Abstract

Many large corporations have added ethical framework to their business processes as these organizations have realised that in long run an ethical business has a bright future. This includes customers, employees, vendors and the public. Every decision made by the business is based on the effect it may have on any one of these groups of people, or the environment surrounding it.

In organizations ethics go beyond the legal requirements; organizations understand that ethical framework helps in making supple decisions making and it also guides organizational behaviour and culture. Morality governs private, personal interactions. Ethics governs professional interactions. Law governs society as a whole, often dealing with interactions between total strangers. The legal environment in India includes various laws regulating business activities like Companies Act 2013, Consumer Protection Act, 2019 and many other such legislations, policies relating to licensing and approvals, foreign trade etc. Ethics are a set of moral values an individual/organization establishes for one own entity and own culture and behaviour whereas laws are structured rules utilized to govern the entire society.

A good example of how advertising can become responsible unethically is: Volkswagen’s campaign that promoted environmentally friendly “Clean Diesel” vehicles that had low-carbon emissions. In India, the National Green Tribunal (NGT) had penalised car manufacturer Volkswagen with a “conservative” fine of Rs 171.34 crore, for contributing to air pollution in Delhi through excess nitrogen oxide (NOx) emissions and for causing extensive health damage. The company admitted to having installed software that manipulated emissions readings to make its cars appear as if they were environmentally friendly. Volkswagen erred by misleading consumers with false claims.

There’s a huge difference between using marketing to paint a product or service in the best possible light by outright lying. With traditional advertising, it’s easier to monitor if companies are using misleading language to target customers. With digital advertising, anyone can run an ad and face minimal oversight.

Airlines are notorious for advertising low prices to entice travellers, but some of them manage to keep things on the ethical side by disclosing when Jetstar and Virgin Airlines decided to forgo this disclosure, they were fined $745,000 for marketing false low prices in their ads. Whereas customers had to pay additional fees involved to finalize the booking.

The Wikipedia defines ethics as a branch of philosophy that involves systematizing, defending, and recommending concepts of right and wrong behaviour. It is also known as moral philosophy. For all of us ethics means living our life responsibly; to review whether our actions are right or wrong. Ethical behaviour is that which is morally accepted as “good” and “right” as opposed to “bad” or “wrong” in a particular situation. All of us live in an ethical illusion about ourselves. The ethical illusions are discrepancies between how we think and how we behave and how we take an action. It also includes our sense of reasoning for our behaviour. Laws are the regulations established, and usually written, by a governing power. Ethics are the morals of a culture, and often, they define the laws of the land. The distinction is that, while you may obey the law, you might not always act ethically. It would be a rare case for something to be ethical, but against the law. An important point to keep in mind is that ethics do not have any associated punishments when broken. A law, however, specifically sets the types of repercussions that should occur or should it be broken.

The fundamental of any business firm cannot claim to be ethical firm if it looks at profits and numbers while ignoring the legitimacy. Today, businesses and industries increasingly find themselves facing external pressure to improve their ethical practices. The alert and well-informed customers today scrutinize business activities. Pressure groups are a good example of this. They are external stakeholders they focus on activities & fair practice of industries with direct and indirect actions which at times has forced some firms to close down their shutters.

Ratan Tata, the then Chairman of Tata Group of Companies, did something that is totally out of the world. He in fact taught the world some lessons in business ethics. After the November 2008 Mumbai attacks which were a series of terrorist attacks that took place in Hotels Taj and Oberoi were badly hit, Ratan Tata went all out to help every single person who was affected in Hotel Taj including those like the pav bhaji vendor outside the hotel. Each one was offered compensation running into several lakhs of rupees. The education of children of those affected, free medical facilities for those survivors at Tata hospital for the rest of their lives, total education of the 46 children who were affected by the bomb blast but survived, has been taken up by the Tata group. A Trust has been formulated to shoulder responsibility for the rehabilitation of the families of the victims. Ratan Tata himself visited the families of each of the 80 employees affected by the bomb blast, and offered compensation running into several lakhs of rupees. Such examples define business ethics. Leaders like Ratan Tata establish faith in customers. He calls himself an industrialist not a businessman.  He has strong attachment to his businesses yet an executive’s ability to make rational decisions.

For leaders at all level, it’s more important to learn how to make the right decision while dealing with different kinds of feelings rather than suppressing those feelings.

Some of the top B Schools such as IIMs in India and other top rung B schools in the world are revamping their syllabus adding business ethics as a core paper, adding projects on ethical values. The process of revamping is for also pondering over and challenging the standard of business wisdom practiced for decades. Ethics and social responsibility seem to be in limelight by some serious thinkers and practitioners.

Chairman of Wipro ltd, Azim Premji, is another example of modesty and a man who doesn’t believe in extravaganza. He annoyed several other fellow industrialists when he said that rich people should pay more taxes, in response to some budget proposal. Not stopping there, he justified his views in many interviews as well. WIPRO has spent upwards of some nine hundred crores in Karnataka and in Andhra Pradesh, where it has helped build school infrastructure, improve standards of education and so on. Its donations to several Government hospitals in Tamil Nadu is very much an example of the highest quality of business ethics.

In the world-famous Enron scandal, which was a series of events involving dubious accounting practices that resulted in the bankruptcy of the energy company, the accounting firm Arthur Anderson got shut down. Enron executives used fraudulent accounting practices to inflate the company’s revenues and hide debt of its subsidiaries. The Securities and Exchange Commission credit rating agencies (SEC), and investment banks were also accused of negligence and outright deception that enabled the fraud. I think it’s symptomatic of a breakdown of the ethical values of business over a period of perhaps 20 years, a gradual erosion of business ethics.

Business organizations dillydally from ethical practices because of compelling and persuasive day-to-day organizational practices. Ethics take a backseat because of the multifaceted processes and practices of businesses which leaves little time or penchant to divert attention to the moral content of organizational decision-making. Morality in business appears to be so ambiguous and qualitative in nature that it lacks substance in relation to business objectives and goals in today’s world. Business relies on quantitative performance than qualitative performance. The pace leaves hardly any time for the managers in reworking their decisions based on ethical framework. Hence the entire framework and thinking of the managers lacks ethical decision making.

Scams such as Satyam Case, Enron Case, I Gate Case, 2 G, 3G, Commonwealth games, Bofors, Fodder scam, IPL, Citibank the list can go on and on. Our memories are so short, that by the time we are fatigued with one scam there appears another scam. The big money, the lifestyles of cheaters, their overstated personas, and the glamour that comes with money feature more prominently in the young students of Business Management if the ethical frameworks in these and many other case studies are not tackled in the classrooms.

Conclusion

Dear friends Socrates, Plato and Aristotle sadly have no place in the twenty first century business environment. A yawning gap exists between philosophical knowledge and business practices. Each generation has learnt ethics and morality with a divergence. Morality is just a dictionary word. Yet, like it or not, there has and will continue to be a surge of interest in ethics.

It was introduced by engineer Bill Smith while working at Motorola in 1980.  The term Six Sigma got registered because it was written that way when registered as a Motorola trademark on December 28, 1993. It was originated from terminology associated with statistical modeling of manufacturing processes. The maturity of a manufacturing process can be described by a sigma rating indicating its yield or the percentage of defect-free products it creates—specifically, within how many standard deviations of a normal distribution the fraction of defect-free outcomes corresponds to. Motorola set a goal of “six sigma” for all of its manufacturing.

Bill Smith generated billions of dollars for Motorola; he introduced his statistical approach aimed at increasing profitability by reducing defects. Smith, in later part of his life earned the title as ‘’Father of Six Sigma.’’ Today it has become a mainstream operation term in business world. As a fact of life the creator rarely gets rewarded for his creativity, as a Motorola employee, Smith did not share directly in the profits generated by the company’s Six Sigma applications. However, over the years, he and Motorola garnered numerous awards and recognition for his vital work to improve profitability in American manufacturing sector. Smith was proud of his role in Motorola’s winning the prestigious Malcolm Baldrige National Quality Award which is given for the best practices in quality management in U.S. The Baldrige Award came in 1988, two years after Motorola implemented Smith’s Six Sigma principles.

In 1995, Jack Welch included Six Sigma fundamentally in all his business strategies at General Electric (GE). He decided to give a thorough overhaul to General Electric; he was guided by engineers and consultants, and he realized that something needed to be done to reduce the operational defects throughout the company. Do you know that Jack Welch’s appointment came with the mandate to change the company for the better; the GE board told him that in whatever way necessary, Welch had to bring the changes? That’s where Six Sigma was brought into the processes at GE. Over the course of five years of Six Sigma implementation, GE reported savings of $12 billion. That is a gigantic improvement, isn’t it? Welch became a promoter of Six Sigma and championed its use in not just his own company, but in others around the world, even in small businesses.

What are the strengths of Six Sigma? It addresses quality problems; errors and defects and costing in terms of waste and delays. It helps in diagnosing and solving problems for getting solutions to problems with its dozens of tools. Once the diagnosis is complete, the right tool can be chosen for a rapid solution. It develops key metrics that first define the problem, then measure the defects and give desired and actual results. It can benchmark the methods at the backdrop of industry’s best practices. With an appropriate investment, a company that adopts Six Sigma can be a center of excellence developing its own best practices through continuous improvement. Another feature of Six Sigma is that it works well with other cutting-edge management tools, such as continuous improvement (kaizen), lean manufacturing, and agile development.

Features that set Six Sigma apart from previous quality-improvement initiatives include: a clear focus on achieving measurable and quantifiable financial returns from any Six Sigma project, an increased emphasis on strong and passionate management leadership and support, a clear commitment to making decisions on the basis of verifiable data and statistical methods, rather than assumptions and guesswork.

In recent years, some practitioners have combined Six Sigma ideas with lean manufacturing to create a methodology named as Lean Six Sigma. The Lean Six Sigma methodology views lean manufacturing, which addresses process flow and waste issues, and Six Sigma, with its focus on variation and design, as complementary disciplines aims at promoting business and operational excellence. Companies such as GE, Accenture, Verizon, GENPACT, 3M Corporation, Xerox, Allied, Conseco, Tata Steel and IBM use Lean Six Sigma to focus transformation efforts not just on efficiency but also on growth. It serves as a foundation for innovation throughout the organization, from manufacturing and software development to sales and service delivery functions. The International Organization for Standardization (ISO) has published in 2011 the first standard “ISO 13053-1:2011” defining a Six Sigma process. Other “standards” are created mostly by universities or companies that have so-called first-party certification programs for Six Sigma.

Implementation of Six Sigma ensures accuracy to specification. 6 Sigma takes care of 99.73% of the process deviation. Organizations cannot afford to set a very loose specification, and, also, they cannot chip away the high assurance point as set in Six Sigma Model.
This means that Six Sigma itself is pretty difficult to achieve, therefore 7 Sigma and above is beyond belief.

Since the 60s the idea of single monoculture is on a slow extinction.  It has given way to pluralistic society that continues to evolve through cultural integration and influence.  These changes are evident in fashions, dietary habit, entertainment, music, literature and sports.  Diversity adds spice to life.

Distinguished management experts have asserted that diversity in organization is a good thing because it forces teamwork, because people know that they must cooperate with each-other to get results, and for a cohesive work culture. Designing and maintaining a consistent workforce with diverse features is a tough managerial task.  Diversity in organization occurs when the organization hires people who have a broad range of background, when the demographics vary on a large scale with difference in age sex, culture and physical challenges.  Cultural ethnicity is one major issue, which needs to be handled with care.  When the pool of resource is large and diverse in nature maintaining equality is a hurricane task.  The reality of globalization is that the boundaries of nations have shrunk, communication speed has increased and the entire world has become a global village.  It is important therefore we respect, accept and celebrate diversity.

Chester Bernard, author of the management classic ‘The functions of the executive’ has described informal organization as any joint personal activity without conscious joint purpose, even though contributing to joint result.  Thus the informal relationships established in-group of people during various celebrations like a dance party, a birthday celebration or a wedding anniversary may aid in achievement of the organizational goals. Globalization, migration and communication challenge organizations to develop broad perspectives of management.  Organizations have to mix and merge people from different parts of world for various operations.  People accept change in cultural diversity if it is a non-issue.  Organizations should constantly but subtly   coach its people to accept change in and around them.

Progressive companies all over the world recognize the advantages of integrating worker from culturally diverse backgrounds. These companies view diversity as a business plan as in today’s global marketplace companies interact with different clients with cultures and different code of conduct.  In the early stages, International business was conducted with an ethnocentric outlook that means the orientation and type of operation was based on the parent company.  The modern multinational corporations have geocentric orientation. The total organization is viewed as an independent system operating in many courtiers.  The relationships between headquarters and subsidiaries are collaborative.  Communication flowing from both directions encourages viewpoints of workers at all levels.  Furthermore, managers of different nationals occupy key positions.

In short, the orientation of multi-national corporations is truly international and goes beyond a narrow nationalistic viewpoint. MNCs have recognized the business opportunities in many different countries.  It can raise money for its operations throughout the world.  Moreover, multinationals firms benefit by being able to establish production facilities in countries where their products can be manufactured more effectively and efficiently.  Companies with worldwide operations sometimes have access to natural resources and materials that may be available to domestic firms only.  Also a large MNC can recruit management and other professionals from a worldwide labor pool.   Companies have recognized the various pros of diversity.

 Increase in Creativity: When different people are put together towards a common solution there is no one best answer to any question because the organization can obtain more and more ideas.  Different cultures of the employees can offer insightful alternatives to a problem.

 Increase in Productivity: When people of variety of culture and variety of backgrounds are made to work together it increases their productivity exponentially. This happens because it kills monotony of work culture, brings freshness in work atmosphere.  Different people have different styles of performing work.  Every employee motivates the other with his difference of style.

Negotiation skills: Negotiating is a part and parcel of life.  Everyone is busy negotiating on some or the other matter.  Every culture has it own philosophy on negotiation.  Americans hate negotiating, they rarely negotiate; you will find them negotiating except for buying a car or a home.  But when Americans have to work with different cultural backgrounds of co-workers they realize the art of negotiation.  Negotiation should always be a win-win situation.  There should be a common ground for negotiation; it should not leave a feeling of hurt on any party.  Germans are called tactful negotiators.  So this can be learnt when diverse people come together to work.

New Business Processes:  Diverse people have diverse attitudes to business.  Companies need to adapt newer business skills and newer processes.  The cross-cultural workforce can bring in better and newer work processes.

New language skills: People can learn new languages while working in organization from their co-workers.  By learning each other’s language the barriers can be reduced.  The companies pay a high sum to language interpreters.  By motivating people who love to learn new languages, companies can curtail expenses.  By learning new languages people can get insight of other countries.  They can improve their communication skills.  After all multi linguistics are always preferred by an organization.

But, Prof.Stephen Bainbridge of University of Illinois Law School argues that homogeneity should be maintained at the workplace as it increases productivity and profitability.  He further states that people feel at home while working with people like them therefore they work more effectively.   He recognizes that people have problem communicating their idea and emotions to people from diverse cultures and backgrounds.   It is a waste of time and energy to work on diverse workforce he comments.

 Prof.Ron Burn a Professor of Sociology and Strategy at the Chicago Graduate School of Business has published several papers on diversity.  He is of the opinion that diverse workgroups are more innovative as they not only have more variety in experience but they are also connected to different source of information in their environment.

Kent State University located in the heartland of America allows students, faculties and staff to learn about variety of cultures from around the world.  Dr.Sheryl Smith – an Associate Dean of students and Director of Campus Life says that the university environment encourages students to explore and understand and appreciate the difference and similarities among cultures especially with diverse student organizations   through events sponsored by these groups.  Students, faculties and staff can experience food, music, dance and sports from wide variety of culture.  The philosophy is simple: students will have to work some day with people of different culture and they will encounter differences.  They should feel at ease and poise when they enter their professions.

Managing cultural diversity is simple.  We all need to address the myths, stereotypes and cultural differences that interfere with our daily chores.  The age-old gender fact that only male and females exist in organizational workforce has lost ground; today we have gay and transgender individuals making vital contributions to our economy. Nations and workforce are both becoming more diverse. The share of people of different color, cast, creed, religion, tradition, language, diction, practice, and ethnicity is part of organizational workforce.

 We are witnessing more women entering the labor force; while taking increasingly the forefront. They are occupying vital roles and are the decision makers in more organizations. It is an open fact that businesses that embrace diversity have a more solid footing in the marketplace than others. Whatever color, black or brown or white.  That is it.   The word “global village” may appropriately describe the world we live in today.  The fiber optics, aerospace and computers link all that exists is a part of our lives. The geographical boundaries are shrinking day by day.   Let’s give up obsolescence and move on to improve productivity.