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  • Hemant Batra
    Hemant Batra    Group moderator
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    WIELDING CORPORATE POWER: THE ETHICAL WAY FOR THE BOARD OF DIRECTORS
    WIELDING CORPORATE POWER: THE ETHICAL WAY FOR THE BOARD OF DIRECTORS

    Introduction

    Business ethics and professionalism together will serve as important imperatives for survival and growth of a modern business organization confronted with multiple challenges including financial scams, dying sentiments of investors, fixing accountability, transparency, independence in decision making, rule of law, fairness in deals, etc. from the different stakeholders, i.e., investors, creditors, industry, government and society, in the present knowledge based, global and competitive environment. The potential for corporate risks will obviously mitigate if an ethical compass is implanted in the conscience of all directors and employees. Such a compass will ensure that the company does not suffer from ethical complacency.

    Business Ethics

    The term ethics has many nuances. Webster’s Dictionary, defines “ethics” as relating to what is good or bad, and having to do with moral duty and obligation. Taylor defined ethics as “inquiry into the nature and grounds of morality where the term morality is taken to mean moral judgments, standards and rules of conduct”.

    Ethics in general is concerned with actions and practices that are directed to improving the welfare of people.

    Ethicists explore the concepts and language that are used to direct such actions and practices to improve human welfare. Thus, ethics deals with questions that relate to making a life worth living and helping people to achieve such a life.

    Business ethics is a subset of the study of ethics in general. However, some special aspects must be considered when applying ethics to business. First, businesses must make a profit. Second, businesses must balance their desires for profit against the needs and desires of society. Maintaining this balance often requires compromise or tradeoffs. To address these unique aspects of the business world, society has developed rules-both legal and implicit-to guide businesses in their efforts to earn profits in ways that do not harm individuals or society as whole.
    Business ethics relate to rules, standards, and moral principles as to what is right or wrong in specific situations. Business ethics comprises moral principles and standards that guide behavior in the world of business.
    Business ethics can help individuals to recognize and resolve ethical conflicts within themselves with others, and with their environment so as to keep business management forever.

    Code of Ethics

    Due to increase in knowledge about the benefits of business ethics, many corporations have established a code of ethics. This code defines the values desired within the company and the ethical action demanded of its employees.

    It is in the best interest of every organization to establish, on its own, an ethical code of conduct. Not only does the government reward organizations who do this, organizations are then able to personalize the code. The best option for an organization is to develop an overall code of ethics for the company and then a separate code to guide each department. Determine the following ethical values important to the organization. For example:

    — Trustworthiness: honesty, integrity, promise-keeping, loyalty.
    — Respect: autonomy, privacy, dignity, courtesy, tolerance, acceptance.
    — Accountability: pursuit of excellence and responsibility of the directors.
    — Caring: compassion, consideration, giving, sharing, kindness, loving.
    — Justice and fairness: procedural fairness, impartiality, consistency, equity, equality, due process.
    — Civic virtue and citizenship: law abiding, community service, protection of the environment.

    In nutshell the attributes of Professional values include the following:

    — Confidence
    — Service
    — Confidentiality
    — Competence
    — Contract
    — Community
    — Care
    — Commitment

    Being a professional means more than simply acquiring a degree. It means being true to your chosen profession and trying to excel in any job assigned to you. Sometimes it means simply doing what is right. The following aspects need to be looked into to have professional attitude:

    — Professional behaviour demands a certain amount of planning so that overruns are avoided and the work proceeds smoothly.

    — Good decision making skills. The directors need to have the skill of making moral judgments.

    — Maintaining transparency and open communication.

    — Doing the job in the right way. A Company who do not pay taxes or fail to take note of their social responsibility is unprofessional. Just having degrees in hand does not matter what counts is the honesty with which one is doing the work.

    Conclusion

    Business ethics, professionalism and corporate governance are interlinked with one another. Business ethics provides philosophical base, vision, mission of an organization, whereas corporate governance is a shared way of corporate functioning and not just a set of rules. It implies a wide acceptance within, of a code of governance, which is transparent and is perceived as such. Corporate action needs to conform to letter and spirit in which society allows corporate to function. Such a society as ours has plenty of rules and regulations, but its adherence to the rules that decides the issue. Our corporate bodies need to be perceived as adhering to established norms. It is being increasingly recognized that being a responsible corporate citizen is important in ensuring long-term success of a company. India’s corporate sector has a new tryst with destiny. To face the formidable challenges of the future, the corporate sector has to be empowered with a new vision, dynamic mission and a new mandate to follow best practices of governance.
    • 21 Nov 2008, 09:14 am