Business Ethics – more in letters less in spirit

Gyanendra Kumar Kashyap

The Cobrapost sting shows that banks which claim to abide by ethical standards on papers give a damn to banking norms and are engaging in fraudulent practices

Log on to the corporate home page of banks and you would invariably find ‘Code of Business Conduct and Ethics’. Read further and you would have statements such as, “The Group expects all its employees, officers and Directors to act in accordance with high professional and ethical standards” and “This Code of Ethics / Conduct intends to ensure adherence to highest business and ethical standards while conducting the business…” Well there is inherently nothing wrong with the code or its wordings; it’s only that when such organisations portraying high levels of ethics in business conduct are themselves involved in fraudulent acts. Such incidences, however few they may be, do lend credence to the segment of commentariat who believe that business ethics is an oxymoron.

The recent pan–India undercover investigation by Cobrapost alleges nation-wide money laundering racket being run by HDFC Bank, ICICI Bank and Axis Bank.  The sting operation alleges that the bankers, among other things, take cash and invest in gold and insurance products, open account to route cash into banks' investment schemes, don't adhere to KYC norms, stash away black money in bank lockers, and split money into tranches to get it into the banking system without being detected.

The banks on their part, however, assured customers that they have high standards of business conduct and that they are investigating the allegations. Sample ICICI Bank’s official response on allegations made by Cobrapost on money laundering reads, “ICICI Group conducts its business with the highest level of compliance to legal and regulatory requirements. All employees of the Group are trained and required to adhere strictly to the Group Code of Conduct, including AML and KYC norms. We have demonstrated our commitment to this by following a zero tolerance policy towards any violation.” Official responses of the other two banks are on similar lines.

At a time when there is so much of discussion around black money, the sting leads us to question the ethical posturing of these banks and their leaders at helm. The banks in question are led by stalwarts who are all spotless and thus the severity of the case. 

Could such operations be carried out without a nod from the top or is it a case of lack of oversight? If professionally managed banks can engage in such fraudulent activities what about the others? Did the CEO fail to communicate and promote clean and ethical conduct? Is ethics and ethical practices merely a discussion point during boardroom meetings? Does it not trickle down to the lower rungs of the organisation? Do the middle managers and their juniors not share the same conviction that exists at the board level? Does the Code of Business Conduct and Ethics merely exist in letters and not practiced in spirit? While the answers to such questions can vary, the essence is that there exists a gaping ethics hole among middle and junior level managers in India Inc.

For those who have seen the footage of the sting it must be clear that none of the managers asked for any personal gratification. Perhaps it was the need to meet the targets and obviously better performance against their names that made them violate the laws. Many in the know are slyly putting the onus on massive pressure to meet targets and performance-oriented bonuses for the unethical practices indulged in by retail banking executives. Such apprehensions cannot be entirely wished away.  According to ‘India banking fraud survey -2012: Navigating the challenging environment’ conducted by Deloitte, “About 73 per cent of the respondents cited ‘lack of oversight by line managers or senior managers on deviations from existing process/controls’ as one of the major reason followed by ‘current business pressure to meet targets’ and ‘difficult business scenario’ as other two major reasons for increasing fraud incidents.”

Are their lessons to be learnt? Will the banking regulator act harshly or will the banks be let off with a few lakhs of fine? Leave the regulators and allow them to do their jobs; the episode should ideally force captains of India Inc into some soul searching and see to it that the discussion on ethical practices come out of the boardroom and be communicated to the lowest denominator. While it is unthinkable that any of these CEOs would ever promote such behaviour under any circumstance but one thing is for sure that the sting puts under a cloud the reputations of these iconic bankers. As few commentators have put it, these iconic bankers must candidly argue the business case for ethical conduct in every corner of his company and eschew short-term (target based) success for long-term sustainability.

Interestingly out of the 145 companies in the Ethisphere® Institute’s, a leading international think thank based out of New York, Worlds Most Ethical Companies 2013, only two Indian companies are featured. You perhaps guessed it – they are none of the above mentioned banks. Time for the banks and India Inc in general to learn, adopt and practice ethical behaviours from Tata Steel Ltd and Wipro Ltd.

A not so Happy Women’s Day…

Gyanendra Kumar Kashyap

It’s a day to celebrate; yet the larger picture is lost in oblivion as no one wants to miss out on gesturing empty symbolism... 

Happy Women’s Day - well I haven’t wished anyone a happy women’s day. I understand that many a newspapers are flooded with colourful advertisements featuring insurance to automobile companies and yes the ministry of women and child development, TV channels and radio stations are saluting women with special programmes and e-commerce websites are offering special discounts to the fairer sex. Yes, there are efforts from every corner to make women feel that this day, March 8, is a special one for them. Nevertheless I have not been able to arrive at, as of now, any justifiable reason to wish my female colleagues a happy women’s day. If at all I have to, it may be – a not so happy women’s day.

The front page article in The Times of India, based on a survey commissioned by the newspaper states that 94 per cent of women find Delhi unsafe or very unsafe. As per the findings of the survey 96 per cent of the respondents don’t feel safe after sunset. If you thought that safety issue is more pronounced outside the office premise, then take note – the survey candidly states that 63 per cent feel that their office has no set up to fight sexual harassment. Agreed that these are mere statistics, however the moot point is that post the 16 December 2012 incident such responses are an indicator to the fact that there is need for more when it comes to the society approach towards women. Dedicating a day and merely luring the customer in women via advertisements is perhaps not the right way forward.

Isn't it a blot that just after two and a half months when Delhi gang rape shocked the nation, yet another gang rape in the satellite town of Ghaziabad a few days ago, March 2 to be precise, and molestation of a women journalist just a day before the international women’s day celebration has come to fore. Are not such incidences a reflection of the nation’s inability to protect its women?

How does the corporate world figure out when it comes to women at workplace? While each company may portray themselves as great employers, Defining Success 2013 diversity survey – released on the eve of Women’s Day - conducted by Accenture breaks certain claims.  The survey states that 42 per cent Indian women cited lack of opportunity for growth (learning, increased responsibility, etc) within their positions as one of the reasons for lower job satisfaction while 46 per cent feel they are underpaid. It goes on to state that for 68 per cent of women poor work culture is a top reason for quitting and 58  per cent state their work going unnoticed as a major reason.  A significant 31 per cent of the respondents find their working hours or workload to heavy – well questioning the work life balance philosophy that companies like to preach.

Following the horrific December 16 gang rape and taking a cue from the government, India Inc’s leading industry chambers – Federation of Indian Chamber of Commerce & Industry, FICCI, and Confederation of Indian Industries, CII set up high profile committees on women’s safety. For a change the government appointed Justice Verma committee and Usha Mehra committee turned their reports in a time bound manner and the Centre has already issued an ordinance ratifying several amendments to criminal laws proposed by the Justice Verma panel. What is intriguing is that neither FICCI nor CII – both of which had constituted special committees to suggest strategies to ensure safety of women – have moved beyond the drawing board stage. Apparently it seems that constituting a committee on the lines of the government was merely meant to earn a few brownie points.

It is in public knowledge across the world that India is a horrible place for women; nevertheless it is International Women’s Day and in our case it is more about symbolism than real content. It’s a special day, or at least that is what is made out to be, and so be it companies, politicians or even actors – none wants to miss out on the cutesy gestures of empty symbolism.

Are you hiring culture-misfit people?

Gyanendra Kumar Kashyap 

Don’t hire solely based on job-fit, do ensure that the candidate in question is not a culture-misfit…

89 per cent of hiring failures are due to poor cultural fit; 46 per cent of all new hires fail within the first 18 months, states a study conducted by Atlanta based research and management consulting firm Leadership IQ. The study further states that 75 per cent of the new hires would succeed if they fit in with the organisational culture. Now this is an eye-opening statistic, which brings to light a valuable lesson: One of the major ways that companies can ensure successful hiring is to pay careful attention to whether the new hire fits the company’s culture. There is no dearth of examples where newly hired, talented senior executives fail pretty spectacularly. It is found that despite their functional capabilities they don’t align with the very foundation of what the organisation as a whole stands for.

Agreed that job fit is an important criterion for hiring but it makes more sense to complement job fit with culture fit. When candidates who seem to be perfect on every level fail, not being aligned to the organisational culture – cultural misfit – can be one plausible reason. The question then is what should organisations do when hiring people?

Trade pundits have often argued that the key in hiring is not necessarily finding people who thrive in uncertainty but rather finding people who thrive in the kind of organisational culture the organisation strives for. The hiring manager or the selection committee should resist the urge to hire people just because they share the same personality traits and background as theirs. In fact they should look for a fit with the organisational culture as assiduously as they sort for experience and skills.

This requires yet another set of question or perhaps yet another round of one-to-one interaction. So how can companies go about adding another layer of questioning to evaluate how a candidate fits their culture? The possible question, apart from the one meant to test functional abilities, could be: Is the organisation’s work meaningful to the applicant? Is the applicant’s value in harmony with the values of the company? Indeed there is a greater likelihood that employees will stay with an organisation where the work feels meaningful. Additionally, when the organisation’s values are in sync with the employee’s values, the employee feels a greater sense of harmony at work.

Do such efforts help? Yes, they do. In fact candidates who are selected on the basis of culture fit, in addition to job fit, contribute faster, perform better and stay longer with the organization. And when hiring managers neglect culture fit, the company and the employee share the burden. Despite being high on technical and functional skills, individuals who are not a fit (in terms of organisational culture) can be toxic to the culture, and when groups of people are hired that lack the necessary fit, it often results in a fragmented or schizophrenic-type culture. Well if you believe that job fit is enough and that culture fit can be imbibed upon by training & development, here’s a caveat: culture fit cannot easily be altered through training and development.

Isn’t it true that in the case of people centered organisations, an employee delivers an experience that is aligned with the organisation’s culture and brand? The bottom-line is that culture matters and hence job fit should be complemented by culture fit when hiring.

How much does 'disengaged employees' cost?

Gyanendra Kumar Kashyap

Not engaged and actively disengaged employees can cost the company and economy billions of dollar in productivity loss

$370 billion. This is approximately the combined GDP of Romania and Kazakhstan. But, according to Gallup's calculations, this is what actively disengaged employees, the least productive, cost the American economy per year in lost productivity.

Interestingly a 2011 study led by Gallup’s Jim Harter concluded that majority of American workers were not engaged in their jobs. The study states that the American workforce consists of 29 per cent engaged employees, 55 per cent who are ‘not engaged’ and 16 per cent who are ‘actively disengaged’. This implies that 71 per cent of American workers are ‘not engaged’ or ‘actively disengaged’ in their work, meaning they are emotionally disconnected from their workplaces and are less likely to be productive. Research findings from Corporate Leadership Council, a member-based advisory company, state that the disengaged employees have a 23 per cent probability of turnover within 12 months, compared to less than a 1% probability among highly engaged employees. Further, disengaged employees cost their employers on average 46 per cent of their salaries in lost productivity.  It is but clear that disengaged employees are expensive.

As I interact with my friends on this subject of employee engagement, the only conclusion that I can draw is that almost everyone starts out as an engaged employee. They say that when they turn up for work in a new organization on Day One, they are excited about getting the job and want to make a contribution. If this be so, then why do the same employees turn out to be ‘not engaged’ or even worse, ‘actively disengaged’?

Are the reasons to do with the lack of investment in terms of money and time on the part of the organisation for employee engagement? If so, then apart from the percentage of payroll that does not add any value, what is the lost opportunity cost? Common guesses would be that the organisation would not have lost customers had the employees been really engaged, the revenue perhaps could have been a lot more, and yes, perhaps a talented employees would not have quit. The last point is interesting, for as Curt Coffman says in his book First, Break All the Rules, “Every day, actively disengaged employees tear down what their engaged co-workers are building.” The ‘actively disengaged’ employees (‘cave dwellers’ as Coffman terms them) also suck the vital life force out of the organization and can ruin the dynamics of a functioning and flourishing team.

Mohinish Sinha, Leadership and Talent Practice Leader, Hay Group India, says, “Disengagement creeps in when employees are not properly ‘enabled’ at work.” He reasons that this could be because – either the employees do not have the tools, technology, information, support, and other resources that are needed for them to be effective; or there are procedural barriers at the workplace that interfere with their ability to get their work done. He makes an interesting observation on role fitment, reasoning that perhaps employees are placed in roles that do not allow them to leverage their skill sets, as a result of which disengagement creeps in.

So what can organisations do? Can organisations increase engagement by buying it? Perhaps yes. A number of organisations offer above-industry-standard compensation and benefits, share options, etc., not realizing that these can only increase the engagement levels to some degree. Researches from Gallup and Dale Carnegie state that engagement has to do a lot with the immediate managers or supervisors. An employee engagement survey conducted by IABC Research Foundation, 2011, concluded that the top two factors contributing to an increase of employee engagement within organisations are individual supervisors (85 per cent) and amount of employee communication (81 per cent). Says Sinha, “Managers must combine engagement (the use of motivational tools), with enablement (the act of providing employees with effective resources).” In fact a lot depends on what managers do, from the day employees join the organisation, which determines whether the employee continues to be engaged or switches off and becomes not engaged or actively disengaged.

Reengaging with Engagement, a 2011 report by The Economist, stated that 84 per cent of senior leaders globally believed that disengaged employees are one of the three biggest threats facing their business. However, only 12 per cent of them regularly worked to address employee engagement.

“Employee frustration is the silent killer of workplace productivity,” says Sinha. Given the loss to productivity, keeping employees engaged makes for a business sense.  Towers Watson, International Survey Research, 2011 found that organisations with engaged employees showed a 19 per cent increase in operating income over a 12-month period, compared to a 34 per cent decrease in companies with disengaged employees. Hay Group’s research with hundreds of companies shows that organisations in the top quartile on ‘engagement’ exhibit revenue growth 2.5 times more than those in the bottom quartile. Moreover, the companies in the top quartile on both engagement and enablement achieve revenue growth 4.5 times greater.

Organisations are open to choose – loss of billions of dollar or increase in revenues and operating income.

Are your employees happy?

Gyanendra Kumar Kashyap

Happy employees are more productive and that translates to better bottom-line, say a slew of research studies

Do happy employees translate into healthier bottomlines? Economists have established a link between workers' happiness and their performance, and say employers should take note. Research conducted by a team led by Andrew Oswald, a professor of economics at Warwick Business School, states, “Happy workers are 12 per cent more productive than the average employee while unhappy workers are 10 per cent less.”

But then what constitutes happiness for an employee? Is it fat pay cheques? Or work-life balance? Or is it endless vacations? According a new Gallup poll, what correlates most closely with happy employees is engaging work. In her book, Make More Money by Making Your Employees Happy, Dr. Noelle Nelson says, “When employees feel that the company has their interests at heart, they will take the company interests to heart.” Gallup quantified the link between employee feelings and corporate outcomes, reporting that lost productivity due to employee disengagement cost more than $300 billion in the U.S. annually.

So, should employers and managers hire people that are more positive and happy?

Studies conducted by psychologists point out that, if happier on a given day, people were not only more likely to come up with a new idea or solve a complex problem that same day, but also do so the next day. This is further corroborated by a separate Gallup study (2010) by researcher James Harter and his colleagues, which found that business unit sales and profits at a given point in time can be predicted by employees’ feelings about the organization at earlier points in time.

In his book Happy Hour is 9 to 5, author Alexander Kjerulf says, “happy employees make the customers happy.” He puts forth the point that when employees like their jobs, customers get better service, and are more satisfied. The correlation makes sense when you consider that employees are usually seen as the face of the company. It is but common sense that a worker who is happy and engaged projects positivity, which customers can detect, whereas someone who is negative, or even just disaffected, can just as easily turn customers away.

So, what can organisations do to make employees happy? In her book Work Happy: What Great Bosses Know, author Jill Geisler suggests four measures: a supervisor who cares (happy employees believe their boss listens to them and actually takes their input seriously); sincere and specific praise and feedback; supportive and fair workplace culture; ways to put new employees off on the right foot.

Geisler further adds in her book that hiring well is also a part of the equation. She suggests that organisations should look for people who are positive in nature, hard-working, and will add to the team.

In the fight for competitive advantage where employees are the differentiator, creating an environment where employees feel happy to be associated with the organisation should be the ultimate goal.

Chidambaram’s three promises, will it solve any purpose?

Gyanendra Kumar Kashyap

The finance minister has made promises to the women, youth and poor of the country; the success of living up to the promises depends on how well the initiatives are implemented

Presenting a budget just before the election year is not an easy task; especially if you are Palaniappan Chidambaram, a key member of the dream budget team. Given, his image as a reformist – at least to some, the finance minister as always was in two minds – whether to give in to populist demands or to adhere to pragmatism. In his budget speech he did speak of the relation between policy and welfare and sough to make a straight forward and short budget speech. In due course of his budgetary speech, he emphasised upon three faces – and made due promises, offered minor sops to income tax payers but slapped a 10 per cent surcharge on 'super-rich' individuals and corporates, levied an inheritance tax and raised duties on mobile phones, cigarettes and luxury vehicles. While post budget reactions such as ‘damp squib’, ‘cautious, could have been courageous’, ‘lollipop’ etc., are doing the rounds; here is a look at the three promises he has made, and how the future could turn out.

“I wish to draw a picture of three faces that represent the vast majority of the people of India,” said finance minister Palaniaapan Chidambaram in the course of his budgetary speech. The faces he spoke of were that of – woman, youth and poor, precisely in the same order.

To the youth of the country, the finance minister has proposed to set aside Rs. 1,000 crore to extend skill development. He believes, and rightly so, that skill trained youth will give an enormous boost to employability and productivity. To the poor of India, the honourable minster made an assurance that Direct Benefit Transfer, which he believes has caught the attention of the entire nation, will be rolled out throughout the country before the incumbent government’s term expires. And yes, not to miss out on the Rs. 33,000 odd crores of additional grant to MNREGA. Well so much for the youth and the poor.

The real spark in the minister’s speech came in the form of a proposal to set up India’s first Women’s Bank as a public sector bank. The minister’s contention is that there is no bank that exclusively serves women. Thus it makes sense to have a bank that lends mostly to women and women-run businesses, that supports women SHGs and women’s livelihood, that employs predominantly women, and that addresses gender related aspects of empowerment and financial inclusion. To this end the finance minister has agreed to provide Rs. 1,000 crore as initial capital infusion. If all goes well, necessary approvals and banking licence could be obtained by October 3013 and new Women’s  Bank could start operation soon after.

At this juncture it is important to have a flashback; in his budget speech in 2010, the then finance minister Pranab Mukherjee had spoken of granting new banking licence to private players. We are yet to see new private banks. One can only earnestly hope, an all Women’s Bank (by whatever name it goes) does get to see the light of the day as promised, October 2013.

Well, a bank was not all that the minister promised to the women of India. Perhaps taken aback by the horrendous incident that took place in Delhi on December 16 2012, the minister spoke of how the incident has cast a long, dark shadow on liberal and progressive credentials of the country. “We have a collective responsibility to ensure the dignity and safety of women,” he said. So to empower women and keep them safe and secure, the minister has proposed to set up a fund, Nirbhaya Fund, where the Government will contribute Rs.1,000 crore.

Besides the two, the minister also proposed to provide an additional sum of Rs. 200 crore to Ministry of Women and Child Development to design schemes for women belonging to vulnerable groups.

It is this promise the minister made to the women of India that is being debated. It is being argued that an all-women bank, the Nirbhaya fund and an empathetic lecture on the girl child and women belonging to vulnerable groups, are mere measures which at best might only scrape the tip of the iceberg that is women’s development and security in the country.

Talking about the bank – the minister himself in his speech acknowledged the fact that, “Women are at the head of many banks today, including two public sector banks.” The question then is what is the logic of an all-women bank? Howsoever good the intentions may be, neither the minister nor the budget document makes it clear as to how the bank will encourage women entrepreneurs? Is an all-women bank the ideal solution? Will it disburse loans at lower rates or will the savings rates be any higher?

As for the ‘Nirbhaya’ fund, there is a general perception in the social media that the fund will rot in the ministry coffers as lazy bureaucracy would take ages to implement laws and tighten security measures. There are questions as to whether the fund will be used to set up better shelter homes and trauma care centres for rape and acid attack victims? Suggestions from various quarters are that- what essentially women need is development at the grassroot level– one of them being more toilets for women. What women really need is security. A few suggest that the minister could have allocated more funds to increase policing on the streets, as well as more female police officers. And yes, more money for rehabilitation and counselling for victims of physical and sexual crimes such as acid attacks, trafficking and rape, would be a better idea.

In previous budgets too, the concerns of poor and youth were addressed; but women being an integral part of the budget discourse is a novel idea. Those for whom the budget is meant want to know how the funds are going to be used. The minister has made the promises, there are suggestions – some of them can be addressed / incorporated - what perhaps could make or mar the entire effort will be the implementation part. If implementation fails, the budget with its inherent goodness as well as inadequacies will be deemed to be mere populist that fell flat.

Lend them your ears

Don’t be stupid, get past your old fashioned reactive measures to douse protests – times have changed. Communicate but more than that lend the peaceful protesters your ears…

    India and Indians are not new to protests and peaceful ones at that. Be it the 1920’s non-cooperation movement or taking to the streets for causes that it is moved by – Jessica Lal in 2006, or the one in support of Anna Hazare’s Lokpal agitation or the more recent peaceful protests demanding justice for Damini / Amanat / Braveheart / Nirbhaya; examples are a galore. However, what has perhaps not changed is the treatment meted out to these peaceful protesters from those in the power corridors. Consider this: when people in New Delhi gathered for peaceful protests seeking justice for the victim and punishment for the accused; the police fired tear gas and water cannons to disperse the crowd and beat them with batons. Sensing the rage against these measures, the government went on to impose Section 144 so as to prohibit protests and demonstrations in the area around India Gate and Raisina Hills and also shut down metro stations. While the government may have thought these as quick fix solutions, the truth is that not only has the government lost touch with ground realities but also its responses were unprovoked. The question is, has the government totally misread the protests – the one being led by vocal, urban, educated and potential middle class who use social media and are not willing to tolerate the unaccountable, unresponsive political class and bureaucratic elite. Given the media attention that these unplanned and spontaneous protests have been able to garner, does it not make sense for the political class (read the government / bureaucracy) to pay heed and perhaps lend them their ears?

    Well going by the initial response, it seemed that the ‘powers that be’ was more interested in dousing the protests and at best resorting to symbolism. Perhaps the thought was that public memory is short and hence the pre-text for not positively responding to the peaceful protests. In an interview to CNN IBN, the Home Minister said, “You cannot have instant solutions.” While the political class failed to seize the moment and act with immediacy, the statements such as the above in a way is reflective of the mismatch between the young and restless generation and a government that is yet to adjust to new age pace. Had it not been for such old fashioned thought process, genuine voices of protest would have been heard with empathy and not tear gas, water cannons and lathi-charge. While stating these actions to be ‘politically stupid,’ Jayati Ghosh, Professor, JNU said during a protest, “The problem is that the government is not even listening.” All thanks to their thought process, the government missed the opportunity of defusing the anger by embracing the protests and providing comfort and reassurance. If at all it came; it was too late by then.

    Corporate India too has witnessed their share of unrests and a few ugly ones at that. Can we draw some lessons from these protests and learn how to embrace the protest and manage them too. Perhaps yes. Communication (a dialogue to be more apt) must go beyond what Rajdeep Sardesai in his column terms ‘traditional lakshman rekhas.’ Essentially this means that when faced with such a situation those at the helm of affairs must step out, summon up the courage and enthusiasm and rediscover the human touch. It is only then that the anger can be channelized to bring about change in the policies and practices.

     Unlike, the lackadaisical attitude and approach taken by the government, the learning for organizations when confronted with protests would be to take them seriously, even if they are small or seemingly disorganized. An apathetic treatment could result in a seemingly small protest gaining steam and eventually morphing into crises.  Rather get to the heart of the matter, identify the messages that the protesting groups want to air and address the issues publicly if that be so. Taking a cue from the on-going protest and how a few of our elected representatives articulated on the subject; organizations would do well to maintain a consistent undertone of respect, restraint and control – particularly with media communications. And yes, the message that needs to be sent out should be simple, direct and above all, honest.

    The writing on the wall is - by being responsive from the onset, these issues potentially can be contained and, hopefully, successfully concluded. What is perhaps needed is empathetic ears… do lend them your ears…