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Ethical Responsibility for the Benefit of Society

Mukesh Dedhia, CFP, IndiaBy Mukesh Dedhia, CFP

The man who will use his skill and constructive imagination to see how much he can give for a dollar, instead of how little he can give for a dollar, is bound to succeed.” -Henry Ford

I completely agree with Mr. Ford’s thought, that until you possess a clean character and sincerity of serving others to your best ability, without any expectations, the ultimate aim of helping does not get fulfilled. It is rare to find people who possess this generosity. Unfortunately, it is much easier to find greedy people who exploit others to attain their goals.

In this cutthroat time of constantly rising consumer demands, raising inflation rates and increasing commodity prices, individuals and businesses are doing their best to survive. Surviving businesses have formed strategies that minimize costs and maximize profits. This is where ethics becomes important. At the end of the day, each business decides its own ethics model, but there are certain principles that should be followed, no matter what.

Business Ethics

Every business has a vision and to attain that vision, they develop a mission statement, which helps employees and other stakeholders understand the purpose of the company’s existence. In addition to the vision and mission, each business has specific goals they are trying to achieve. Finding the balance between these elements is called corporate karma.

Business ethics is the most debated topic of all the times. A business that simply makes money is a poor business, in my opinion. Businesses that do this will not sustain in the market.

Business ethics are more than moral values and principles that determine our conduct in the business world. They refer to commercial activities, either with other businesses or with customers. Business ethics, when used correctly, should be applied from the generation of an idea to the execution of the sale or service.

Giving Back to Society

Businesses couldn’t function without help from the public, therefore, it is the duty of companies to look after the welfare of the community. While the objective of all businesses is to make profit, they should also contribute to society by ensuring fair practices. However, because of the cutthroat environment that is present, business strategies lean towards unethical business practices, leading to legal complications and general mistrust from the public. Businesses embracing ethical practices will see benefits among all their stakeholders, including the employees, customers, and government. Business ethics are fundamental for business growth and they are crucial to economic development.

Business ethics is a vast topic which includes corporate social responsibility (CSR). CSR can make a significant contribution towards sustainability and competitiveness. CSR has the potential to contribute to various common goals, such as social harmony, economic competitiveness and a more rational use of natural resources. Corporations should take responsibility for the improvement of social and environmental conditions.

Ethical Business Practices

Is it difficult to practice business ethics? No, not at all! If your company vision is clear and you are confident in your success, then there is no need to choose unethical paths to reach your goals. From my personal experience, I have seen people and businesses take the unethical path and they reach their goals faster but they are left feeling unsatisfied because they have wronged many individuals on the way. The ethical option may take longer but it comes with the benefit of having peace of mind and heart.

Doing Ethical Business

So, what should a business do to be ethical? It’s simple. A business should be honest, transparent, and sincere in all areas of work. By making ethical business the top marketing differentiator, businesses can accelerate their profit-making process. After dealing with the business a few times, stakeholders will gain trust and the business will be able to survive in a competitive market.

Another common question is “Does the pre-existing system force businesses to be corrupt?”

The unethical path may be tempting to take, but, as I said above, taking the ethical path results in a high level of contentment. This isn’t just my opinion; many Indian professionals have proven this.

Ethical Leaders

N.R. Narayana Murthy, the mentor of Infosys Technologies, the company with the largest market capitalization today, is actively involved in various community development programs. In 1996, Infosys created the Infosys Foundation as a not-for-profit trust to which it contributes up to 1%PAT, every year. They have taken initiatives to work in the areas of research and education, community service, Rural Reach Programme, employment, welfare activities undertaken by the Infosys Foundation, healthcare for the poor, and arts and culture.

Ratan Tata, the chairman of Tata Group, even after being considered amongst the top business tycoons in India, has not let the bad air come into his business operations. Indians have immense trust in the functioning of Tata Group. Tata has also set up many trusts including Sir Dorabji Trust and several Allied Trusts which focus on overall developmental issues. Trusts extend Tata Group’s support to individuals, institutions and organizations striving to make a difference. Trusts actively carry out the activities for rural development by arranging for the programs to spread the awareness for education, health, optimum utilization of natural resources, and so on. They also give funds for disaster relief that provide relief and rehabilitation to alleviate distress and suffering caused by natural and man-made disasters.

For instance, in the recent case of the Mumbai terrorist attacks occurring on Nov 26, 2008, Tata Group extended their hand to help sufferers by paying Rs.10,000 p.m. for about three to four months. Tata Group is also well known for creating the TATA Memorial Hospital for Cancer Treatment, the first hospital making treatment available to individuals who can’t afford treatment.

Tata Group’s positive societal impact has created an immense level of confidence and faith in the citizens of our country.

Azim Premji, the chairman of Wipro, the third-biggest IT services exporter, has established a trust which is involved in nonprofit initiatives, such as building schools, training teachers and funding other educational activities. In December 2010, the news headlines read that Premji transferred around 8.6% stake, worth over Rs. 8,000 crore (at current market prices), to a private trust, that is going to support educational causes. With this move, Premji’s stake in the company will decrease from 79% ownership to 70%.

There are many other big-hearted personalities who believe that whatever you think the world is withholding from you, you are withholding from the world. Such personalities really prove that thousands of candles can be lit from a single candle, and the life of the candle will not be shortened. Gratification and generosity never decreases when it is shared.

Unethical Businesses

I’m sure you have heard of many scams that have been unraveled by authorities. To me, it is so sad to think that these people were purely motivated by money! Everyone likes to earn money and most of us share the dream of being wealthy, but it should never be done at the expense of others. There are many examples of unethical hardships that our community still remembers.

The investment community will never forget “The Big Bull (Harshad Mehta) scam” of 1992 which eroded the shareholders wealth in the form of big market jolts.

And then there was Ketan Parekh’s scam in 2000, which was inspired from The Big Bull scam. This scam resulted in huge losses for the investment community, as well as a career-failure for Ketan Parekh.

The scam at Satyam Computer Services is something that shattered the peace and harmony of Indian investors and the shareholder community beyond repair. Satyam is amongst the biggest fraud in corporate history at Rs. 14,000 crore. The company’s disgraced former chairman, Ramalinga Raju, kept everyone in the dark, for a decade, by fudging the books of accounts for several years and inflating revenues and profit figures of Satyam.

Lastly, there is the ongoing 2G spectrum scam by A. Raja, Union Minister of Telecommunications, which has cost the government more than Rupees 1.7 lakh crore, and is supposed to be the biggest scam the country has ever seen.

The list of scams goes on-and-on but the point is, eventually scammers get caught, and when they are exposed, all of their money and “friends” disappear. The expression goes, “When the ship is sinking, rats are the first ones to run away.” Every single one of us prospers when we learn to give value to others first.

Ethical Responsibility

So, is it only the big companies who need to change their strategy to be ethical?

If you are already on the right path, then continue forth and encourage others to follow in your footsteps. Unethical behavior is evident everywhere – people sacrificing others to get a promotion or cheating the taxation system to save money. Keep in mind that what goes around comes around. Cheating taxes only cheats ourselves. If individuals pay their taxes like they are supposed to, the government will use the taxes to take care of the people and the economy.

Why The Public Should Pay Taxes

Based on a recent news report given by the department of revenue, India’s population is around 1.1 billion while the income tax assesses/payers are less than 4%. Can you believe that? Where does the money go? Thousands of people have their money in black but what’s the fun in that? Ultimately your deeds will be counted and not the money that you possess. Even students learn that the government generates revenue by collecting taxes from us, so why can’t adults understand the value of paying taxes?

If we run away from paying taxes, the revenue collected by the government reduces and the tax liability slab rates are affected. Sometimes, in such cases, what is good for an individual is bad for the nation. So, if you are escaping from paying taxes, then how will the revenue be generated for the nation? If we, as honorable citizens, pay our taxes, accordingly and timely, the revenue generation ratio will improve drastically and result in India becoming a prosperous nation.

Savings vs. Investments

When the nation’s economy grows, the standard of living also improves. Our economy cannot grow by individuals growing their savings because the money is not being circulated. To support the economy, individuals need to put their money in investments which will be directed to corporations that have productive plans to make effective use of the money. When these corporations make profits, they will pass the money back to the citizens through dividends.

Business done with good intentions will bring prosperity for everyone. Let us not forget to pay back nature for all that it has given to us. As Shakespeare said, “Dust Thou Art, and Unto Dust Shalt Thou Return” meaning we all begin as dust and will end as dust; why not make the best use of the life that we are blessed with and be ethical throughout!

 

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