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