Address : Inauguration Of The Academic Year For The Third MBA Batch, Bhagwan Mahavir College of Management, Surat
Dear dignitaries, colleagues and friends,
Honorable Vice-Chancellor Professor Prajapati,
Principal of the Bhagwan Mahavir College of Management Professor Abani,
Professors, academicians and dear students,
The theme of my address is to underline the importance of role of rule of law and ethics and business practices and why the future MBA – business executives should be aware of this.
The aims of this college are distinct: providing high quality education, develop professional and personal skills, promote public-private partnerships, and the most importantly, as it reads: to shape the personality of participants by inculcating healthy habits, moral values, work ethics and holistic view of life as citizens of India. I was struck by the last aim and hence selected my theme for today’s address. My cursory study of courses offered at various MBA institutions across the country shows that management and business education in India does not adequately enlighten students on ethical issues as it does on efficient practices. Ethical education should be an integral part of the curriculum. In India, the problem is teaching ethics as many business graduates have a narrow background of commerce or science and engineering alone. Students need a more general grounding in the humanities to understand ethical issues better.
It is not the case that in order to become a most-ethic centred businessman, one has to study at Harvard or Yale. We have read in the newspapers the famous Bernard Madoff Scandal, high-flying business executive of New York studied at Hofstra and Alabama, at our own home pitch Ramalinga Raju of Satyam did a business-ownership course at Harvard.
I will just outline where ethics play the most important role in various subjects of an MBA study. In this way, you will be better prepared to recall some of the ideas I am going to present during your next two years of stay at this college. Ethics seeks to address questions about morality, how moral values should be determined, how a moral outcome can be achieved in specific situations, how moral capacity or moral agency develops and what its nature is, and what moral values people actually abide by.
Let me begin by saying that morality is a private and costly luxury but we shall certainly aim to have it all along.
Those of you who will study strategic management, the ethics will come up. As all organizations do face some ethical issues while making strategic decisions, such as setting vision, salary of CEOs, implementing strategic change, changes in organization ownership and global strategic operations are bound to arise. On all these fronts, you will face ethics while making a right decision. Only when you will adhere to ethics, you and your organizations will be able to sustain with success for a foreseeable future.
Those of you who will specialise in marketing management, as this is one of the subjects offered at your college, will have to be conscious of ethics while chalking out a marketing strategy through final delivery of products to the consumers. Be it a product, place, price or promotion, at each occasion ethical issues play a very important role.
Those who plan to specialize in operations management, may be please reminded that yours is an important role in implementing the ethical decisions. It would be absolutely useful if the training programmes are worked out which bring about higher awareness among the employees regarding the ethical issues. In this way, you will make ethics an important part of the decision-making process. From managing human resources to key decisions regarding suppliers, the interests of both internal and external stakeholders must weigh equally in your mind and it is at this juncture of critical decision-making process, you have to ensure that you do not loose the sight of ethics.
Those of you who will become purchase or procurement managers, let us ensure that ethical issues in purchasing such as favoritism, accepting of gifts by suppliers, disclosing confidential information are dealt with clear vision of ethics.
Those of you who will be our future human resource managers will face the ethical problems in hiring, deciding remuneration and retrenchment. Please hire a person who can give maximum contribution to the enhancement of owner value. Similarly, long term contribution towards enhancing the owner value should reflect in the remuneration package.
Those of you who will become financial specialists will come across ethics dilemma during mergers and acquisitions. You will have to deal with ethical and unethical aspects of management buyouts and inside tradings, money laundering, etc. I am sure you will live up the expectations of this college.
I am sure the professor in accounting for managers subject will highlight the importance of ethics in this area of management too. However, just to draw the link – let me say, you will come across manipulative practices – fictious revenues, fraudulent timing revenues, hidden liabilities and revenues, improper disclosure and fraudulent asset valuations. Be vigil and be guided by the rule of law and ethics. Be it financial accounts for the shareholders or for your internal management, I am sure you will be guided by these high principles. Auditors too have to abide by ethic tools. I studied Accounting for Managers while my wife was pursuing the diploma course in the subject from the British Open University in 2001. Insights into the course modules enabled me to see the importance of rule of law and ethics in this important area of management.
The Caux Principles (named after the place in Switzerland where world business leaders deliberated and drew up a code) affirmed the ``centrality of moral values'' in economic decision making. Its cardinal principles are the corporation should (a) share the wealth created with all its employees, shareholders and customers in order to improve their lives; (b) be responsible citizens from whom competitors can expect ``a spirit of honesty and fairness''; (c) contribute to human rights, education and welfare; (d) protect and wherever possible improve the environment; (e) in the exercise of its vast power be guided not by the law alone but by the ``centrality of moral values'' in economic decision making; (f) pledge to support human rights and democratic institutions and to cooperate with those forces that are dedicated to raising standards of health, education and work place safety.
There is a distinction between old-fashioned philanthropy and, corporate responsibilities and outreach, which involve profitably integrating the logic and compulsions of the organisation with the needs of the broader society, the understanding of which is necessary for practical implementation of business ethics. There are a number of issues of responsible business conduct to which the owners and managers of an Ethically Responsible Business Enterprise need to give special attention:
1. Relationships with government officials and entities: Business leaders and government officials should have an ongoing public dialogue about issues that contribute to corruption, such as monopoly practices, discretionary fees, onerous taxes, and regulations and licenses that impede business and entrepreneurship.
2. Role of the private sector in the regulatory process: Good public governance respects human and property rights, supports the sanctity of contracts, protects residents, provides infrastructure that speeds the transportation of goods and services and supports the transmission of knowledge, and establishes a market-oriented legal framework and reliable judicial institutions that allow its residents to resolve conflicts. Good public governance is founded on a transparent relationship between government and the private sector.
3. Government contracting and procurement: When an Ethically Responsible Business Enterprise conducts business directly with a government official or entity, whether as a contractor, supplier, or in some other capacity, it should take steps to ensure that its relationships are transparent and ethical. It should abide by all laws; refrain from engaging in bribery, cronyism, or coercion; and avoid even the appearance of impropriety. By so doing,
the Ethically Responsible Business Enterprise minimizes the risk of penalties, fines, and other forms of sanction for misconduct.
4. Role of voluntary action: An Ethically Responsible Business Enterprise may also contribute to its community by participating in community economic development projects. Such projects promote cooperation between business and the local community. An enterprise that engages in a community economic development activity designs programs to train and employ local citizens. Through such projects, a multinational enterprise partners with locally owned enterprises and franchises to help develop successful business strategies. Such actions enhance an enterprise’s reputation and goodwill in the community.
In your daily work, you will come across ethical dilemma which are faced by employers and employee related to power, authority and trust and secrecy, confidentiality and loyalty.
There are innumerable institutions and colleges offering management courses in Gujarat and India at large, but you have chosen this college with a purpose and it is this purpose which this College has a mandate to realize through your efforts. The time will fly fast enough before you realize that you have become an executive at a multinational corporation, have started your own venture aiming to trade carbon credit through fancy issue like climate change, have started selling best quality goods through a retail store giving tough competition to the mall-culture of today, or opening a consultancy practice to rejuvenate the multi-crore project of the well-publicized diamond park in surat. We at the Gujarat National Law University try to inculcate a culture whereby the lawyers provide integrated legal advise. You, in another profession, will be required to provide business advise from floating an idea to establish a business to make a hostile takeover abroad to close the business in turbulent times.
Study the legal aspects of your profession in a meticulous manner. You will be required to study contract act of 1872, sale of goods act of 1930, companies act of 1956, and latest consumer protection and cyber laws. Equally, you can not forget to pay full attention to the factories act, trade unions act, industrial disputes act, payment of wages act, compensation act and a whole range of labour laws.
In closing, I would urge the Vice-Chancellor, the Principal and the academic community to offer a specialized course on ethics and values during the next two years of your stay at this college.
Is it too late to introduce ethics course? To this, I am guided by the fact that the core of a student’s character would already be formed by the time they reached higher education institutions. Therefore, continuous intervention would be needed right from childhood. Some of you are, perhaps, in the infancy stages of business world, hence, this reminder would be very useful throughout your career. To those who are already in the business, I may say that the business leadership should endeavor to create and enforce a set of values for their employees to adhere to. This is the larger problem as many students who actually imbibe the importance of ethical business activities find that the real business world is very much different.
At Harvard Business school this year about 160 from a graduating class of about 800 have signed “The MBA Oath”, which its student advocates contend is the first step in trying to develop a professional code. May I humbly request the authorities to follow this practice at this college too and set up an example in the whole of Gujarat? At Columbia Business School, all students must pledge to an honour code: “As a lifelong member of the Columbia Business School community, I adhere to the principles of truth, integrity, and respect. I will not lie, cheat, steal, or tolerate those who do.” The code has been in place for about three years and came about after discussions between students and faculty.
In the end, let me mention that ethics and moral values are inseparable elements of a successful business organization or a career. I thank you for your attention and wish you all the very best in your studies and careers.
Bimal N. Patel