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Ethics and integrity
in corporate America
Companies in
the US are suddenly realising that ethics and integrity of employees play a
very significant role in the smooth running of their organisations. Business
leaders are going to expect higher ethical standards from their business
partners and companies they deal with, writes Mohan Babu
One topic
receiving a lot of attention in recent times is the importance of integrity
and honesty in the corporate world. The role of integrity in our day to day
lives, especially of those in business and management, is being tested in
light of the recent corporate scandals erupting in the US. Starting with the
fall of Enron, Anderson and K-Mart last year, and the bankruptcy of a number
of visible Fortune 500 companies, scandals and layoffs in corporate America
have left people high and dry. In many cases, the public has found visible
scapegoats like Bernie Ebbers (ex CEO of Worldcom) and Dennis Kozlowski (of
Tyco), to identify corporate greed. These individuals, inspite of being
among the highest paid executives, stooped to low levels for a few dollars
more. Of course, for every documented culprit, hundreds are roaming free.
Just recently
prosecutors charged Tyco’s former chief executive, Dennis Kozlowski, and its
ex-chief financial officer, Mark H Swartz, with stealing $170 million in
unauthorised compensation and illegally reaping another $430 million from
stock sales. A recent Wall Street Journal report went on to add, “In the
indictments, prosecutors painted a picture of a company run like a “criminal
enterprise”, in which top executives paid themselves huge bonuses without
Board approval and hid the payments from shareholders. Messrs Kozlowski and
Swartz have pleaded not guilty.” On similar lines, New York Attorney General
sued five current and former top telecom executives, demanding that they
return more than $1.5 billion in profits allegedly reaped through
self-serving relationships with investment bank Solomon Smith Barney. These
are not just stray cases but a massive overhaul of the corporate governance
system taking place in the US.
Companies in
the US are suddenly realising that ethics and integrity of employees and
workforce also play a very significant role in the smooth running of their
organisations. The focus of boardrooms, that until recently hinged solely on
corporate earnings, ROI and maximising shareholder wealth, is shifting
towards other “essential” factors, including ethics and integrity. This
back-to-basics approach ties in with the core values that we as individuals
are expected to adhere to. Most of us have been raised to be ethical in our
dealings and generally try to hold ourselves to the highest levels of moral
and ethical standards. Problems arise when individuals with differing
standards of ethics and morality work in organisations that give a free
reign to personal behaviours. This renewed focus on integrity is bound to
lead to a major overhaul of the system. Along with this, business leaders
are going to expect higher ethical standards from their business partners
and other companies they deal with. Dealings with foreign companies
(including Indian IT companies) will start to receive a higher level of
scrutiny.
In India, we
are content to classify government officials and politicians into the
“corrupt” category and turn our eyes the other way when it comes to
corporate embezzling and white-collared crime. Of course, corruption among
government officials and politicians is well documented, and a pet obsession
of ours. However, even a cursory look around will tell you that corruption
is all around us, even in the high-tech IT world. Surprised?
Let’s take a
hypothetical example. A large Indian company bags a 2,000 man-month project
to be implemented in five months. Simple math tells me that about four
hundred people should be working on the project for five months before it
can be successfully completed. Even if the company employed “super
programmers” only, the project would need upwards of 350 people dedicatedly
working all the time. However, in the real world, you and I know what really
happens. A core group of individuals work their tails off and the management
shuffles people in and out of the project since they are trying to manage a
few other such “2,000 man-month” projects. Needless to say, the work gets
done, client gets billed and the company receives payment. Did the company
really need 350 or 400 people? Was the project really a “2,000 man-month”
effort? I could fill the dots from my own experiences but I think I have
made my point. While companies focus on the end results, i.e. delivery of
projects and recovering the amounts due, they invariably cut corners,
overcharge and resort to other such “routine” business tactics.
Individual
consultants too are not blame free. If I, the programmer, had an opportunity
to bill for (and receive payment for) overtime in a project, would I
routinely do it? You bet I would! Would I be honest when I told the client
that the project “really” needed overtime? Maybe. It is this “maybe” that
has a way of coming back to bite us.
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