Business Sutra |3| Business Ethics and Morals
In the first episode of the TV serial on CNBC 18, spread over three segments, Devdutt Pattanaik presented to us the most visible form of the business – the corporation : its meaning, its purpose and its action perspective.
In the second episode Devdutt Pattanaik discusses Leadership: Role of the leader, Context of the leader and Leadership in different business cycles.
The third episode relates to the ethical and moral dilemmas of the leader, and hence in turns that of the organization. The ethics and morality are the human concepts. Animals and plants belong to Prakriti or nature, where no one has choices. Everyone is fettered to their nature. Purusha or humans have the unique ability to make choices and hence reject what is ‘in their nature’ – the idea of dharma comes from this space, the core ethical and moral values of the human being. The concept is beautifully illustrated in the Ramayana and the Mahabharata. Dharma is a principle, not a rule, which is why in Ramayana rules are upheld and in Mahabharata rules are broken. Beneath the actions of Ram and Krishna is dharma – which may result in rule making or rule breaking, depending on the context.
Business Sutra |3.1| Ethical and Moral Dilemmas
Let us begin with first things first and take a glance at what do values, ethics and morality mean- in the western management literature.
Bahaudin Mujtaba presents Understanding ethics and morality in business . He states that values are professed statements of one’s beliefs, ethics is delivering on one’s professed values and morals are actions of good conduct as judged by the society that enhance the welfare of human beings. ..With an understanding of values, ethics and morals while using ethical principles, a business owner or leader can form a framework for effective decision-making with formalized strategies. The willingness to add ethical principles to the decision-making structure indicates a desire to promote fairness, as well as prevent potential ethical problems from occurring.
Surbhi S has clearly presented the Difference Between Morals and Ethics . The word Morals is derived from a Greek word “Mos” which means custom. On the other hand, if we talk about Ethics, it is also derived from a Greek word “Ethikos” which means character. Put simply, morals are the customs established by group of individuals whereas ethics defines the character of an individual.
|Basis for comparison||Morals||Ethics|
|Meaning||Morals are the beliefs of the individual or group as to what is right or wrong.||Ethics are the guiding principles which help the individual or group to decide what is good or bad.|
|What is it?||General principles set by group||Response to a specific situation|
|Root word||Mos which means custom||Ethikos which means character|
|Governed By||Social and cultural norms||Individual or Legal and Professional norms|
|Deals with||Principles of right and wrong||Right and wrong conduct|
|Applicability in Business||No||Yes|
|Consistency||Morals may differ from society to society and culture to culture.||Ethics are generally uniform.|
|Expression||Morals are expressed in the form of general rules and statements.||Ethics are abstract.|
|Freedom to think and choose||No||Yes|
Business Ethics is a brief, structured, treatise on the subject.
Conventional Approach to Business Ethics is a presentation prepared on the 7th Chapter – Business Ethics Fundamentals – from the book Business and Society. We get a quick-glance view of serval fundamentals of the subject.
12 Ethical Principles for Business Executives : Ethical values, when translated into active language, establishing standards or rules that describe the kind of behavior an ethical person should and should not engage in, are ethical principles. The following list of principles incorporates the characteristics and values that most people associate with ethical behavior.
- HONESTY – honest and truthful in all their dealings.
- INTEGRITY – personal integrity and the courage of their convictions by doing what they think is right even when there is great pressure to do otherwise.
- PROMISE-KEEPING & TRUSTWORTHINESS – worthy of trust.
- LOYALTY – worthy of trust, demonstrate fidelity and loyalty to persons and institutions by friendship in adversity, support and devotion to duty.
- FAIRNESS – fair and just in all dealings.
- CONCERN FOR OTHERS – caring, compassionate, benevolent and kind.
- RESPECT FOR OTHERS – respect for the human dignity, autonomy, privacy, rights, and interests of all those who have a stake in their decisions.
- LAW ABIDING – abide by laws, rules and regulations relating to their business activities.
- COMMITMENT TO EXCELLENCE – pursue excellence in performing their duties, are well informed and prepared, and constantly endeavor to increase their proficiency in all areas of responsibility.
- LEADERSHIP – conscious of the responsibilities and opportunities of their position of leadership and seek to be positive ethical role models.
- REPUTATION AND MORALE – protect and build the company’s good reputation and the morale of its employees.
- ACCOUNTABILITY – acknowledge and accept personal accountability for the ethical quality of their decisions and omissions to themselves, their colleagues, their companies, and their communities.
The Seven-Step Path to Better Decisions : We make thousands of decisions daily. Most do not justify extended forethought but when confronted by major decisions with no clear answers it can be easy to feel overwhelmed. This seven-step guide to making good decisions is an excerpt from the book Making Ethical Decisions .
- Stop and Think – One of the most important steps to better decisions is the oldest advice in the word: think ahead.
- Clarify Goals – clarify your short- and long-term aims.
- Determine Facts – You can’t make good decisions if you don’t know the facts.
- Develop Options – make a list of options, a set of actions you can take to accomplish your goals.
- Consider Consequences – Two techniques help reveal the potential consequences: “Pillar-ize” your options. Filter your choices through each of the Six Pillars of Character: trustworthiness, respect, responsibility, fairness, caring and citizenship, and, “Identify the stakeholders” to determine how the decision is likely to affect them.
- Choose – make your decision.
- Monitor and Modify – re-assess the situation and make new decisions, if the outcomes do not follow the plan.
Having covered some details of the fundamentals of Ethics and Morals- as perceived by the West, we move on to what the present management literature has to state on the subject.
In a well presented article – How did Peter Drucker see Corporate Responsibility? – in HBR, Frances Hesselbein notes that, according to Peter Drucker, “Leaders in every single institution and in every single sector … have two responsibilities. They are responsible and accountable for the performance of their institutions, and that requires them and their institutions to be concentrated, focused, limited. They are responsible also, however, for the community as a whole.”…Peter Drucker strived to make business leaders see the community as the responsibility of the corporation. He called on leaders to embody “the Spirit of Performance” by exhibiting high levels of integrity in their moral and ethical conduct; focusing on results; building on strengths; and leading beyond borders to meet the requirements of stakeholders, ultimately serving the common good.
In ‘What is Business Ethics?’, Peter Drucker categorically states that the traditional Western moralist would probably treat Business Ethics as oxymoron. However, all the authorities of Western tradition are, however, in complete agreement on one point: There is only one ethics, one set of rules of morality, one code, that of individual behavior in which the same rules apply to everyone alike. They would accept the difference between what is ethically right or not would be grounded on social or cultural context. He then goes onto detail the evolution of term Business Ethics over 18th Century till now.
The individual ethical thinking and behavior in an organization has to be translated into the organizational level integrity.
Lynn S. Paine looks at the role of the organization in shaping the individual’s ethics in an HBR article, Managing for Organizational integrity.
We look at (only) some of the videos:
DuPont Sustainable Solutions has compiled Workplace Ethics Scenarios that show, in the lighter style, the “wrong way” and the “right way” of handling 17 common ethics issues at the workplace.
Creating ethical cultures in business: Brooke Deterline at TEDxPresidio –
As Corporate Director for the Heroic Imagination Project (HIP), Brooke Deterline helps boards, executives, and teams at all levels develop the skills to act with courage and ingenuity in the face of challenging situations. This fosters leadership credibility and candor, builds trust, engagement and reduces risk.
Legal vs. Ethical Liability: A Crisis of Leadership and Culture | Mel Fugate | TEDxSMU
Professor Fugate argues that leaders at all levels and across industries need to focus on ethical liability above and beyond legal liabilities for themselves and their organizations. Ethical liability tests the true character of a leader and determines the character and quality of an organization’s culture. He illustrates this point in the context of higher education, where he contends a lack of accountability has led to a crisis of leadership and culture. Fugate uses scandals in college sports as common examples of a pervasive and larger problem of university leadership (at all levels) that fails to meet its ethical liabilities. He outlines a number of potential causes for the patterns of unethical behavior in higher education and also provides a few suggestions on how to overcome the challenges of this crisis.
We are now geared up to listen to what Devdutt Pattanaik has to say, in Segment 1 of the episode 3 – Dharma and Dharma Sankat.
Humans are the only creatures on earth that can choose to overturn the law of the jungle to outgrow the beasts within us. Firing this eternal struggle is our ability to imagine, imagine a better place.
But the problem with imagination is also that it amplifies our fears. I can think of the worst situations. I can imagine problems which do not exist. Even in times of abundance I can think of drought and go into a depression. So it is a tragedy of imagination, while I can imagine good things I can also imagine horrible things. It amplifies joy, it amplifies fear too. The most tragic and interesting thing about imagination is suddenly we ask ourselves and because you can imagine and because are aware we can die, we start asking the question what’s the point of it all. That is where everything starts. That is the home. That is the source of our solutions and our problems.
How is it connected to Dharma?
I can imagine not being afraid. If you look at all the gods, they have their hand sticking out and what they are saying is ‘do not be afraid’. This is the Fearlessness Pose (Abhaya Mudra). The fact is any deity, anyone, is holding the hand out. That is what a leader is supposed to do.
Just visualize a simple number chart. There is a positive axis and there is a negative axis. Now imagine the number zero as what is call in Sanskrit as Matsya Nyay, A Law of the Jungle. The big fish can eat the small fish in the sea.
This means I am allowed to be territorial. I can be dominating because I want to survive. That is an animal instinct. If I can outgrow this animal instinct of survival, then I start thinking about others. I empathize because I can imagine your fear, and because I can imagine your fear I can empathize with you. If I can walk towards empathy that is outgrowing the beast, But if I allow the fear to amplify my fear then in my fear I will say that I have to stay alive and I have to thrive and others don’t matter. Nobody else matters, but me. Then I start exploiting people. I will tame other people. I will dominate. I’ll become worse than an animal. Animals don’t exploit, humans do. Animals are not cruel, humans are. So exploitation comes or the empathy comes from the human imagination. Both these, the exploitation and empathy come from the same space of the human ability to imagine and be creative. So both are possible. If I move more towards positive scale, then this is Dharma. It is a work-in-progress. It is not an endpoint, it’s not destination, it’s a process. If I move in the opposite direction, overwhelmed by fear, it is Adharma. The choice is ours and every choice has consequences, if not in this life, then in the next life.
What is the Dharma Sankat (Ethical or Moral Dilemma)?
Dharma Sankat is the ability to take this decision, What is life all about? Every moment we have to take decisions. At a moment of time what do I decide? What decision do I take? Let me give you an example through a story. Once upon a time there was an eagle. The eagle was chasing a dove and the dove came to a king and told the king: save me. The king said I will save you and the Eagle said what will I eat now. So the eagle ate another dove. That is cruel. King said do not eat dove, eat rat. So the Eagle said, that’s cruel why should a rat die to save the dove. Finally the king said because I say so. The Eagle then said you are foolish. How long can you feed me? Sooner or later you will die and I’ll have to eat the Dove. So you are just delaying its death. This is Dharma Sankat.
In nature nobody would have come to the rescue of the dove. Now the King thinks he is very noble in saving the Dove. King is imagining that by saving the dove I am being a nice man, but in effect he is cruel to the eagle. You decided that the eagle is bad, the dove needs saving. Now look what is happening – the Dove is calling the king a kind king and the eagle is calling the king a cruel King. Who is right?
What should the king do?
There is no prescription.
How do you fit this in a business or corporate context? What are the more common Dharma Sankat situations that business leaders face and how are they supposed to overcome them?
There is a recession. Company has to cut costs. I have two ways of cutting cost: reduce salaries of the top management or give pink slips to the bottom of the pyramid. Which way should I go?
The former sounds less cruel. But, to those people it is as cruel.
That would mean that the top management which is running your organization may leave and the company can collapse and the shareholders will withdraw money.
What do you do?
That IS Dharma Sankat. That is why you need a leader. If there was a prescription out there then why do you need a leader? You have to ask yourself – if I have to evolve, I have to ask myself: why do I take the decision? Where from comes a decision that I am taking? Am I taking a decision because I’m afraid? Am I doing it to protect myself? Am I doing to protect my self-image? Am I doing to protect my business, which is actually an extension of my self-image? Or, am I doing it for the good of the people? More often than not it is never for the good of the people.
We have, thus, seen that West and Hindu points of view broadly converge on the basics of Dharma – the Ethics and the Morality. They also do take cognizance of the reality that ethics or morality is not the absolute – they manifest in light of the then socio-economic-cultural milieu in which the human being lives.
When we look at the literature on the values that shape the ethics and morals, we do find a subtle difference in the approaches of the West and the East. For the present, that is beyond the scope of our discussion. However, both ideologies do converge and agree that it is the value system that drives the (ethical and moral) behavior.
In our next session, we will take up the logical extension of the topic – Relationship between the owner and the organization – in the second segment of the Third Episode of Devdutt Pattanaik’s TV serial Business Sutra
Note: The images used in this post are the irrevocable property of their respective creator. They have been taken up courtesy the internet, so as to illustrate the point under discussion.