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BW Businessworld

Ethical by Choice

This idea of creating a top-down approach for setting high ethical standards in an organisation, however, should not diminish or undermine the responsibility of individuals to behave ethically.

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Among the many interesting and insightful stories that have emerged from the life of JRD Tata, the longest-serving chairman of the Tata Group, is one about ethics that set the context for future debates on the subject, particularly in the corporate sector. When tax consultants labored to explain the difference between tax avoidance and tax evasion, with the former being a legal and legitimate way to reduce the corporate tax burden, JRD had only one question: “Not illegal. But is it right?”

If at all anything, this incident should be particularly instructive not just for owners of businesses but executives at every level in today’s organisations. The question of doing the right thing and doing it consistently is also of importance particularly when we are living in a culture of winning and losing where successes and failures are often measured over a much shorter span of time.

It is also important to recognize the fact that ethics is a matter of culture that goes much beyond compliance to policies and code. To a great extent, it is dependent on the beliefs and values that the leadership team instills in its employees. To put it more simply, a good lawyer or accountant will tell us what is legal and what is not, but it would take an enlightened leader to show the right path in line with the values of the organisation. This idea of creating a top-down approach for setting high ethical standards in an organisation, however, should not diminish or undermine the responsibility of individuals to behave ethically.

Corporations or business organisations in general have a vital role to play in creating and upholding ethical standards. This stems from the basic understanding that businesses are part of the larger community and, therefore, have a very important role to play in setting up high ethical standards in how they conduct their business. One of the best ways to create a culture of ethics is to clearly define this standard. Today, many global organisations have a well-articulated code of conduct that forms the basis or foundation of what the organisation considers it's way of doing business. Such a code of conduct that has been put in writing must be seen more as a ‘constitutional’ framework within which the day-to-day business is conducted.

The values enshrined in such a corporate constitution can include a wide range of universal values such as equity, social justice, concern for the environment, quality, respect for the individual, etc. It is also very important to ensure that these standards permeate deep within the organisation’s culture and reflect on each of the processes including decision-making at every level. Upholding the highest standards of ethics, though may be defined at an organisational level, ultimately comes down to individual actions. Few things organisations can do to ensure this would be to constantly communicate these values, openly recognise ethics champions and build its processes to demonstrate the fundamental values and beliefs of the organisation. This will ensure that ethics is not seen as a mere esoteric idea only a few people at the top must worry about but also demonstrate how ethically-valid decisions are made on a day-to-day basis.

Instinctively, most people understand the difference between right and wrong or what is ethical and what is not. What sets apart organisations that uphold the highest ethical values from the rest is completely dependent on individuals within the organisation and their resolve to stand by the values against all odds. An organisation that stands by its values and principles and the character it demonstrates during difficult times always reaps the benefit of stakeholder confidence in its brand - a true hallmark of a brand.

(The Article is Authored by Ms. Soni, Chief Ethics Counsellor, Tata Steel)

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