worked with the senior management of a venerable third-generation private firm to evolve a set of core values and objectives, which would be codified. It was part of the overall exercise to turn more professional. The mission statement did not pose a problem, neither did objectives like the need for trust and innovation. But the first hiccup came when attention turned to paying taxes. The overall feeling was that only as much taxes needed to be paid as was thought necessary. But where things got stuck was whether to include ‘integrity’ in the list of core values. Eventually, the word was dropped!
The experience of the management consultant who narrated this story and whose clients were mostly in the private sector was not very different from that of a person who has spent a lifetime in the voluntary sector. He had first worked with the British and then a retired war hero general and was used to one kind of ethical atmosphere. Then came another retired general who clearly had his hand in the till. When the professional quit the organisation his friends asked him what for. After all, he himself was neither dishonest nor under a cloud. He replied: with what conviction can I go and raise funds for our agenda when I know what is happening inside my organisation?
Times have changed and NGOs are now increasingly being run professionally. This professional is now facing a second crossroads in his career. A fund raiser is doing well, more than fulfiling targets but is cutting corners, making false expense claims. The veteran thinks the fund raiser should be sacked forthwith. But the management does not want to disturb him. He is such a good performer!
Back to the private sector. The sluggish regional sales of the number two in an industry suddenly began to look up when it hired a dynamic new regional marketing head. All went well until one fine morning the marketing head was suddenly gone. The departed gentleman was doing well by the company as well as himself. Unsurprisingly, the top management of the company had consistently foregone revenue because it would not allow some common practices, which were unethical but widely prevalent in the industry.
The burden of all these anecdotal tales whose dramatis personae must remain unnamed is clear enough. There is a public outcry today in India against corruption in government but there is much that is lacking in public life across the board, not just government. The private and voluntary sectors have much to answer for. And the important point is that there are all kinds of firms and NGOs. Not all private firms are value neutral and not all NGO outfits hold internal moral standards high. The corporatisation of cultures in public organisations in the post reform period has sometimes sidestepped ethical standards.
The difference between the two worlds — business and non-business — is brought out by the different music that two individuals, P J Thomas and Rajat Gupta, are facing. Both the chief vigilance commissioner and the former McKinsey chief are facing legal action. Thomas is still entangled in a case that was filed years ago and whose progress the Supreme Court itself had stayed. Gupta is accused in a civil litigation over his association with the Galleon founder who faces criminal charges of insider trading. Both Thomas and Gupta are widely considered to be personally scrupulously honest. But Thomas’s world, the non-business one, feels that on grounds of propriety he should quit. On the other hand Gupta’s world, that of business professionals and corporate leaders in India, feels that there is no need for him to quit the chairmanship of the Indian School of Business. Both Gupta and Thomas are likely to be eventually exonerated but that is beside the point in determining what needs doing now.
Standards of what is expected of public individuals on grounds of probity and propriety differ. The non-business public feels there is a huge deficit but the business public does not feel the same way about its own space. The overriding attitude in the world of business when it comes to ethics is that it is enough to remain within the law and the important thing is not to get caught.
But is this good for business and the economy? Most respected competitiveness rankings place two or three strong negatives against India: its infrastructure is terrible, transaction costs are enormous and corruption in public life is high. Now how can this be set right? Is it enough if public sector corruption goes? Is it sufficient if public functionaries, ministers and senior civil servants, become much cleaner? And while this happens, business and the voluntary sector take a functional approach to ethics within their own domains?
The traditional argument of business is that it has had to be unethical in order to survive. You have to pay a bribe if you wish to remain in business. On the other hand, the public considers business to be unethical, not just in order to survive but also to beat the competition. The minister approved allocation of spectrum under dubious norms in order to favour individual firms and businessmen. The issue is, in order to graduate to a cleaner public life is it enough for public servants to become cleaner or for business also to become cleaner and demand cleaner regulation. This is necessary not just as an end in itself but for purely business reasons — so that the Indian system becomes more competitive and business gets to do better. One way of doing this is for the readers of business papers to demand higher ethical standards from business.
