Enron's former CEO Kenneth Lay : Crossing that red line

BACK OF THE BOOK

Ethics is possibly one of the most abused words in the corporate world. Spoken of with reverence in boardrooms, it's often the object of derision and jokes in washrooms. One reason why ethics evokes such contrasting reactions is that it is poorly understood. Those sitting in the ivory towers of management see it as an ethereal quality their organisation must possess in order to become a model corporation, while those in the trenches-the salesmen, production and purchase managers-see it at best as a nuisance, a hurdle they must "negotiate" on their way to their quarterly targets thrust upon them, of course, by the bosses in the headquarters.

So what does business ethics really mean? According to Dipankar Gupta, a professor of sociology at Jawaharlal Nehru University (JNU) and an advisor to KPMG's business ethics and integrity division, it's not about one thing but a combination of several aspects. For example, business ethics, he says, "is not about morality, but about the establishment of transparent norms of interrelationships", "is concerned with a code of ethics and not just with a code of conduct", and "is about establishing employee morale and not just about establishing compliance".

ETHICS INCORPORATED By Dipankar Gupta Harper Collins PP: 220 Price: Rs 395

In this book, which probably would have done well to adopt a Goldratt-like narrative, Gupta not only clarifies what ethics means when applied to business, but also offers a step-by-step roadmap to its implementation. And one of the first things he tells you to do is to frame explicit rules that apply to all. It's easy to see why fuzzy ethics is bad for organisational morale. Unless the rules are spelt out, different executives, depending on their relative position and power in the organisation (besides their personal value system), will employ ethics differently. One may view making personal phone calls from a company-provided phone as a breach of ethics, while another may not turn a hair awarding a contract to a friend or relative, or even cooking the books. How ethics is defined and adhered to, then, becomes a function of the corporate culture. Where superlative examples of ethical behaviour among the top managers are available, there will be a more ethical organisation at work. Where there is little of it, short cuts and compromises will be seen par for the course.

But the question is: can businesses be ethical? Indeed, is it their job to be ethical? Gupta says the answer to both the questions is yes. According to him, business ethics needn't be seen as an oxymoron: businesses can be ethical and still be successful. In fact, he argues that being ethical is actually good for the bottomline. While in the post-Enron era that rings truer than ever before, the fact is good corporate governance has always meant good business. After all, what does a company do when it cheats? It raises its own risk factor. Lenders will price their loans higher, investors will expect a higher return, suppliers may insist on cash-on-delivery, and consumers may be distrustful of the company's products and services, forcing it to sell at a discount to its competitors. In other words, if you want yours to be a successful corporation, be good.

"If You Want To Be A Long-Distance Player, You Have To Adopt Business Ethics"

JNU professor Dipankar Gupta on business ethics as they ought to be.

Isn't business ethics an oxymoron?

Yes, that's the way it appears to many of us, not just in India but elsewhere too. But if you want to be a long-distance player, you have to adopt business ethics. The CEO, the top executives of the company must know their company well, they must know what the people in the company want. In fact, that's the first principle of business ethics.

Almost all the recent corporate scandals globally have involved the CEO. Obviously, business ethics isn't something CEOs are losing sleep over.

If the top people in the company are going to be crooked, there is no possibility of business ethics really making its appearance in the company even though there are some ways by which we could save it. Let us say that the company has a well-established procedure on very simple things like whistleblowing. If everybody knows how the process works, what the whistleblower rights are, then you can put pressure even on the top managers to behave.

But how conducive is the business environment for ethics, considering that pay-for-performance is now the norm?

It's not easy. But I think if you pick your people carefully enough, a lot of such problems can be pre-empted. I don't think top management, which usually sets the performance goals, is made up of unreasonable people.

But given the quarter-to-quarter pressure, there is a lot of incentive for employees to cheat or lie...

I think corporate governance can play a very important role here. If you want corporate governance to really work, then there are two very simple steps one can take. One is to make sure the external members meet often enough so that they become a cohesive group. Two, members of the board shouldn't just deliberate on matters brought to them. They should actively seek information. Information from the audit committee, from the compensation committee etcetera.

BACK TO THE WOMB & OUT AGAIN WITH "DOGASH'' By David H. Hooker Modicare Ltd PP: 185 Price: Rs 300

When an entertainer-turned-salesman-turned-motivator coins a word, it's hard to ignore. The motivator here is David Hooker, who heads Delhi's Modicare School of Entrepreneurship, and the word is 'Dogash'. It's an attitude. The reader must figure out what it means from all the "Dogash says..." blobs of advice (sample: 'Break this rule!'). The book's hook is the entertainer in Hooker; he even uses a comically misinterpreted psalm from the Bible to sell free will. The womb bit? You, as a sperm, have already been one helluva winner getting to the ovum and then all the way out. With Dogash, you get back the spunk. Some of it, though, sounds like a comic misinterpretation in itself. Take the Dogash commandment, "If you know the answer will be no-don't ask the question!" Well, too bad; here's the question anyhow: do you expect to have that engraved in stone?