4 ethical attitude of managers

Ethical Attitudes of Ethical Attitudes of Indian ManagersIndian Managers

Dr Subhash GuptaDr Subhash Gupta

Environmental Variables Affecting Environmental Variables Affecting Management FunctionsManagement Functions

National VariablesEconomic system Physical situation

Legal system TechnologicalPolitical system know-how

Socio-cultural Variables

ReligionEducationLanguageCultural Variables

ValuesNormsBeliefs

AttitudesWorkTimeMaterialism

IndividualismChange

Individual and Group Employee Job BehaviorMotivation CommitmentProductivity Ethics

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INGREDIENTS OF ATTITUDE

1. Ethics, especially in business.1. Ethics, especially in business.2. Integrity.2. Integrity.3. Responsibility.3. Responsibility.4. Respect for law and order.4. Respect for law and order.

5. Respect for the rights of 5. Respect for the rights of others. others.

6. Hard work.6. Hard work.7. Prudence.7. Prudence.8. Will of super action 8. Will of super action ..9. Punctuality.9. Punctuality.10. Planning.10. Planning.


THE VALUE OF ATTITUDETHE VALUE OF ATTITUDE

In poor countries, only a minority follow In poor countries, only a minority follow these basic principles in their daily these basic principles in their daily lives. lives.

Therefore, we are not poor because we Therefore, we are not poor because we lack natural resources or because lack natural resources or because nature was cruel to us. nature was cruel to us.

We are poor because we lack ATTITUDE. We are poor because we lack ATTITUDE. We lack the will to comply with and We lack the will to comply with and

teach these functional principles of rich teach these functional principles of rich and developed societies.and developed societies.

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Indian ManagersIndian Managers

An average Indian manager represents a plausible picture of the average Indian’s resistance for change, his willingness to delegate but unwillingness to accept authority, his fear of taking an independent decision, his possessive attitude towards his inferiors and his abject surrender to his superiors, his strict observance of rituals and his disregard of them in practice, his preaching of high morals against personal immorality, and his near-desperate efforts at maintaining the status quo while talking of change.

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Dealing with BureaucracyDealing with Bureaucracy

Ninth most corrupt country in the Ninth most corrupt country in the world.world.

Pervasive corruption linked to Pervasive corruption linked to excessive control and unfulfilled excessive control and unfulfilled demanddemand

Red tapeRed tape Widespread tax evasionWidespread tax evasion


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KPMG Fraud Survey 2010KPMG Fraud Survey 2010

Ineffective control systems and Ineffective control systems and diminishing ethical values are diminishing ethical values are key contributorskey contributors

Volatile economic conditions Volatile economic conditions coupled with increasing coupled with increasing business and technological business and technological complexities have led to complexities have led to increased opportunities for increased opportunities for fraud fraud


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KPMG Fraud Survey 2010KPMG Fraud Survey 2010 Ineffective whistle-blowing Ineffective whistle-blowing

systemssystems Lack of objective and Lack of objective and

independent internal audit independent internal audit functions with forensic skillsfunctions with forensic skills

Inadequate oversight of Inadequate oversight of senior management activities senior management activities by the audit committeeby the audit committee


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PricewaterhouseCoopers' Economic PricewaterhouseCoopers' Economic Crime Survey 2009 Crime Survey 2009

Percentage of Frauds detected through various toolsPercentage of Frauds detected through various tools Internal Audit -Internal Audit - 17%17% Tip-off (internal) Tip-off (internal) 16%16% Fraud Risk Management Fraud Risk Management 14%14% By accident By accident 13%13% Tip-off (External) Tip-off (External) 11%11% Whistle Blowing Whistle Blowing 7%7% Suspicious Transaction ReportingSuspicious Transaction Reporting 5% 5% Corporate ScrutinyCorporate Scrutiny 5%5% Rotation of personnelRotation of personnel 5% 5% Other Detection methodsOther Detection methods 4% 4% By Law enforcement By Law enforcement 3%3%



Excellence in Corporate Governance

Corporate Excellence

Social Excellence

National Excellence

Excellence in Corporate Governance leads to National Excellence


WHAT MAKES OUR LIVES 100%?WHAT MAKES OUR LIVES 100%?

AA BB CC DD EE FF GG HH II JJ KK LL MM NN OO PP QQ RR SS TT UU VV WW XX YY ZZ

11 22 33 44 55 66 77 88 99 10101111121213131414151516161717181819192020212122222323242425252626

AA TT TT II TT UU DD EE11 2020 2020 99 2020 2121 44 55

KK NN OO WW LL EE DD GG EE

11111414151523231212 55 44 77 55

HH AA RR DD WW OO RR KK

88 11 1818 44 2323 1515 1818 1111

SS KK II LL LL SS1919 1111 99 1212 1212 1919 =

=

=

=

82

96

98

100

Let each letter of the alphabet have a value equal to its sequence in the alphabetical order:

...and always remember... Most significant change in a person’s life:

change of attitude A positive attitude is not a destination: it

is a way of life Our lives are reflections of our attitudes A positive attitude is like a magnet for

positive results Right attitudes produce right actions A creative attitude is the fuel of progress

and growth ATTITUDE, NOT APTITUDE, DETERMINES

YOUR ALTITUDE!


Professional EthicsProfessional Ethics

Professionals:Professionals: are experts;are experts; use expertise responsibility;use expertise responsibility; belong to a professional order.belong to a professional order.

Why professions?Why professions? Easier to identify competence.Easier to identify competence. Can identify incompetence before it is Can identify incompetence before it is

too late. too late. Managers clearly needs professionalism.Managers clearly needs professionalism.


Professional EthicsProfessional Ethics

Professional obligations are narrower Professional obligations are narrower than ethical duties in general.than ethical duties in general. The whole point of a profession is to The whole point of a profession is to

establish a reputation (and live up to it).establish a reputation (and live up to it). Professional conduct is what the Professional conduct is what the

reputation leads people to expect.reputation leads people to expect. Determining professional obligation is Determining professional obligation is

more a matter of sociology than ethics.more a matter of sociology than ethics.


Business as a Profession?Business as a Profession?

““Professional” duties of business Professional” duties of business managers and directors have been managers and directors have been narrowly construed.narrowly construed. Strictly a Strictly a fiduciary fiduciary duty to owners duty to owners

(investors, stockholders).(investors, stockholders). Fiduciary duty is strictly Fiduciary duty is strictly financial financial - make - make

lots of money. Not allowed to think about lots of money. Not allowed to think about ethics if it impedes profit.ethics if it impedes profit.

This protects fiduciaries from frivolous This protects fiduciaries from frivolous lawsuits.lawsuits.


The Business View The Business View

If the firm can’t compete, managers If the firm can’t compete, managers will get the blame.will get the blame.

Quality and safety raise the price of Quality and safety raise the price of the product.the product. Ideally, the consumer decides how to Ideally, the consumer decides how to

balance quality and safety against cost.balance quality and safety against cost. But quality and safety often cannot be But quality and safety often cannot be

evaluated until long after the purchase.evaluated until long after the purchase.


CorruptionCorruption

KickbacksKickbacks A purchasing agent may receive A purchasing agent may receive

payments from a supplier in exchange payments from a supplier in exchange for a contract.for a contract.

This is corrupt in the West because it This is corrupt in the West because it implies conflict of interest.implies conflict of interest.

The purchaser is supposed to consider the The purchaser is supposed to consider the company’s interest, not his/her own.company’s interest, not his/her own.

Decisions are based on transparency: the Decisions are based on transparency: the bids, information about the bidders, etc.bids, information about the bidders, etc.



In another system, one does business In another system, one does business with a person, not a company.with a person, not a company.

Business is based on a long-term Business is based on a long-term relationship that builds trust.relationship that builds trust.

When there are problems, it is no use to call When there are problems, it is no use to call a lawyer. One must rely on the relationship.a lawyer. One must rely on the relationship.

It is therefore in the company’s interest for It is therefore in the company’s interest for the agent to build these relationships. There the agent to build these relationships. There is no conflict of interest.is no conflict of interest.



The kickback makes it clear that the seller is The kickback makes it clear that the seller is serious about the relationship. If he has serious about the relationship. If he has invested in the relationship, he is unlikely to invested in the relationship, he is unlikely to disappear when there are problems.disappear when there are problems.

In some parts of the world, kickbacks In some parts of the world, kickbacks are written into the contract.are written into the contract.

A curious result of imposing the foreign idea A curious result of imposing the foreign idea of a written contract.of a written contract.

A contract presupposes a universal A contract presupposes a universal framework of rules and justice, in which framework of rules and justice, in which most cultures do not believe.most cultures do not believe.



NepotismNepotism Your associates may ask you to employ Your associates may ask you to employ

their relatives.their relatives. This is often unethical in the West due to This is often unethical in the West due to

conflict of interest.conflict of interest. It is standard practice in much of the world.It is standard practice in much of the world.



In many cultures nepotism has In many cultures nepotism has advantages.advantages.

The boss is intimately aware of abilities and The boss is intimately aware of abilities and can assign duties accordingly.can assign duties accordingly.

Duties are determined more by direct supervision Duties are determined more by direct supervision than written job descriptions.than written job descriptions.

The authority of an elder family member can The authority of an elder family member can induce relatives to produce more than induce relatives to produce more than others with greater talent.others with greater talent.

The main reason for nepotism is the The main reason for nepotism is the primacy of the family.primacy of the family.



BribesBribes Definition varies.Definition varies.

Many view a kickback as a “commission,” not a Many view a kickback as a “commission,” not a bribe.bribe.

A thank-you gift may be viewed as gratitude A thank-you gift may be viewed as gratitude rather than bribery, even if there is some quid-rather than bribery, even if there is some quid-pro-quo.pro-quo.

Consequences vary.Consequences vary. In China, bribery can be punished with death by In China, bribery can be punished with death by

firing squad.firing squad. In Turkey, the police ask you to pay them a bribe.In Turkey, the police ask you to pay them a bribe.



Frequency varies.Frequency varies. In Singapore, no one dares.In Singapore, no one dares. In China, it is ubiquitous.In China, it is ubiquitous.

Bribery may or may not be corrupting.Bribery may or may not be corrupting. In South Korea, executives give white envelopes In South Korea, executives give white envelopes

full of cash to government officials as a normal full of cash to government officials as a normal part of doing business.part of doing business.

The bribe assures the government official that the The bribe assures the government official that the executive will abide by regulations to avoid losing a executive will abide by regulations to avoid losing a relationship in which he has invested.relationship in which he has invested.

Not necessarily corrupting, although exposure brings Not necessarily corrupting, although exposure brings loss of face.loss of face.



In Japan, bribery is corrupting because it In Japan, bribery is corrupting because it undermines group loyalty.undermines group loyalty.

In China, it is corrupting because it shortcuts In China, it is corrupting because it shortcuts guanxiguanxi and weakens government power. and weakens government power.

In Malaysia and Indonesia, unclear.In Malaysia and Indonesia, unclear. In Russia and eastern Europe, an In Russia and eastern Europe, an

unmitigated evil.unmitigated evil. In Africa, bribes so inflate the cost of doing In Africa, bribes so inflate the cost of doing

business that the economy is crippled.business that the economy is crippled. In India, government officials could not In India, government officials could not

subsist without side payments.subsist without side payments.



THE ICEBERGTHE ICEBERG

HOW MUCH DO WE SEE OF AN HOW MUCH DO WE SEE OF AN ICEBERG?ICEBERG?


THE ICEBERG iiTHE ICEBERG ii

•ONLY 10% OF ANY ICEBERG IS VISIBLE.

•THE REMAINING 90% IS BELOW SEA LEVEL!


THE ICEBERG iiiTHE ICEBERG iii

SEA LEVEL

10 %

90 %

VISIBLEABOVE SEA LEVEL

INVISIBLEBELOW SEA LEVEL


THE ICEBERG ivTHE ICEBERG iv

The Iceberg phenomenon is also The Iceberg phenomenon is also applicable on human beings…applicable on human beings…


THE ICEBERG vTHE ICEBERG v

SEA LEVEL

KNOWLEDGE&

SKILLS

ATTITUDE

UNKNOWN TO OTHERS

KNOWN TO OTHERS


THE ICEBERG viiTHE ICEBERG vii

SEA LEVEL

BEHAVIOUR

VALUES – STANDARDS – JUDGEMENTS

ATTITUDEMOTIVES – ETHICS - BELIEFS

KNOWN TO OTHERS

UNKNOWN TO OTHERS

Thank Thank youyou

4 ethical attitude of managers

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