Enhancing Value through an Ethical Culture

www. .comShantaram
Dr. Anita
 Legasis Profile
• Legal Systems and Integrated Solutions
• Specialized Business Enterprise
• Compliance, Governance & Ethics
• Intellectual Property Rights
• Market leaders in Compliance Solutions (India)
• Consistently in worlds top 500 IP firms (IAM 500)
• Largest software patent filer in western India
• High Ethical Quotient
• 140 Lawyers, 15 IT Professionals, 10 PCS, 5 Locations

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 CENTRAL VIGILANCE COMMISSION

Introduction

• Apex integrity institution of the country,

• Objective: endeavours to promote integrity,
transparency and accountability in the public life.

• The Vigilance Awareness Week is organised from the

30th October to 4th November this year.

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 CENTRAL VIGILANCE COMMISSION

THEME

The theme for Central Vigilance Commission’s

Vigilance awareness week, 2017 is
“My vision- Corruption Free India.”

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 CENTRAL VIGILANCE COMMISSION

DISTINCTIVE FEATURES OF THE VIGILANCE

AWARENESS WEEK

• Integrity Pledge:

• Vigilance Excellence Awards:

• Integrity Index:

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 $ 1.5-2 trillion

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• 80% of the participants acting in a corporate capacity
made a decision that 97% of those acting in a personal
capacity judged to be morally unacceptable

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Meet another person interact and discuss any of
the words below:

• Abortion
• Corruption
• Euthanasia
• Bribery
• Environment
• Copyright
• Human Rights
• Smoking/ Alcohol
• Responsible Behaviour
• Terrorism
• Sustainable
• Racism
• Corporate Governance
• Minority
• Conflict of Interest
• Diversity
• Insider trading
• Cloning/stem cell
• Stakeholders

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 What Is Ethics?

Some of what works to increase our understanding:

Law is adherence to the enforceable and Ethics is

adherence to the unenforceable

Defined by the Institute for Global Ethics.

What we should do, what we ought to do

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 What Is Ethics?

 Ethics is more than not giving and taking bribes

 As N Vittal says Corruption flourishes because it is a

low risk and high profit activity

Make corruption high risk

Zero tolerance

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 Understanding Ethics

 Ethics is not something we do when it convenient

or comfortable to do. It’s something that we live for,
fight for ...

 Aristotle ‘’We do not act rightly because we have

virtues , but we have them because we have acted
rightly.

 Our lives begin to end the moment we become

silent about the things that matter.

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Hammurabi’s Code
• 18th century BC
• 282 laws
• Property rights, criminal
behavior, slavery, divorce
– brutal punishments for
not obeying
• Bone for bone- eye for
eye
• Innocent till proven
guilty
• Minimum wages

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 Business Ethics and Compliance

• Compliance is about adherence

• Ethics is about choice
• Good governance cannot be achieved by compliance
alone
• Compliance and ethics are intertwined

-Mervyn King, Former Judge of supreme court of SA

Chairman King Committee on Corporate Governance

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 “Business Ethics” and Actions
affecting the “Image” of the Company

Business ethics an Oxymoron?

When is there more misconduct – recession or when

economy booming ?

Who do people first go to to report misconduct ?

How much cash is exchanged worldwide per annum as

bribes?

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 “Business Ethics” and Actions
affecting the “Image” of the Company

Define corruption

Transparency international CPI for India

Why is it that corruption prospers in India?

Teddy bear and crayons in board room

Crèches and kinder garden within 2 mile radius

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 Can Ethics be taught?
 Harvard began offering courses in business ethics back
in 1980’s

 Eg: One business school sends MBA students to a

monastery

 CEO chief ________ officer

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 Can Ethics be taught?

 Legitimate in one culture may be considered corruption

in another culture

 For e.g. What is thought of as a gift in Japan could be

construed as a bribe in USA

 Intellectual property may be viewed as a communal

good

 COPYRIGHT - KOPIMISM

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Q.1.You try to withdraw $100 from a cash machine,
but instead it dispenses $200, because its been
incorrectly stacked with $20 notes instead of $10
notes. You decide to return the extra cash that isn’t
yours because:

a)It is simply not to return someone else’s property.

b)It wouldn’t be fair to the banks shareholders.

c)I might get found out and prosecuted for theft

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Q.2. You have decided to apply for a new job, but you do
not have quite enough experience in one key area.
However, you decide not to exaggerate your experience
because:

a)Honesty is an important principle for me.

b)If everyone lied, who could we trust?

c)It would be fraud and I could be fired if found out later.

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Q.3.You have been asked to take an “integrity test”. You
decide to answer truthfully because:

a)I’d rather face up to my weaknesses.

b)It’s the fair thing to do for everyone involved.

c)The firm would expect me to take this seriously.

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Q.4. After nine months out of work, you get a great new
job. However, one day your boss verbally abuses a
young female colleague, reducing her to tears. You
decide to act because:

a)I’d rather risk my job than allow this kind of behaviour.

b)Others might suffer if I don’t take action.

c)There are clear HR procedures to deal with the

situation.

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Q.5. Your boss is a single-parent mother with two difficult
children. She calls in sick and says she will be off work
for a week, but the next day you see her coming out of
the local cinema with her screaming children. You decide
you have to act because:

a)Trust is vital to working relationships.

b)I have the interests of all employees to consider.

c)Lying about sick leave is fraud.

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 Please note how many times you answered a, b or c.
Each answer represents one of the three main moral
philosophies that guide our sense of what’s right, which
we will call:

b) Social Conscience
a) Principled focuses on what “is
conscience is guided considered right or
by “moral principles” acceptable in a
particular society”

c) Rule Compliance is
defined by our “legal
rights and duties”

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Stages of Ethical Development

Ethical
Leadership

Ethical Action

Ethical Reasoning

Ethical Awareness
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 Six tests for Ethical Decision Making

1. The Law Test

2. The Values Test

3. The Conscience Test

4. The Newspaper Test

5. The Child Test

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 Leaders Say Ethical Leadership is:

“Leadership is where all progress begins. Without proper

ethical leadership,
all our institutions are in serious trouble. Without ethical
leadership the organization is a soulless structure.”

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“Ethics has also worked against our growth.
What would have happened if our philosophy
was like that of some other companies which
do not stop at any means to attain their ends. I
have come to the conclusion that if we were
like these other groups, we would be twice as
big as we are today. What we have sacrificed
is a 100% growth”

…. J.R.D.Tata

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 Can Ethics be taught?

 Six reasons business people act unethically

1. Rationalisation

2. Bad role models in the organisation

3. Peer pressure

4. Difficulty in defining what is ethical

5. Corporate culture

6. Pressure from superiors

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 Can Ethics be taught?

 What are the myths?

The most common myths about ethical behaviour

-Author Nan De Mans

 I can’t change this place

 You are born with your morality

 Women have a more developed sense of ethics

then men

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 Can Ethics be taught?

 It is possible some unethical acts are due to a lack

good judgement.

 We need to train people to be able to identify the

difference

 Right is right even if nobody is doing it

 And wrong is wrong even if everybody is doing it

 So the question is not whether....

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 Case I

Shyam , is an employee working with red battery. He

is the trusted employee working with the organization
for the last 16 years. The organization is doing very
well. Its success is based on responding to customer
needs fast. Delivery is on time.

One such instance of responding to an important

delivery, he has been stopped at the check naka.
Octroi has to be paid. However the officials there are
asking for a bribe. Customer is king is the philosophy-
What should he do?

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 Case 2

Keshav, a fresh new designer is just out of fashion school.

He is raring to go. He get gets picked up by a new female
designer to start working with her as an assistant. He starts
work with a lot of enthusiasm. Fashion shows etc. As he
spends more time in the organization he realizes that the
Fashion designer, Manda Sehwani is picking up garments
from various sources and cutting the tags and stitching her
label on it. He does not think it is right. Also she seems to
have a soft spot for him. He thinks it is best to play along
and work with her for some more time, get experience and
a foothold in the industry. What should he do?

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 Case 3

Alisha, is working in a small company. She is a new

entrant. She was brought to the company by Neeta
who is her boss. Alisha is a bright smart enthusiastic
individual. During her work she has become close to
Neets’s boss. Neeta’s boss shares with her
information. He is planning on firing Neeta. Alisha is
now in a fix. She is close to Neeta and knows that
Neeta has no idea something like this likely to happen
since she has put in 10 years of hard work. Alisha
want to share this information with Neeta. Though she
feels that it will not be right to share this information
with Neeta. What should Alisha do?

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 Case 4

A trust working for the upliftment of poor students . It is

working in the city. However they decided to work in the
rural areas . They decided to build a school for the rural
area students. A residential school with free education and
teachers going from Mumbai to teach them. To purchase
this land the trust contacted some local people. Land was
identified and ready to be purchased. However , while
working with the bureaucracy they was no movement of the
file. There was no response for 6 months despite follow up.
Maybe bribe would work. The trust could pay a small
amount to be able to achieve something good in the larger
perspective. What should it do?

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12 Ethical Business Practices

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 Reporting: Why and Why Not?

Reasons FOR Reporting Reasons for NOT

Reporting
Believed corrective action 79% Believed no corrective 59%
should be taken action should be taken

Support of Management 75% Feared Retaliation 46%

Support of Co-workers 72% Feared no Anonymity 39%

Could report Anonymously 63% Believed someone else 24%

would report

Felt no one else would report 49% Did not know who to contact 18%

2005 National Business Ethics Survey, Ethics Resource Center

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The Millennial Mindset

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 Millennial

• Millennial – born between 1980 and 2000- will

comprise 75% of workforce by 2025

• Millennial mindset- Increasing skepticism that business

will do the right thing when faced with a tough decision

• Far more emphasis on the importance of an

organizations social responsibility and environmental
impact.

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37% of respondents thought employees cynicism
was the top threat to the effectiveness of their E&C
training programs

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 Expectation from Board

The full Board should expect to participate in

formal and internal and/or external education at
least annually on:

• Organizational and Industry Risks

• The risks they bring as Directors (E.g. Conflicts of

Interest, Insider Trading);

• Current and evolving regulatory requirements and

the structure and operation of an effective E&C
program

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Top 5 risks reviewed during C& E risk assessments:

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 Culture Breakdowns Are the
Leading Cause of Misconduct
69% of
settlements were
identified as
culture-related

The average cost of

compliance failures
caused by a poor culture is
more than $40 million

Source: CEB Analysis

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When Leaders Demonstrate a Commitment to Ethics,
Workplace Integrity Improves Significantly

Top Management Top Management

Perceived to have Perceived to have
WEAK ethical STRONG ethical
commitment commitment
Pressure to 30% 3%
Compromise
Standards
Observed Misconduct 84% 23%

Reported Misconduct 54% 80%

Experienced 42% 10%

Retaliation

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 A Thought
...The Power of the Ethical Management.
By Kenneth Blanchard and Norman Vincent Peale
New York 1988

Managing only for profit is like playing tennis with your

eye on the scoreboard and not on the ball.

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