Values and Ethics, the Building Blocks of Great Enterprises

The Last Word

The business world has provided fertile ground for writers to come up with winning scripts that have become runaway successes in the box office. In most of these movies, the hero is the idealistic trade union leader, and the villain, his ruthless employer. This stereotype has been much loved by cinemagoers, and it possibly has a universal appeal especially among youngsters. There is an element of truth in it, but again, like all stereotypes, it is only partially right.

 

There is a connection between values and ethics, and the kind of enterprise you end up building, says C Balagopal

 

The years after 1947, which saw the creation of a command and control economy, with complex bureaucratic controls over every aspect of business activity, led to the creation of a business mindset that focused on navigating through these complex regulations, and using them to one’s advantage. This had huge implications on the quality of products and businesses that grew up in this peculiar environment, with the premium on evading taxes, bending rules, paying bribes and making shoddy products. There were, of course, honourable exceptions.

There is a connection between values and ethics, and the kind of enterprise you end up building. This connection is often lost sight of, with the result that we end up creating products that are shoddy, and an enterprise that is possibly profitable, but not one capable of surviving in a competitive market.

Ethical business practices will impose a rule-based behaviour on the entire enterprise. This means that all decisions and processes are governed by rules and processes that must comply with the laws and regulations of the land, and meet simple standards of decency and ethical correctness.

First, knowing that you want all rules and laws to be fully complied with, your people will understand that all permissions and licences will need to be obtained through full compliance with the rules. This will make all your people read the rules and become fully conversant with them, instead of relying on the dubious opinion of one of the ‘fixers’ who promises to ‘manage’ officials if problems arise. If an application for a licence renewal is delayed and a fine has to be paid, the person responsible should be held accountable.

Second, your people should understand that compliance does not mean the licence is current and valid. For example, your factory licence means that you fully comply with the provisions of the relevant statute, which has many provisions covering all aspects of occupational safety and health, in addition to specific provision covering hazardous substances you may be using in your process. How many people read the provisions of these statutes, in order to ensure they are fully implemented? As a responsible entrepreneur, it is your duty to ensure that your managers know these important statutes, and that all provisions of these regulations are fully complied with.

Third, an ethical business means that rules and values must govern your dealings with your people. Internal rules and regulations must not only comply with local rules and statutes, but also be aimed at creating a place that is good to work in, that is safe, and that promotes desirable values and behaviour. Every HR process covering hiring, training, performance evaluation, promotion and other aspects of working in an organisation, must conform to the highest standards of ethics and values.

Finally, you must be ethical and value-based in your dealings with your business associates, suppliers, customers and service providers. All bills must be paid on time, and you should have processes to ensure that your receivables are collected on time. Ensure that written contracts cover all your transactions, and they are strictly adhered to. In tough times, when cash flows dry up, keep your suppliers informed about your ability to pay their bills, and avoid making promises you know you cannot keep. Sometimes, external conditions such as exchange rates and interest rates may change, and you may stand to gain if the deals were to be renegotiated. Don’t look for ways to renege on the deal. This is a windfall the other party is entitled to. Your turn will come.

A simple rule to follow when faced with an ethical question is to ask the following questions. First, is it legal? Second, is it fair? And third, will I be comfortable with the decision I make? The face in the mirror is your best guide to the correct decision you should take.