4 Ethical Attitude of Managers

Ethical Attitudes of Indian Managers
Dr Subhash Gupta
Environmental Variables Affecting Management Functions

National Variables Economic system Physical situation Legal system Technological Political system know-how
Socio-cultural Variables Religion Education Language
Cultural Variables Values Norms Beliefs Work Time Materialism Attitudes Individualism Change
Individual and Group Employee Job Behavior Motivation Commitment Productivity Ethics
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Dr Subhash Gupta
INGREDIENTS OF ATTITUDE
1. Ethics, especially in business. 2. Integrity. 3. Responsibility. 4. Respect for law and order. 5. Respect for the rights of others. 6. Hard work. 7. Prudence. 8. Will of super action . 9. Punctuality. 10. Planning.
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THE VALUE OF ATTITUDE
In poor countries, only a minority follow these basic principles in their daily lives. Therefore, we are not poor because we lack natural resources or because nature was cruel to us. We are poor because we lack ATTITUDE. We lack the will to comply with and teach these functional principles of rich and developed societies.
Dr Subhash Gupta 4
11/10/2012
Indian Managers
An average Indian manager represents a plausible picture of the average Indians resistance for change, his willingness to delegate but unwillingness to accept authority, his fear of taking an independent decision, his possessive attitude towards his inferiors and his abject surrender to his superiors, his strict observance of rituals and his disregard of them in practice, his preaching of high morals against personal immorality, and his neardesperate efforts at maintaining the status quo while talking of change.
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Dr Subhash Gupta
Dealing with Bureaucracy
Ninth most corrupt country in the world. Pervasive corruption linked to excessive control and unfulfilled demand Red tape Widespread tax evasion
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Dr Subhash Gupta
KPMG Fraud Survey 2010

Ineffective control systems and diminishing ethical values are key contributors Volatile economic conditions coupled with increasing business and technological complexities have led to increased opportunities for fraud
KPMG Fraud Survey 2010

Ineffective whistle-blowing systems Lack of objective and independent internal audit functions with forensic skills Inadequate oversight of senior management activities by the audit committee
PricewaterhouseCoopers' Economic Crime Survey 2009

Percentage of Frauds detected through various tools Internal Audit 17% Tip-off (internal) 16% Fraud Risk Management 14% By accident 13% Tip-off (External) 11% Whistle Blowing 7% Suspicious Transaction Reporting 5% Corporate Scrutiny 5% Rotation of personnel 5% Other Detection methods 4% By Law enforcement 3%
Dr Subhash Gupta 9
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Excellence in Corporate Governance leads to National Excellence

National Excellence
Social Excellence Corporate Excellence Excellence in Corporate Governance

WHAT MAKES OUR LIVES 100%?

Let each letter of the alphabet have a value equal to its sequence in the alphabetical order:
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
S K I L L S 19 11 9 12 12 19 K N O W L E D G E 11 14 15 23 12 5 4 7 5
=
=
82
96
H A R D W O R K 8 1 18 4 23 15 18 11
A T T I T U D E 1 20 20 9 20 21 4 5
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=
=
Dr Subhash Gupta
98
100
11
...and always remember...
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Most significant change in a persons life: change of attitude A positive attitude is not a destination: it is a way of life Our lives are reflections of our attitudes A positive attitude is like a magnet for positive results Right attitudes produce right actions A creative attitude is the fuel of progress and growth
Dr Subhash Gupta
12
Professional Ethics
Professionals:
are experts; use expertise responsibility; belong to a professional order.

Easier to identify competence. Can identify incompetence before it is too late. Managers clearly needs professionalism.
Dr Subhash Gupta 13
Why professions?

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Professional Ethics
Professional obligations are narrower than ethical duties in general.
The whole point of a profession is to establish a reputation (and live up to it). Professional conduct is what the reputation leads people to expect. Determining professional obligation is more a matter of sociology than ethics.
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Dr Subhash Gupta
14
Business as a Profession?
Professional duties of business managers and directors have been narrowly construed.
Strictly a fiduciary duty to owners (investors, stockholders). Fiduciary duty is strictly financial - make lots of money. Not allowed to think about ethics if it impedes profit. This protects fiduciaries from frivolous lawsuits.
Dr Subhash Gupta 15
11/10/2012
The Business View
If the firm cant compete, managers will get the blame. Quality and safety raise the price of the product.
Ideally, the consumer decides how to balance quality and safety against cost. But quality and safety often cannot be evaluated until long after the purchase.
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Dr Subhash Gupta
16
Corruption
Kickbacks
A purchasing agent may receive payments from a supplier in exchange for a contract. This is corrupt in the West because it implies conflict of interest.
The purchaser is supposed to consider the companys interest, not his/her own. Decisions are based on transparency: the bids, information about the bidders, etc.
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Dr Subhash Gupta
17
Corruption
In another system, one does business with a person, not a company.

Business is based on a long-term relationship that builds trust. When there are problems, it is no use to call a lawyer. One must rely on the relationship. It is therefore in the companys interest for the agent to build these relationships. There is no conflict of interest.
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Dr Subhash Gupta
18
Corruption
The kickback makes it clear that the seller is serious about the relationship. If he has invested in the relationship, he is unlikely to disappear when there are problems.
In some parts of the world, kickbacks are written into the contract.
A curious result of imposing the foreign idea of a written contract. A contract presupposes a universal framework of rules and justice, in which most cultures do not believe.
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Dr Subhash Gupta
19
Corruption
Nepotism
Your associates may ask you to employ their relatives.

This is often unethical in the West due to conflict of interest. It is standard practice in much of the world.
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Dr Subhash Gupta
20
Corruption
In many cultures nepotism has advantages.
The boss is intimately aware of abilities and can assign duties accordingly.
Duties are determined more by direct supervision than written job descriptions.
The authority of an elder family member can induce relatives to produce more than others with greater talent.
The main reason for nepotism is the primacy of the family.

Dr Subhash Gupta 21
11/10/2012
Corruption
Bribes
Definition varies.
Many view a kickback as a commission, not a bribe. A thank-you gift may be viewed as gratitude rather than bribery, even if there is some quid-pro-quo.
Consequences vary.
In China, bribery can be punished with death by firing squad. In Turkey, the police ask you to pay them a bribe.
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Dr Subhash Gupta
22
Corruption
Frequency varies.
In Singapore, no one dares. In China, it is ubiquitous.
Bribery may or may not be corrupting.
In South Korea, executives give white envelopes full of cash to government officials as a normal part of doing business.
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The bribe assures the government official that the executive will abide by regulations to avoid losing a relationship in which he has invested. Not necessarily corrupting, although exposure brings loss of face.
Dr Subhash Gupta 23
Corruption
In Japan, bribery is corrupting because it undermines group loyalty. In China, it is corrupting because it shortcuts guanxi and weakens government power. In Malaysia and Indonesia, unclear. In Russia and eastern Europe, an unmitigated evil. In Africa, bribes so inflate the cost of doing business that the economy is crippled. In India, government officials could not subsist without side payments.
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Dr Subhash Gupta
24
THE ICEBERG
HOW MUCH DO WE SEE OF AN ICEBERG?
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Dr Subhash Gupta
25
THE ICEBERG ii
ONLY 10% OF ANY ICEBERG IS VISIBLE.
THE REMAINING 90% IS BELOW SEA LEVEL!
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Dr Subhash Gupta
26
THE ICEBERG iii

VISIBLE ABOVE SEA LEVEL
10 %
SEA LEVEL
INVISIBLE BELOW SEA LEVEL
90 %
THE ICEBERG iv
The Iceberg phenomenon is also applicable on human beings
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Dr Subhash Gupta
28
THE ICEBERG v
KNOWN TO OTHERS
KNOWLEDGE & SKILLS
SEA LEVEL
UNKNOWN TO OTHERS
ATTITUDE
THE ICEBERG vii

KNOWN TO OTHERS
BEHAVIOUR
SEA LEVEL
UNKNOWN TO OTHERS
VALUES STANDARDS JUDGEMENTS
ATTITUDE
MOTIVES ETHICS - BELIEFS
Thank you

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4 Ethical Attitude of Managers

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Ethical Attitudes of Indian Managers

Environmental Variables Affecting Management Functions

Socio-cultural Variables Religion Education Language

THE VALUE OF ATTITUDE

Dealing with Bureaucracy

KPMG Fraud Survey 2010

11/10/2012 Dr Subhash Gupta 7

KPMG Fraud Survey 2010

11/10/2012 Dr Subhash Gupta 8

PricewaterhouseCoopers' Economic Crime Survey 2009

Excellence in Corporate Governance leads to National Excellence

Social Excellence Corporate Excellence Excellence in Corporate Governance

WHAT MAKES OUR LIVES 100%?

...and always remember...

are experts; use expertise responsibility; belong to a professional order.

Professional obligations are narrower than ethical duties in general.

The Business View

In another system, one does business with a person, not a company.

Your associates may ask you to employ their relatives.

In many cultures nepotism has advantages.

The main reason for nepotism is the primacy of the family.

Bribery may or may not be corrupting.

HOW MUCH DO WE SEE OF AN ICEBERG?

THE ICEBERG iii

INVISIBLE BELOW SEA LEVEL

The Iceberg phenomenon is also applicable on human beings

KNOWLEDGE & SKILLS

THE ICEBERG vii

VALUES STANDARDS JUDGEMENTS

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