Ethics for Effective

Management
Prof KK AHUJA

The Globalization is ushering

Undesirable consequences like:

-Economic disasters
-Social unrest
-Individual stress levels
Posing the question of

Values & Ethics

The World has witnessed

Enron
Parmalat
WorldCom
Baring Bank
Arthur Anderson
Global Trust Bank
Satyam
They had everything...
But

These all lacked

INTEGRITY
Doing the right things, even if nobody is watching

Moral principles of duty and virtue that prescribe how

one should behave;
behave the foundation of ones internal
control.

AND THEIR HISTORY IS WRITTEN

Relationship Between Values & Performance

Organizational
Values
Harmony in
Values

Positive Impact
On Performance

Discord in
Values

Negative Impact
On Performance

Ethics & Corporate Governance

To be truly effective, ethics must:

Be an integrated part of the organizational culture

rather than an appendage grafted onto
administrative systems

Be modeled by the leadership team, even when it is

painful (audit disclosure)

Be designed to prevent problems before they occur

& resolve issues when they arise

Prevent concealment or obfuscation

Encourage recruitment & retention of the best & the

brightest

Increase public confidence

Dilemma of Decision Making

Thorny judgment calls
Dealing with
Changing norms
Mixed messages
Ambiguity
Competing pressures

Effective Ethical Leaders?

An effective ethical leader will

Foster an environment of Trust
among individuals in the Workplace
and this trust will encourage openness
among team members without fear of
retribution.

Framework for Ethical Decision Making

1. Who will be affected by my decision?
2. What general rules or principles underlie my decision?
Are you handling similar matters consistently?
3. What are the implications of my decision for the
University and the Laboratory?
4. What does my decision say about my values? (We all
know people who say one thing & do another.)
5. One can be unethical without breaking the law.
6. What is right, what is fair and what is in your best
interest may not be the same. Put your bias aside.

Effective Leaders Will Have:

The

Desire

Willingness &
Courage
...

to Do Whats Right

Effective Leaders Will Have:

Ability
to resolve ethical issues by using
traditional methods of inquiry, namely:

Listing options
Testing the
options
Making a decision,
andMost importantly,
Acting !

DEVELOPIG FUTURE LEADERS

Competitive
Advantage

Integrity

Values & Ethics

High Emotional
Leadership
And
Professional
Qualities
Intellectual Competency
Quotient
Business
Instincts
Result
Orientation

Creative
Conceptual &
Thinking
Analytical
Techniques
Planning

Positive
Attitude

Proactive
Approach

Customer
Focus

Dynamism

Team
Work

Where Modernity Blends With Tradition

Ethical Leader Imperatives

Establish shared values
Establish a positive leadership climate
Develop self & others
Think strategically
State & communicate your intent
Decentralize
Empower the work force
Emphasize continuous improvement

The real test of ethics and character

is whether we are willing to do the
right thing

even when it is
likely to cost more
than we want to pay.

After a steady journey of 20yrs, from an early start-up in

Hyderabad to a global $2.5 billion corporation, Satyam
computers has, in a dramatic turn of events, landed itself at the
crossroads, with uncertainty staring in its face.

Rated as countrys 4th largest IT service provider employing

53000 people with operations in 66 locations across the globe &
185 fortune-500 companies as clients, the company commanded
respect from all quarters and all stakeholders till the middle of
Dec.08

With barely Rs 100 crore revenue in 1995, the companys

business built mainly on the Y2K opportunity & system
integration work, gradually transformed itself into a full services
provider building on various verticals.

As it grew, building on scale, Satyam was amongst the first

Indian companies to be listed on the New York Stock Exchange.

The IT sector is in the limelight again, but for all the wrong reasons.

The scale of fraud is unprecedented in Indian corporate world and

how this continued for a long period needs through a probe.

The Satyam fiasco is a stand-alone case of failure of corporate

governance.

More than 3000 satyam employees posted their resumes with job
consultants as well as job portals like monster.com, naukri.com etc.

More than 1500 applications had received in a single day..said an

employee of job consultancy.

While satyam was on rise in the corporate and IT

firmament of the country, its promoters spread their
presence in society.

Ironically, todays revelations of fraud and overstatement in

the companys books have seriously dented the image of
the promoter chairman of Satyam computer.

Paradoxically, the companys auditors Price water house

Coopers, which is in the dock for various accounting flaws
now surfacing with Mr. Rajus disclosures, also helped
satyam to become the 1st Indian company to comply with
IFRS.

The auditors have to be independent, thats why they are

called independent auditors.

They should not be under the thumb of the management.

Given the current mess, the company is in with a valuation

of about $600 million, it may find suitors hard to come by.

In its growth story, the major contracts it bagged included

work for FIFA world Cup & World Bank jobs, but it also
suffered several set-backs

These include the recent ban by World Bank- a long time

client, & case of fraud filed by paid in a Texas court.

You need principles, you need culture, thats why corporate

governance is not just filling up check list.

It is about mindset. It is about the honesty and the

willingness of the management and the shareholders at large.

It is about your values, it is about your aspirations and what

you go after in life.

If you want respectability, then you will automatically do all

the right things.

Firstly, it is about the management realizing honesty is the best

policy.

Secondly, it is about creating an environment where there could

be whistle blowers.

Thirdly, it is about creating an environment where anybody will

standup and say NO, what we are doing is wrong are not agree
with it.

Fourth, it is about creating an environment where respect

matters more than jus money or power.

Focus on gratification is a good thing

Focus on respectability is very important.

Good governance in the long term will make people

happier or peaceful and will bring tremendous
rewards.

Middle class values are the best values.

Dec 16 : Satyam announces plan to buy building firms partowned by the outsourcers founders for $1.6 billion. It does
not rapid U-turn, killing the deal jus 12 hours later following
a 55% plunge in the companys share prize in hectic US
trading.

Dec 18 : Satyam board says it will meet on Dec.29 to consider

a share buyback in a bid to restore confidence.

Dec 23 : Satyam barred from business with the World bank

for eight years for providing staff with improper benefits. Its
shares fall another 14% to their lowest in more than 4.5yrs

Dec 24 : Satyam shares rally amid market talk the

outsourcer may have become an attractive takeover
prospect given the steep share price fall.

Dec 26 : Mangalam Srinivasan, an independent director.

resigns.

Dec 28 : Satyam defers board meeting until Jan. 10 to

give itself time to consider options to shore up investor
confidence.

Dec 29 : : Three more independent directors quit.

Jan 2 : Satyam says its founders stake fell by a third to

5.13%. Analyst say this means the company is more
attractive bid target.

Jan 5 : Satyam shares tumble 9% on concern that corporate

governance issues could hit new business.

Jan 6 : Shares rise more than 7% on a newspaper report

Satyam had been approached by smaller rivals Tech
Mahindra for an all-share merger.

Jan 7 : Mr. Ramalinga Raju confesses manipulation of

financial statements of Satyam; Rs 5040crore cash hole in
balance sheet.

WHAT IS A VALUE ?
An enduring belief that a specific mode of
conduct is personally and socially preferable
to another.
A value can change with the changing
character of society as well as a persons
maturity.

A VALUE IS A VALUE IF IT IS
Chosen freely
Prized and publicly affirmed
Acted upon repeatedly
Enhances personal growth

OUR VALUES
B Business Ethics
C Customer Focus
O Organizational & Professional Pride
M Mutual Respect & Trust
I Innovation & Speed
T Total Quality for Excellence

B-C-O-M-I-T

BENEFITS OF NEW VALUES

Business Ethics --- In all dealings. Will raise NTPC

image; corporate governance; and business risk
management.

Internal Customer --- Also to receive the necessary

empathy, understanding and support from all the
staff functions and internal service providers.

Professional Pride --- All executives and workmen

to continuously learn, develop and perform their
tasks to high professional standards.

BENEFITS OF NEW VALUES

Respect --- Also for every employee and

vendor.

Innovation --- In every aspect, big and small,

hard and soft areas.

Excellence --- As the end objective, for which

there is need for quality in all areas.

LEADING A POWERFUL LIFE

VISION, DISCIPLINE & PASSION RULE THE

WORLD

An individual - who has had profound influence on

others, on institutions or on society.

Any
parents
whose
intergenerational.

Anyone who has really made a difference for good

or ill.

Possessed three common

discipline and passion.

influence

has

attributes:

been

vision,

Express Your Voice

The life of all great achievers

those who have had the greatest influence on

others,
those who have made significant contributions,
those who have simply made things happen you
will find a pattern.

They have greatly expanded their four

native human intelligence or capabilities.

Express Your Voice

The highest manifestations of these four

intelligences are:
Mental - vision;
Physical - discipline;
Emotional - passion;
Spiritual - Conscience.
These manifestation represent our highest
means of expression - our voice.

Vision is seeing with the minds eye.

What is now proved was once only
imagined.
Discipline is paying the price to bring
that vision into reality.
Passion is the fire, the desire, the
strength of conviction and the drive
that sustains the discipline to achieve
the vision.
Conscience is the inward moral sense
of what is right and what is wrong, the
drive toward meaning and contribution.

Mental Intelligence/Capacity

Physical Intelligence/Capacity

IQ
PQ

Vision
Idealistic
Anticipating
Future

Discipline
Realistic

Long term
perspective

Execution
Constant

Dreamer

Pioneering

People behaviour
Philosophical

Achiever

Focused

Autonomous

Takes Initiative

Committed

Hard-working
Tenacious

Willing in Sacrifice

Self Disciplined

Spiritual Intelligence/capacity
Emotional Intelligence/Capacity

SQ

EQ

Conscience

Passion

Enthusiastic
Optimistic

Hope

Takes Responsibility

Synergetic
Courageous

Empathetic

Affirming
Inclusive

Intuitive

Moral
Servant

Wise
Humble

Fearless
Challenging

Ethical

Integrity
Fair
Inspired
Compensations

Corporate Social Responsibility

What is Responsibility?

What is Social Responsibility

Definition of CSR?
37

Some Issues

How does it matter if CSR is not done?

Can a small company go for CSR?

In a monopoly market is there a need to go

for CSR?

38

CSR through NGOs

Some Issues

Corrupt NGOs

Accommodation of
volunteers

Unjust demand for publicity

39

Politics of CSR

Some MNCs are malign

hence

Opposition by Activists Justified.

Beating up corporations is easy

but

Economy rolls social transformation

40

Contd
Therefore,

NGOs critical about

Voluntarism
But

Corporations Against
Mandatory Regulations
41

Contd
Now A Million Dollar Question

Should CSR be Voluntary or

Mandatory?

42

Contd
In a battle between
Voluntary vs. Mandatory
Voluntarism Won Hands Down
UK for An Enlightened Voluntarism
in WSSD at Johannesburg
43

Economics of CSR

Expanding customer base

Getting an edge over competitor

Increasing sales and profit

Sustainability of the company

44

Emerging Perspective

Nation State to Vanishing

Territoriality

Activists against MNCs

A Better Demographics

New Corporate Governance

45

Contd

So Business depends more on

Reputation Capital than

Tax Benefit only

Profit Optimization than

Profit Maximization

Social Responsibility than

Philanthropy
46

Barriers of CSR

(WB Study Report)

Business short-term, CSR long-term

All buyers not CSR focused

No clear business benefit

Local government not strict

Young CEOs deny CSR

47

Contd

Time passing activity of CEOs wives?

Transparency not aggressively enforced

Corporate donations often hazardous.

Deciding CSR strategy is very difficult.

48

Strategy Issues

Should it be charity or business?

How to select the region?

Selecting the Cause

How much to Invest?

Selecting the Partner

49

Benchmarking CSR

Socially responsible product

Corporate Governance

Employees

Voluntary contribution
50

Impact Analysis

HR Index

Environment

Economic
Cost of CSR?
51

If the Ethics Rope Breaks