Doing business in India today: does it call for compromises?
Why do companies find it tough to take a stand against corruption? There is always the fear that they could lose business if they don’t indulge in, or at least turn a blind eye to corruption. Of course, there’s a cost involved in not taking short cuts. But even after the cost benefit ratios are worked out, we are still left with the question – is it worthwhile to indulge in corruption?
The answer will depend on your value system and whether you define business as merely maximising shareholder value, or, while you make profits you also uphold some principles. In the short run, a corrupt company may succeed and earn profits but the quality of our national life could suffer.
We business people are very clever. When it comes to corruption we think that it belongs to street level politicians and when it relates to business we try to take the sting and stink out of that word by using euphemisms like “governance deficit.”
Transparency International defines corruption as “the abuse of entrusted power for private gain.” In today’s world, governments and business houses wield enormous power and the nexus between them encourages and fosters corruption.
Earlier, it was believed that corruption is a by-product of certain societies, especially the developing nations. But today, we know that corruption can exist in any society, in countries under authoritarian governments as well as in advanced liberal economies and democracies.
In the pre-liberalised India, in a government-controlled economy, crony business houses profited from closeness to the political class. Only sectors like IT which had minimal engagement with the government or export oriented companies could thrive without the blessings of governments. Though we embarked on economic liberalisation in the 1990s, and moved away from the Licence Raj, corruption has found new forms of practice and patronage. Thanks to our popular practice of Jugaad – that untranslatable Hindi word to convey a curious mix of innovative thinking, bypassing of approved channels, and fixing – ethical standards of doing business remains very pliable, capable of infinite adjustments.
Today, every walk of Indian life – politics, bureaucracy or business – is tainted with corruption. Over the years we have become immune to corruption. For example, while selecting our electoral representatives, dishonesty has become a non-issue. All-pervasive corruption, certainly, is the biggest challenge before the country as it erodes the effectiveness of resource allocation and strategy for development. However, we look to someone or the other to clean up the mess. Can we respond differently? Instead of expecting others to change can business owners make a start?
While there are business leaders who syphon off large amounts from their companies for personal gain, there are also honest organisations forced to make payments to deal with harassment by politicians and bureaucrats. They also have to use ‘speed money’ to get things done that should have happened normally. It is difficult for individual companies to resist this kind of harassment. Here, business associations can initiate a dialogue between corporates, bureaucracy and political representatives to check this menace.
Independent directors are expected to assure corporate governance. But if critical information is not shared and if their opinions are not respected and followed, how can they succeed in their duties? Media continues to highlight “respectable” companies who won awards, had high powered independent directors and yet, swindled the shareholders. Facades often mask unpleasant realities.
For companies to say ‘No’ to certain questionable practices and yet do better than competitors, their products and services have to stand out. They have to focus on outstanding quality, on-time deliveries, constant upgrades through innovation and be ahead of the competitors in all aspects of business. If this happens, in most cases, there will be no need for under-the-table exchanges and it will lead to win-win business for all concerned.
It is alright to get employees sign the Code of Conduct or Business Ethics. But the demonstration of intent for ethical business has to come from the top management and it cannot be a fair weather conviction. A company’s determination to stay on and do ethical business is tested in times of business adversity. It won’t do for us to use the old Groucho Marx line, “Those are my principles, and if you don’t like them …. well, I have others.” It is only when individual conscience speaks firmly and with conviction that government and companies will pause to listen, act and reform their time-tested and questionable ways of doing business.
Corporate governance is not window dressing and business ethics is not another public relations practice to enhance corporate reputation or the company’s brand. Ethical business goes beyond profit maximisation and envelops the entire society in a virtuous wrap.
At Thermax, we decided to say no to compromises while securing orders and focus only on taking clean orders. Of course, it meant foregoing some business opportunities, which means a degree of loss in the short term. To compensate for loss in domestic business, Thermax has started focusing a lot more on globalising our operations. From a single digit figure at the turn of the century, we have reached 40% in the international share of our business.
We are a capital goods company and over 60% of our business comes from repeat orders. I am convinced that there are enough business houses keen on adopting transparent business practices as we are. Though we still experience difficulties with a few corporates and several government arms, as far as possible, we will continue to resist harassment, strengthen our processes and, with growing confidence, walk the talk.
What gives me joy is to listen to our employees say they are proud of being part of an organisation that has a great culture and is by and large honest. Today, youngsters are looking not just for pay and perks but also for occupation that’s meaningful and fulfilling. I am sure open culture and ethical conduct will go a long way in helping business houses attract talent.
Corporates need to be profitable and yet we have to find a larger purpose. What is the purpose of business? To me, the business of business is not just business, but human well-being. If we find a larger purpose, we will not be obsessed with profit at any cost. My late husband, Rohinton, expressed the idea aptly when he said, “Profit is not only a set of figures, but of values.” In business, we are used to listening to the voice of the shareholders. Can we also listen to that small voice within each of us that tells us what is right and wrong?