Sept.2010 HRM Review

1]BUSINESS ETHICS

Business Ethics in Indian Organizations

-- R Chandrasekaran
Research Scholar,
Bharathiar University, Coimbatore,
and Sub Divisional Engineer,
BSNL, Madurai.
sekarrajesh@gmail.com

Even after several amendments in our Constitution, guidelines formulated by various regulatory bodies and directions by various judiciaries, there is no considerable and expected development of India. When analyzed, it is comprehended that organizations in our country lack ethics. Unethical business practices are found at various levels—at the corporate level, at the employee's level, and at the level of government regulatory bodies as well. Our erstwhile President, Kalam's dream of India becoming a Superpower in 2020 may come true only when ethics are strictly implemented in each and every organization throughout India.

India now has emerged as an industrial country, which has transgressed from mere a nation of agriculture to a nation of all-round development. For the past two decades, we have changed our business strategies allowing a considerable percentage of FDI in almost all sectors. We hailed MNCs to invest in India, at the same time, Indian business giants like Ratan Tata et al. expanded businesses abroad. In such a scenario, it is imperative to implement business ethics in all organizations irrespective of their ownership viz. public, private or government. The very purpose of any organization in India is to lift millions of people out of poverty and win economic freedom for all.
Business is normally perceived as a purely economic activity. Economics unfortunately, is traditionally regarded as unethical and obsessed with the rational self-centered utility maximizer.

What is Ethics?

Ethics refer to the basic principles of moral values that are expected to be followed by every citizen in a civilized society, aiming to maintain tranquility and virtues. Any organization whether profit-making or service-oriented needs to abide by ethical principles so that the entire nation is benefitted.

Sources of Business Ethics

The major sources of ethical values are knowledge imbibed through religious sermons and vedic books, culture and law. These systems influence every organization and have become the guiding principles for the individuals working in the organization.
In my experience, the strict followers of religious values practice ethics in business also. They are bound by such values and afraid of violating them. The culture comprises of inherited expected behavior which is transferred from one generation to another. Finally, the laws are rules of conduct, approved by legislatures that guide human behavior in any society. It is to be noted that even after hundreds of amendments in Law, we could not weed out unethical business practices. This implies that Law alone cannot prevent malpractices, it has to be ethics.

Why Business Ethics?

The public, in general, contemplate that business means earning money disregarding ethics. Profit maximization and personal benefits are the mantras of any business organization. It is misconceived that business means profit. As it is well-known, most businessmen are lured by the fast-buck culture, that is to earn as much money and as far as possible. Harshad Mehta, Ramalinga Raju etc. can be quoted as examples. Ends justify the means for these businessmen. Ethics is the science of morality. Ethics prohibit direct harm (death, disability, deprivation of freedom or pleasure), as well as indirect harm to others (deceiving, cheating, breaking promise, breach of trust, violating the law and negligence of duty).

Unethical Business Practices may be Divided into 3 Categories

1. By Organizations

By exploiting the employees without giving proportionate salary, non- remittance of EPF contribution, holding of original certificates, ill-treating of employees, insulting the teaching staff before students.
Deceiving their customers by selling defective products, non-compliance of the terms and conditions as given in the agreement.
Hidden charges levied in the bills of the customers. For example, caller tune service, GPRS service etc. They are compulsorily levied on the mobile phone users without their demand.
Not taking appropriate remedial actions for the complaints brought to the notice of the higher authorities.
Collecting the rent and service charges for the periods when there was out of order of the system or interruption of the service.
Not treating all shareholders fairly at par with other elite shareholders.
Non-transparency of the business activities.
Favoritism committed during recruitment, selection, appointment, promotion, and transfers.
In public sector units, while purchasing or availing services, it is mandatory to go for tender through wide publicity using mass media when the estimate cost go beyond a certain predetermined level. In such cases, the self-centered higher-ups commit unethical business practices by allowing blacklisted vendors or by giving opportunity to letter pad companies or to the kith and kin of the tendering authority. The previous record/performance of the bidders are ignored.
Lack of attention and negligence of duty while dealing with contract matters and tendering processes. Consequently, it may to lead to litigations causing irreversible loss to the organization.
The board of directors of the Public Sector Enterprises willfully purchase obsolete equipments from the vendors of close relatives of the board members. These equipments or instruments purchased for the organization incur huge expenditure and mostly are of inferior quality.
Having some vested interests, the top level executives of the public sector units secretly support the private sector competitors, getting gratification from them.

2. By Employees

Some trade unions accept hush money from various contractors.
Being a deadbeat employee. That is, an employee who does a very minimum of work to stick to the job.
Always applying the policy of work-to-rule.
Leaking company secrets to others and selling customer profiles to the competitor company.
Joining the competitor company after retirement and attacking the weaknesses of the previous employer.
Getting drunk while on duty, being a dubious character, threatening and discouraging other employees who are sincere and loyal.
The trade unions always oppose implementation of any policy by the organization. In order to win the heart of their members they support the erring employees, meddling in the routine business of the executives, and compelling the organization to bow down for their unjustified demands.
Nowadays, trade unions are politically colored and they divide their members based on party line and caste line.
Some trade unions accept hush money from various contractors to cover up the usual malpractices committed by them. For example, the civil contractors, electrical contractors, road contractors, and suppliers of some equipments sometimes breach the promises and intentionally fail to provide quality product. Such malpractices even though brought to the notice of the union leaders, they hesitate to kindle the issue.
Lastly, it is shameful to say that some trade union leaders accept money from non-deserving employees for postings, transfers, and also to protect the delinquent employees from punishment.

3. By Regulating Agencies

Being a mute spectator of unethical business practices and not taking any action even after brought to the notice of the authorities concerned.
Failure to press the investigating agencies at the right time to probe the malpractices in the organization.
Some governments try to cover up issues if the ruling party leaders are involved in any such disputes.
The government officials intentionally do not extend cooperation to the investigating agencies during probing operation.
Sometimes, the legislators block access to documents that could reveal the existence of a politician-official-business mafia nexus in the alleged scam.
Meddling with internal affairs of the public sector units especially in key areas of recruitment, appointments and tendering processes.
Some governments compel the public sector banks to provide a huge amount of loan to the bad debtors and force such banks to waive the loans provided to the farmers to win the hearts of the voters.

Unethical Business Practices in India: Some Examples

The Bhopal disaster.
The scandal by Harshad Mehta, a stock exchange broker who deceived the entire nation and earned crores of money through illegal means.
The Fodder Scam in Bihar.
Fraudulent embezzlement occurred in Satyam Computers.
A sizeable amount of money is deducted from the account of the mobile users in the name of providing value-added services like, caller tunes, GPRS facility, etc. without any request from the customer. This unethical business practice is found in almost all mobile telecom operators in India.

Some of the Acts to Ensure Fair Business Practices in Our Country

The Foreign Exchange Regulation Act, 1973, now replaced by the Foreign Exchange Management Act (FEMA), 1999.
The Companies Act, 1956.
The Monopolies and Restrictive Trade Practices Act, 1969 (MRTP).
The Consumer Protection Act, 1986.
The Environment Protection Act, 1986.
The Essential Commodities Act, 1955.

Remedial Measures to Bring in Ethical Practices in Business Organizations

The business schools in India should impart the basic principles of ethics to their students. Every paper in every semester must have a unit for business ethics so that students should never forget the importance of the ethics in their life.
Students should be sensitized to the fact that injustice causes needless heartache and needless heartache is intolerable to any decent society.
Code of ethics for the entire organization has to be formulated and checked for its implementation.
First of all, the top level executives must be a role model for ethical behavior.
Theories of ethical behavior have to be incorporated in all in-service training and orientation programs.
Can we make a ruthless person moral? Probably not. Such persons once identified should be eliminated from the organization.
The organization has to support whistleblowers and they must have a suggestion box in the premises of company so that malpractices can be identified in the beginning stage itself and can be nipped in the bud.
Employees of the organization should be taught that unethical business practices though profitable sometimes lead to litigations resulting in loss of revenue, image and goodwill of the company.
The public sector units should be given autonomous status and regulation of the government should be in such a way that the organizations do not indulge in unethical business practices.

Conclusion

Business ethics is the most vital concept for any organization to achieve its objectives. Without ethics, an organization may become a rendezvous of white collar criminals causing innumerable harm to the entire society. Hence, the government has to make efforts to inculcate ethical principles in all organizations in the interest of the society.

2] MANAGEMENT

Manage + Men + Tactfully = Management

Harjoth Kaur
Head,
Department of Management Studies,
Sree Chaitanya College of Engineering,
Thimmapoor, Karimnagar.
The author can be reached at
harshinder1@gmail.com

In any organization, the primary concern of the management is the satisfaction of a range of stakeholders, customers, suppliers and employees. This involves making profit for the shareholders, creating qualitative products at a reasonable price for the customers, and providing best employment opportunities and rewarding the employees. Managing people becomes one of the main functions in running the organization successfully. This article talks about the tactics or strategies of managing people and concludes with a few suggestions on how to win the hearts of employees.

The 5Ms (Men, Materials, Methods, Machines, Money) essential for sustained business success are all inextricably linked, but the central thread connecting them all is people. The statement "Our people are our greatest asset" helps to manage people in the organization effectively, efficiently and economically for the sustained success.
And these people are to be managed in such a way that the organization survives forever on profitable lines. Then what is meant by `manage the people'? Well, it is nothing but management. If we examine the word `Management', we find three words hidden in it, i.e., `manage', `men', `t'. Then what is `t'. It stands for tactfully. Let us first understand what is meant by `tactfully'. The dictionary meaning of tactfully is the skill and sensitivity in handling the people or in other words, it is a sense of what is good and suitable way to deal with others.
Different people have different interpretations and notions about what exactly tactfully means. To few it is strategy, and to others it may be politics, grouping, rule book, love and affection. If you have any other word, you can perceive it in your own way.
A strategy is a plan of action which deals with giving direction, coordinating, and providing a decisional framework. Strategy is different from tactics in real sense. When we deal with military organizations, the term tactics is the answer to how to fight and win, and whether it should be fought at all is a strategy. But in management, both strategy and tactics are used interchangeably.
It has been observed that employers/superiors use different strategies/tactics to manage people in their organizations. Let us see the most common tactics used to manage people in an organization.

Management by `Divide and Rule Policy'

Management means the art of getting things done through others. And this art of getting things done through others may be by dividing hard workers, smart workers or low workers, like that of the British who used this strategy to gain control of the large territory of India by keeping its people divided along lines of religion, language, or caste, taking control of petty princely states in India piecemeal.
Divide and rule is the word derived from Latin which means divide et impera. It is the totality of political, military and economic strategy of gaining and maintaining power by breaking up larger concentrations of power into chunks that individually have less power than the one implementing the strategy. In reality, and especially in few organizations, it often refers to a strategy where the superiors prevent small power groups from linking up and becoming more powerful, since it is difficult to break up existing power structures. They may form a strong group and may even revolt against them to fulfill their selfish motives.
This strategy may help managers in deciding the salaries and fringe benefits of their employees as hard and fast workers are paid more than that of slow workers. It may serve the purpose of limiting the cost per employee and creating competition in between them to get more salary. But there are both advantages and disadvantages. In some organizations, they pay high salaries, bonuses and incentives to employees for their good and extra performance, whereas other employees receive less salary and no bonus or incentives, irrespective of their individual contribution to the goal. Managers lack of recognition discourages employees hampering their performance.
For this strategy, we can take the example of the so-called mighty British empire in India which ruled from 1600 AD to 1947 AD, more than 300 years and had to ultimately leave the country.
Most of the organizations are striving to achieve teamwork with their employees or members. But, we see that there are a few leaders who generally feel unsecured of their positions and therefore apply the divide-and-rule strategy in their management of the employees, staff or members. Such leaders, more often likely to sow seeds of misunderstanding and would intentionally create problems among the subordinates so that they can get into conflict with one another. When this happens, as they had thought, then the subordinates would obviously not form a team and go against the leader. Now his position is secured. This style of management is pretty unsound. But, this is seen in most of the organizations where a weak leader is managing a team of strong and intellectual subordinates. Hence, he does not encourage teamwork at all in his team.
Therefore, it should be understood that this strategy may serve to manage people and gain benefits in the short run but to live longer and survive managers should not opt for this strategy. If at all they adopt this strategy, it should not do any harm to its stakeholders, which is impossible.

Management by `Politics'

We often hear employees gossiping with each other that there is lot of politics in their organizations that they were denied of hikes in pay, promotions, etc. Then, what really is politics? Is it denying the genuine workers from promotions and hikes or what? Well, politics means social relations involving authority or power and refers to the regulation of a political unit/party, and to the methods and tactics used to formulate and apply policy. The word `Politics' is derived from the Greek word politika which means `affairs of state'. In Latin, this was politicus and in French politique. Thus, it became `politics' in Middle English.
In managing employees, some of the employers/superiors apply politics, a process by which people in groups try to make collaborative decisions. And that group may have their own motive. The term is most frequently applied to people's behavior within civil governments, and also in other groups such as corporate, academic and religious institutions.
The basic components of political structure are three institutions—political representation, majority rule and the party system. These are applicable to both central and local governments. It is seen in organizations that rather than serving the purpose of managing people politics is creating problems like jealousy among departments, and its members. For instance, the affiliation of trade unions with that of political parties prevailing in the nation follows the manifesto of that party. Moreover, multiplicity of trade unions in a single organization and their affiliation to different parties creates havoc and chaos in implementation of policy matters of an organization. They get busy in solving these issues and diverting themselves with the main stream of making a brand/profit/customer satisfaction or so.
We usually see higher officials/managers resort to politics. For example, if managers are asked to propose and defend their budgets to their supervisors, they may attempt to prove their budget by misinterpreting their competitor's budget or by exaggerating their own needs. Misrepresentation of the facts occurs due to political behavior or politics prevailing in them. Another example is, where managers may sometimes use the selection system to hire people like themselves in order to build their hold and power base. Others may criticize the performance appraisal process by either under or over evaluating. For example, managers give average or negative remarks to those employees that they don't like, ignoring their hard and result-oriented work. In some cases, managers give positive remarks to the performance of their kith and kin to keep them safe in the organization making them puppets in their hands.
Therefore, it is very clear that the tactics/strategy called politics may serve the purpose of managing people and increasing their productivity in the short run but when they come to know the indifferences shown to them in the shadow of their selfish motives, they no longer be loyal and may even revolt against them.

Management by `Rule Book'

Every organization sets its own rules and regulations for the smooth functioning of all the departments. The rule book serves as a guide to all employees to do their work without hindrances. They knew about their authority and responsibility. They knew to whom they are accountable.
The rule of law or supremacy of law states that the law is same to all no matter whether they are kings or paupers, rulers or ruled, or anyone. There is no discrimination on the part of gender, caste, creed or so. Hence, all are equal before law. It is a body of rules constituted by the state subject to changes according to situations.
The rule book serves the purpose of discipline in the working of the organization. It acts like a guide to all the employees who feel comfortable and work enthusiastically. But all rules are not favorable for all types of employees.
We don't get into trouble until we follow the rule book. It becomes our security. Employees don't usually get fired for absurd outcomes if they follow the book. The process becomes more important than the result. Rule books are switches. If you switch on the wrong button, it will create problems. Moreover, there are hard and soft rules working together. But if these are not managed properly, it would create chaos. Managers, often use hard rules to show their supremacy and this will lead to disharmony among employees and the result may be negative.
The drawback of this tactic/strategy is that it would limit the opportunity for decision making. The more text there is in that book the greater opportunity the managers may have to exercise their power. It simply states how the legal system operates. As a result, there is a possibility of existence of undemocratic rules without due care and respect for human values and rights. We find such a situation in several organizations especially MNCs. Their rule book may have been intended to provide details that would limit the opportunity for decision making, rigid timing and goals, improper motivation, etc. The rule book of law is in danger of being ruled by the subjective nature of decision makers/or management supporters.

Management by `Love and Affection'

Love is the word which is very difficult to define. It is a great sense of strong affection, attachment, feelings, states, and attitudes. It may range from generic pleasure to intense interpersonal attraction. People use and define it in their own way according to their own feelings and emotions. Love is an abstract concept and is referred as a deep tender care for another person. It is a major facilitator of interpersonal relationships everywhere, whether home or office. It is the central part of any common theme in the creative arts and also in managing people. Of many forms, interpersonal form of love is one which states the love between human beings. It is a strong sentiment than just a simple liking for another person.
I remember, once I was going through the article on Jamshedji Tata. He was asked on how he could build such a huge empire of business. He laughed and replied "I lead the people with love and affection." Therefore, we see that love not only has touched natural persons but also artificial persons like corporations to prosper and survive realizing the fact that hearts and brains of people can be won not by divide and rule, politics, or rule book but only by love and affection. Therefore, it should be kept in mind that wars can be won by latest technology-based weapons but peace can only be brought by love and affection.

Conclusion

Peace is very important in any organization. People live and work in peace without quarrels if they feel that they are loved by their superiors. And this is the element which binds the employees together. They feel that they are in an organization where there is a cordial and homely atmosphere. Strategies like divide and rule, rule book, politics, etc. can be used in some situations only so as to survive for a shorter period of time but, if organizations want to create a brand, they have to rule the hearts of their employees with love and affection so that their brand exists as long as the earth exists.
Few Tips to rule the hearts of the employees
Greet all the employees wholeheartedly on all occasions no matter to what cadre they belong to as they contribute towards the growth of the organization.
Share their happiness as well as sorrows.
Smile when you talk to them.
Avoid criticising.
Be kind and generous to all.
Call them by their names (remembering names is important, at least few at each organizational level).
Remove problems and not the person.
Feel free to ask their opinions.
Organize parties and crack jokes. Sense of humor is a must.
Always remember that they ask what they deserve (as they know themselves very well).
Be positive.
Point out their mistakes (if any) only to rectify and not for your selfish needs.
Take and give regular feedback.
It is in our hands to not only develop our own personality but also that of the organization. Therefore, managing men tactfully is a very simple task as it involves nothing but love for everyone—good or bad, technocrats or non-technocrats, rich or poor, male or female, reserved or unreserved, healthy or sick, fast worker or slow worker belonging to any caste or creed, etc.