Yearly Archives: 2011

15Dec/11

The Corporate Dharma

Values which can awaken and manifest the highest moral and spiritual potential of business and how to implement them.

Key Perspectives

Dharmic values of business and how to implement them.

A sound value system is what differentiates long-term players from others.

- Narayana Murthy,
The Founder of Infosys.

Only clear, consistent and unwavering communication and practice of values can create a culture that can withstand and gain from turbulence.

- Azim Premji,
The Founder of Wipro Limited

As we have discussed briefly in the editorial of this issue, Dharma has two aspects: universal, which is common to all humanity and the individual or specific, which is unique to the nature of the individual or the community. We have to aspire for the universal and the highest values of Dharma but they have to be adapted to the unique nature of the individual or the community.

The Dharmic Values of Business

What are precisely the values, which can bring out and manifest the dharmic potential of business? Here is a broad outline of a system of values, principles and guidelines based on the dharmic vision of business.

  • Creating wealth for the society through efficient, economic and productive utilization of resources.
  • Producing high quality products and services at minimum cost.
  • Delighting the customer.
  • Enhancing the quality of the larger economic, ecological and social environment through creative giving or sharing of wealth, knowledge, skill, expertise and resources with the community.
  • Employee development not only in terms of skill, knowledge and creativity but also in terms of material, mental, moral and spiritual development and well-being of the employees.
  • Truth, honesty and transparency in all dealings.
  • Mutual trust and goodwill among the members of the organizational community.
  • Fairness and justice in dealing with employee grievances.
  • Patience, understanding and compassion in dealing with ethical, professional and personal problems among employees.
  • Creating mutually beneficial win-win situation in all transactions.
  • Creativity, innovation and continuous improvement in every activity of the corporate life and progressive perfection in work.
  • Beauty and harmony in the equipment and organization of the material and economic life of the company.
  • Progressive growth of liberty, equity and fraternity in the social and political life of the organization.
  • Promoting self-knowledge, self-management, compassion and service as primary leadership qualities.
  • Cultivating inner Peace and providing reasonable outer Security, acting as anchors of stability in a sea of change.
  • Providing sufficient rest, relaxation, leisure and inner and outer space to people for reflection, renewal and growth.
  • Every activity of the individual and corporate life, like for example, finance, marketing or manufacturing, should have some clearly defined professional, ethical, aesthetic and spiritual standards or ideals of perfection towards which it has to progress continually with a constant uplifting aspiration and effort.
  • Felicitating triune integration: integration of the body, mind, heart, will and action of the individual around a dharmic ideal or the spiritual core of her being; integration of the personal and professional life of the employee; integration of the material, techno-economic, social, political and cultural life of the organization around its mission, vision and values, which are in turn derived from dharma.

How to Implement Them

The second question is how to implement these values in the corporate life?

The first task is to create an enabling environment which consciously encourages and rewards all form of active and creative self-expression of these values in thought, feeling, behaviour and action. In other words there must be active encouragement to ethical, aesthetic and spiritual excellence and innovation.

The present motivational strategies in the corporate world encourage only techno-economic innovation and excellence. But for the higher evolution of the corporate world, there must be equal encouragement to what we may call as “value-innovation and excellence” in the mental, ethical, aesthetic and spiritual domain or in other words, there must be quality circles for promoting higher values. Workers and employees must be encouraged to offer suggestions on how to make the collective organism more true, beautiful, harmonious, compassionate, creative, progressive. In this task, the house-magazine and the intranet of the organization can be of great help in disseminating higher values in the organization through dialogue, discussion and creative participation. For example, the house-journal of the organization may publish articles, which help in widening the intellectual, ethical and spiritual horizons of the mind.

The second task is to create a system of education, training, and communication for internalizing these values in the consciousness of the individuals. However mere mental or information-oriented education of the kind given in most of the present systems of education can only bring about a superficial change.

At the best, it can bring about a change in intellectual orientation or attitude, which is helpful, but not enough for a lasting inner change. This deeper change can be achieved only by a psychological process and discipline. The main psychological factors which have to be developed and internalized to create an enduring ethical consciousness in the individual and the community are as follows:

  • Self-knowledge, self-control and self-mastery.
  • Calm, peace and tranquility.
  • Ethical, emotional and aesthetic intelligence, which has an intuitive sensitivity to higher values like truth, beauty, goodness, harmony, unity.
  • Faculties and qualities of Will and the Vital force like firmness, persistence, strength, courage, enthusiasm, energy, which are essential for manifesting these values in work, life and action.
  • Kindness, compassion and generosity.
  • Integrity, which means in a psychological perspective harmonious integration of thought, feeling, will and action around a higher ideal.

The third factor is to build a leadership which walks the talk. Every leader of the organisation must make a sincere and constant effort to live the higher values like truth, beauty, goodness or compassion in his thought, feelings, behaviour and action.

The fourth task is to create a system of monitoring and feedback for evaluating how much or to what extent the values are lived in the corporate life by the people in the organisation.

M.S. Srinivasan

The author is a Research Associate at Sri Aurobindo Society and on the editorial board of Fourth Dimension Inc. His major areas of interest are Management and Indian Culture.

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15Dec/11

The Business Ethics of J.R.D. Tata

The life of JRD Tata defines ethics and values in their truest sense showing us that it is possible to create a large, successful and yet humane organization.

JRD Tata was the Chairman of Tata Sons, the holding Company of the Tata Group of Companies which has major interests in Steel, Engineering, Power, Chemicals and Hospitality. He was famous for succeeding in business while maintaining high ethical standards. Under JRD’s Chairmanship, the number of companies in the Tata Group grew from 15 to over 100. Monetarily, the assets of Tata group grew from Rs 620 Million to over Rs 100 Billion.

In the public mind, ethics in business is mainly identified with financial integrity. Important as that is, the real meaning of ethics goes beyond that. The dictionary defines it as “the science of morals in human conduct, a moral principle or code.” It encompasses the entire spectrum of human conduct. Business ethics lays down how a person in business deals with his or her colleagues, staff and workers, shareholders, customers, the community, the government, the environment and even the nation at large.

J.R.D. Tata was meticulous when it came to financial ethics. When I pointed out to him in 1979 that the Tatas had not expanded as much in the 1960s and 1970s as some other groups had, he replied: “I have often thought about that. If we had done some of the things that some other groups have done, we would have been twice as big as we are today. But we didn’t, and I would not have it any other way.”

The well-known tax consultant, Dinesh Vyas, says that JRD never entered into a debate over ‘tax avoidance’, which was permissible, and ‘tax evasion’, which was illegal; his sole motto was ‘tax compliance’. On one occasion a senior executive of a Tata company tried to save on taxes. Before putting up that case, the Chairman of the company took him to JRD. Mr. Vyas explained to JRD: “But sir, it is not illegal.” JRD asked, softly: “Not illegal, yes. But is it right?” Mr. Vyas says that during his decades of professional work no one had ever asked him that question. Mr. Vyas later wrote in an article: “JRD would have been the most ardent supporter of the view expressed by Lord Denning: ‘The avoidance of tax may be lawful, but it is not yet a virtue.’”

Attitude to Colleagues

When he rang us in the office he would first ask: “Can you speak?” or “Do you have someone with you?” Except when he was agitated, he would never ask you: “Can you come up?” He was always polite.

JRD’s strong point was his intense interest in people and his desire to make them happy. Towards the end of his life he often said: “We don’t smile enough.” When I was writing The Creation of Wealth, he told me about his dealings with his colleagues: “With each man I have my own way. I am one who will make full allowance for a man’s character and idiosyncrasies. You have to adapt yourself to their ways and deal accordingly and draw out the best in each man. At times it involves suppressing yourself. It is painful but necessary…. To be a leader you have got to lead human beings with affection.”

It is a measure of his affection that even after some of them retired he would write to them. He was always grateful and loyal. To him, ethics included gratitude, loyalty and affection. It came about because he thought not only of business but also of people. In dealing with his workers he was particularly influenced by Jamsetji Tata, who at the height of capitalist exploitation in the 1880s and the1890s gave his workers accident insurance and a pension fund, adequate ventilation at the workplace and other benefits. He wanted workers to have a say in their own welfare and safety, and he wanted their suggestions on the running of the company. A note that he wrote on personnel policy resulted in the founding of a personnel department. As a further consequence of that note came about two pioneering strokes by Tata Steel: a profit-sharing bonus and a joint consultative council. Tata Steel has enjoyed peace between management and labour for 70 years.

Beyond Business

Decades later, Tata Steel workers had received several benefits. Then JRD looked further.

In a speech in Madras in 1969 he called on the managements of industries located in rural or semiurban areas to think of their less fortunate neighbours in the surrounding regions. “Let industry established in the countryside ‘adopt’ the villages in its neighbourhood; let some of the time of its managers, its engineers, doctors and skilled specialists be spared to help and advise the people of the villages and to supervise new developments undertaken by cooperative effort between them and the company.”

To put JRD’s ideas into action, the Articles of Association of leading Tata companies were amended and social obligations beyond the welfare of employees was accepted as part of the group’s objectives. In the 19th century, Baron Edward Thurlow, the poet, asked: “Did you ever expect a corporation to have a conscience?” The answer from J.R.D. Tata was: “Yes”.

Whenever he could, he raised his voice against state capitalism. He never bent the system for his benefit. L.K. Jha recalled in 1986 that whenever JRD came to him when he was a Government Secretary, he came not on behalf of a company but the whole industry. He wanted no favours, only fairness.

In his last years he was very conscious of the environment and industry’s part in spoiling it. He wrote in his Foreword to The Creation of Wealth in 1992: “I believe that the social responsibilities of our industrial enterprises should now extend, even beyond serving people, to the environment.”

The J.R.D. Tata Centre for Ecotechnology at the M.S. Swaminathan Research Foundation was created in furtherance of his desire.

To him India was not a geographical expression; it was people. When he was awarded the Bharat Ratna in 1992, Tata employees arranged a function on the lawns of the National Centre for Performing Arts in Mumbai. A gentle breeze was blowing from the Arabian Sea. When JRD rose to speak, he said: “An American economist has predicted that in the next century India will be an economic superpower. I don’t want India to be an economic superpower. I want India to be a happy country.”

This was not only his hope, it was also his life. He brought sunshine into the lives of many of us who knew him

Russi M. Lala was the director of Tata’s premier foundation – The Dorabji Tata Trust for eighteen years. His book ‘The Heartbeat of a Trust’ is based on this Trust. He has authored a large number of books including ‘Beyond the Last Blue Mountain: A Life of JRD’. He is also co-founder of the ‘Centre for the Advancement of Philanthropy’ and has been its chairman since 1993.

R.M. Lala

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29May/11
07responsible_business_SG

Building Responsible Business

This article is based on a talk delivered by Sri Satyabrata Ganguly, Chairman, Emeritus, Exide Industries Limited at the seminar entitled “Spiritual Culture for Modern Management and Leadership” held at Swami Vivekananda’s Cultural Centre on 8th July, 2007.

Key Perspective

Imbibing values; pragmatism of goodness; principles of ethical management; building sustainable business; a humane merger; exide experience; incorporating spirituality.

Imbibing Values

When I started my journey in the corporate world some 43 years ago, concepts like “Ethics in Management” were not taught in business schools or even discussed. As a matter of fact ‘business school’, as a concept, had just about started in India. So there was no question of learning the basic principles of ethical management from B-schools, as young managers do today. We came into the corporate world armed with a certain value system and a sense of ethics that developed within us over the years. And the subsequent work environment that we faced in our professional life further fostered it.

These core value systems were inculcated in us by our elders, our teachers and the epics like Ramayana and Mahabharata. Stories of great men like Swami Vivekananda and Ramakrishna Paramhansa inspired us. Their writings, speeches and anecdotes from their lives set us thinking in the right direction. It was perhaps not a very conscious imbibing of their words; but those teachings of the great men left an indelible mark in our mind at a subconscious level. Our actions and attitudes in subsequent life got tuned to those value systems, which are also universal and can be applied anywhere in any situation.

The Pragmatism of Goodness

Now more than ever, there is clearly a need to balance the “business” of Leadership with the “spirituality” of Leadership; whilst many speak in terms of “ethical”, “moral” or “principled” leadership, what is really meant is a spiritual leadership that goes beyond some minimum ethical standards of the day.

Many companies believe that “Business is war”. This thinking is so engrained in the corporate world that unconsciously managers and corporate leaders fall prey to that style of business, which allows them to rationalize their dishonest behaviour. Unfortunately, many companies find out the hard way that this philosophy doesn’t lead to genuine, long lasting success. Some points to remember are:

  •  Good ethics is good business.
  •  Corporate spirituality is conducting business according to set values and high ethical standards. It means refusing to partake in dishonest dealings, no matter how rewarding they may seem in the short run.
  •  Growing a successful Corporation is not a competitive sport in which winning means that others lose. In order to build a truly successful company, everyone must win. This includes the company, its employees, shareholders and customers.
  •  Successful companies are built on the basis of how much good they can bring to the market place as opposed to what they can take from it. Those companies who focus only upon what they can take from the market are short-lived and only survive until others catch on to what their true objectives are.

Everything that happens in life and in business is a result of cause and effect. The more good you offer to the world and the market place, the more good you will receive in return.

The Principles of Ethical Management

The basic trend of ethical management is that you are not managing the business for your personal goals. Business gets its license to exist from the society and it exists for the overall good of the society. Business does not seek to create wealth for the individual – if it does, it is one of the side effects. Its principal objective is to create wealth for the society, rather than for the individual in the true sense of the word. Therefore, all the steps that a business manager takes in the interest of his or her business should be taken with this larger objective in mind. If this is done, profit will automatically follow. I will give you an example.

Before starting his own company, Henry Ford was approached by a group of financiers who gave him money to make cars that they could sell at super profits. After a few months, Mr. Ford stopped working with them on the ground that they were interested only in profit and not in a superior product that would benefit the society. He wanted to make a car that would benefit the people. This single passion drove him to discover ways of making good cars at a low cost – he invented the assembly line. Mr. Ford kept on driving down prices year after year so that more people could buy it and kept on increasing the wages of his workers that made him very unpopular with his contemporaries. But he was successful in his endeavour.

To me, this is what is ethical management. Ford was not driven by a profit motive. He was driven by an inner zeal to produce something meaningful for the society. Profits followed automatically. And they always do, at least that has been my experience. I am by no means trying to say that profit is bad or its pursuit is unethical. At Exide we have been consistently profitable for the last sixty years and paid dividends to our shareholders every year since inception. What I am trying to say is that the society should profit first and that larger societal profit should be the ultimate objective.

If my business demands that I cut down rain-forests, indiscriminately pollute the rivers, then I have to stop that business. There is no other way. I cannot do this, no matter what the profits to the individual shareholders of my company are. Even if it means job loss to a few hundred workers, I have to stop such a venture. My society is not benefiting from this action and therefore I have to stop.

Building Sustainable Business

Business has a responsibility towards the society. They call it ‘Corporate Social Responsibility’ these days, which is largely interpreted as charity. Many people confuse ethics, corporate social responsibility with personal charity. The two are actually quite different and are not related to each other. You can be very charitable in your personal life and create many schools and hospitals but if your business erodes wealth of the society there is no value in those personal charities.

Your business model should be such and your way of conducting that business should be such that it uplifts people and the society as a whole. That is what true corporate social responsibility is.

Ethical management also means managing with a sustainable business model in front. I have to ensure that my business remains sustainable in the long run. I can’t do something that will crumble down the entire social structure and with it jeopardize my own existence, directly or indirectly.

Now, sustainable business does not just mean environment-friendly business. Sustainable business also means transparent business. The manufacturing process has to be green, the products have to be green and the accounting system has to be clean, above board and open to scrutiny. Every single rupee spent has to be accounted for. Otherwise you will have an Enron kind of situation where despite getting all the awards for being one of the fastest growing enterprises in the world and best managed companies in the world, you crumble down like a pack of cards in no time and render thousands of people across the world within your organisation jobless and their entire life’s savings gone. The last point that I want to discuss on the subject of ethics in management is the handling of human resource within an organisation. Your employees are an integral part of your business, agreed that a factory is not set up so that people get jobs. The hospital is not for the doctors and nurses but for the patients. But that is no reason to treat the employees shabbily. A team of motivated employees is the best asset that any company can have. Because ultimately it is the people who make the difference – not the machines or technology alone. Therefore how you lead the team and how you motivate them is what make the difference.

People, I have noticed in my professional life, are motivated when they know that the leader speaks from his heart and does not have an ulterior motive. He has a vision that is communicated well to one and all and that vision is transparent and noble. There is a larger goal for everyone to work towards something that is worth toiling for.

I began the talk by saying that I was inspired by the teachings of Swami Vivekananda. I will end it by trying to share with you some of those philosophies that helped me along this long journey of over four decades. While Vivekananda’s great speeches on social equity, women’s rights, karma, yoga etc. have obviously inspired me and have helped me, I have drawn equal inspiration from some of his less quoted one liners like “chaturir dvara kono mahat karyo hoy na”. That is, you can’t achieve anything great by adopting cunning methods. I respect intelligence but not cunningness.

A Humane Merger: exide Experience

We in Exide took over the assets and people of our strongest competitor Standard Batteries in 1999. Those who we were fighting tooth and nail in the market till yesterday suddenly became our own people. Of course this was a major victory for us and I won’t get into the details of how we made this seemingly impossible thing happen. But after our takeover, every one thought we would sack them overnight, or at least make their life miserable so that they left. Going against the prevailing trend of those days, when merger meant job loss, we took a conscious decision not to do this. I personally ensured that each and every ex-employee of the erstwhile Standard Batteries felt at ease in Exide and didn’t feel threatened. They were not prisoners of war. They were our own people now. We went that extra mile to ensure this actually happened. I had to counsel my own people personally so that they didn’t feel bad that we were trying to be extra soft with our competitors of yesterday. We even hired IIM consultants to tell us how to integrate the two teams culturally and emotionally and keep everyone motivated.

Today I can stand proudly in front of every one and say, yes, this was one of the most humane and successful win-win mergers in liberalised corporate India, where two plus two meant more than four. We created value through this merger and every one won. For some reason (or perhaps, many reasons) companies have been afraid to use the term “spiritual” in conjunction with their business. Interestingly enough, the fact remains that most successful leaders in industry and elsewhere have all had a strong spiritual foundation on which their successes were built.

Incorporating Spirituality

It does not take a great deal of effort to start implementing spiritual standards into business. There isn’t a large capital investment, upgrading equipment, expanding the facilities, or creating a “Spiritual Committee”. What it will take is:

  •  A willing CEO, officers and the Board to be the active role models for the company. Leadership is practiced not so much in words as in attitude and in actions.
  •  Creation of and publicity for a solid mission statement incorporating spiritual standards.
  •  Training of current and future employees in implementing the mission statement.

People in positions to make substantive changes, are beginning to become aware of the fact that business decisions must be driven by more than just profits. They must be driven from a holistic perspective, considering not just what is good for one part, but what is good for the whole. It is the mark of a true leader and serves as a beacon of light for those who wish to follow their success and create an enlightened business world we all deserve.

I would like to conclude with a thought from Swami Vivekananda:

“Take up one idea; make that one idea your life. Think of it, live on that idea. Let the brain, muscles, nerves, every part of your body, be full of that idea, and just leave every other idea alone. This is the way to success and this is the way great spiritual giants are produced.”

The author is Chairman Emeritus, Exide Industries. He is the first recipient of EIM Lifetime Achievement Award. During his tenure, the company grew almost ten-fold.

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29May/11

Corporation and the Community

Because our society is rapidly becoming a society of organization, all institutions including business, will have to hold themselves accountable for the quality of life of the society and will have to make fulfillment of basic social values, beliefs and purposes a major objective of their continuing normal activities rather than a social responsibility that restrains or that lie outside of their main function.

- Peter Drucker

A business organization is not merely an economic entity; it is also a social organism, a human community. So one of the higher aims of a business organization is to integrate or harmonise its communal life with the communal life of the surrounding environment. This must be the next step in the evolution of the Corporate Social Responsibility (CSR) movement; it has to progress beyond some adhoc or isolated charitable projects to embrace the surrounding community as a whole. In other words, there must be an integration of CSR with the totality of the community development process. There is a natural process of human development in a community which can be accelerated by appropriate, creative intervention. Business has the competence to provide some of the most efficient and effective interventions acting as a catalyst for community development.

There is a concentration of resources, knowledge, competence and skill in a business organization, which it has to share with the community of which it is a part. Among business leaders, J.R.D. Tata had a clear perception of this responsibility and also the potentiality of business for community development. He said, “Every company has a special continuing responsibility towards the people of the area in which it is located. The company should spare its engineers, doctors, managers to advise the people of the villages and supervise new developments undertaken by cooperative effort between them and the company.” We must note here that JRD’s conception of corporate responsibility goes far beyond charity or sharing of wealth, towards sharing of capabilities.

But the CSR movement can also take one more step beyond community development to social transformation. In our modern age, business is the most powerful, resourceful and influential organ of the society. Among modern social organs, modern business has the most efficient, innovative and productive executive force with a great capacity to convert an Idea into material reality. If the Idea is sufficiently potent, creative and transformative, business can become a great instrument for social transformation.

In this issue, our primary emphasis is on practice and not on theory. The concept of corporate responsibility or community development is illustrated with the living examples of individuals and institutions that live the idea and walk the talk.

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