Just a couple of weeks ago, Thomas Friedman – the man who fired the imagination of world business with his book The World is Flat - wrote in his New York Times column: “We don’t just need a financial bailout; we need an ethical bailout. We need to re-establish the core balance between our markets, ethics, and regulations.”
The very next day, while announcing his nominee for head of the SEC, president-elect Barack Obama noted that there needed to be a shift in ethics in business and that “everybody from CEOs to shareholders to investors are going to have to be asking themselves not only is this profitable, not only whether this will boost my bonus, but is it right?
Much as we would have wanted to move beyond these sentiments and focus on navigating our ships through an already challenging environment, the disclosures made by Satyam have brought this issue from the US and Wall Street to much closer home. And yet, it only confirms a trend we have been witnessing among organizations to select partners with a track record of performance, innovation, and above all – a robust corporate governance structure. Credentials today run far beyond turnover, growth and profits. They extend deep into ethics, integrity, credibility, track record, domain experience, creativity, professionalism and corporate governance.
In other words, in addition to ‘what a company does,’ it is equally important to focus on ‘how it does it.” Looking ahead, sustainable business can only be built on a culture of trusted partnerships with each and every stakeholder group – including employees, customers, shareholders, vendors, regulators. Trust through Transparency – a core value at HCL for long – will finally gain its due recognition as the only way forward. As customers move out of the economic turbulence of the recent past, there will be a clear shift towards service providers that can create the highest business value while maintaining the highest ethical and governance standards. For the financial health of business can only be anchored in trust.
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Once again you have hit the nail right on it’s head. We should be cautious enough that in this era of cut throat competition we keep ethics right on top of our priority list..transparency and trust should be build not only with the current stakeholders but also with the future stakeholders like prospective employees.
Excellent post Vineet! As you rightly said integrity, ethics and trust are very critical and forms the foundation of any successful relationship(be it personal or professional). Corporates should ensure that their core values are not compromised irrespective of the situation in order to provide sustained value for their stakeholders. A breakdown in values will ultimately lead to destruction of the entity as we have seen on multiple occasions across the globe.
There is definitely a need to look beyond balance sheets. How does one check the ethical background of the management? Is this going to be simple and transparent process? In Satyam’s case, nothing much was heard even 2 months back.Yes, end of the day its trust which counts. What should be the criteria for trust? Do not get any simple answers..
Very true Vineet , I have also noticed a sudden interest in business ethics classes in management institutes , even though the course was always there but mostly students took it for granted and something very obvious. Suddenly profs and students have got an interesting case to discuss from so many angles and not to mention the disaster which can occure by not following a value based governance. The debate is also on to to have robust selection perocess for Corporate governance hierarchies rather then having some impressive names just for the sake of brand building .We wish it should have not taken a disaster like Satyam to impose iportance of corporate governance….
Good one. Its high time bringin the ‘Trust through Transparency’ with the management and stake holders as you mentioned aptly after this satyam fiasco.
Excellent points made, Vineet. The issue that needs to be addressed is that of ethics & integrity which are universal values, very much like axioms or self-evident-truths. It is not cultural as well. Leaders either have it or they don’t, be it in the East or West. I don’t think that there are any shades of grey here. Its Black or White !!!
The issue is one of character as well. Character can be defined as what you are when no one is watching.
I realize that it is not simple job to balance all the factors that a leader needs to address in order to keep all stakeholders satisfied. However, this is exactly where a great leader relies on his (or her) character to take the right call and to prioritise between organizational goals, shareholder demands, employee views, market dynamics and the regulatory framework. In today’s world, it gets increasingly difficult to balance all of it together all the time, but with ethics, integrity, character and transparency, an outstanding leader can do an exemplary job.
very nice post Vineet
thanks
Good and thought provoking article vineet. look forward for more posts.
Instead of agreeing or disagreeing, let me share something with you. Warren Buffett recently said something interesting about the most important traits any employee must have (forgive me I’ll quote from my memory): “The first is Integrity; the second is Intelligence; the third is Ambition. And if you don’t have the first one, the other two will kill you.” It’s good one, huh? Thinking of recent Indian news, Satyam’s smarts and ambition immediately come to mind. But there is a problem with Buffett’s idea: it implies that there are people of absolute integrity among us. Alas, there aren’t any. Not I, nor Warren Buffett, nor your favorite guru or historical figure: we all have to compromise in our lives. Moreover, no one has cancelled the basic trait of human beings: self-interest. And it is self-interest that lies at the core of “self-creating” phenomena of corruption and lies in all their varieties. Nonetheless, organizational systems can be simplified to enable us to trust virtually everyone we work or deal with and still be free from the arbitrary limitations of various integrity codes, intrusive transparency, books full of rules and other restrictive stuff. Such simple organizational systems can save us from corruption and unneeded taxation in the government realm, and can make piles of money to capitalists who’ll adopt them in business, because they boost productivity and savings by 15 – 50 percent. And don’t think that’s a pipe dream – I’ve put such systems in place.
Respected sir and a Visionary, I am an ex comnetian, I am very happy to see the whole transformation of HCL Tech in particular.And creating waves in the global infrastruce arena and congratulating you once again for foreseeing the infrastructure industry way back 2k. I am wishing you many more success to come in near feature like Axon. Yours sincerely.Murali.