“Matter of ethics and governance” – 19 March 2013

The matter looked simple on the surface. A salesman has just closed a deal, and there was an overall happiness that a good deal was sealed with a client that had refused to have any dealings with the company. Still, the big boss did not seem happy. He was rather grim, and did not congratulate the Sales and Marketing staff for its success. So, one evening 2-3 days after the deal was closed, Dinkar, the Deputy General Manager of Sales and Marketing section called on the big boss, a middle-aged man who had been serving the company for well over 25 years. “What is the matter, Sir? You don’t seem happy with our new deal! Is there anything not right?”, he asked.

The big boss looked up, smiled, and asked Dinkar to sit down. He said, “Look Dinkar, that a difficult client has been won, is a happy event for us. But I am not quite sure if we have handled the deal correctly. For, we have granted to the new client certain concessions which we have never given to anybody else. Not only did we cut into our own profits, but also gave him the impression that we were madly in need of business. Is this the real situation on the ground with us?”

Dinkar fell silent. He pondered, and realised slowly that the big boss had a point. He said, almost inaudibly, “Sir, we are not bereft of business. Our products have a decent market. But in this deal, we acted as if we were madly in need of some break at whatever cost. Now I realise this. We should have consulted you before we closed the deal. But we were euphoric that we had done smart work.” The big boss looked rather surprised. He asked, “If this was so, then why did you not think about this aspect before hand?” Dinkar asked back, “Sir, shall we cancel the deal?” “No. Never do that. That will mean sliding down the ethical scale all the more. That would be a beginning of our end, Dinkar,” the big boss said. “Then, what should we do?”, Dinkar wondered. “Yes, that is the big issue,” the big boss said. He then took a sip of coffee and continued, “Dinkar, whatever has happened cannot be written off. So, we will have to have a serious rethink of our goals and the methods of achieving those. This cannot be done by only two of us; we will have to take the entire senior staff into confidence and discuss with them the possible approach we should take in these tough times of recession. We cannot rush into taking some off-hand decisions. We will have to take a pause, and then ponder. And remember, when a company starts acting in a senseless haste to close deals, its bad days are in looming large over the horizon. So, let us take time to think correctly.”

This could be the story for many. In times of recession, many companies feel tempted to seal the deals rather in a hurry without thinking about the big picture or about the ethical issues. There is a rush to corner whatever money the market is offering. And that is when the revenues start dipping. And then, in order to justify the decisions, companies start expressing helplessness against the market forces. On most occasions, these justifications are only escapisms. For, there are companies that do not make, so many and unnecessary compromises with their creed, when going is tough. They hold on and eventually win.

There also is a possibility that some companies may fake a situation in a mental block on the basis of half- baked information about what is happening in the market. Such companies, too, can mess up ethical issues with so-called practicable solutions. In that state of unspoken panic, they think of making money at any cost. Such companies forget what Henry Ford Sr had said: “A business that makes only money is no good.” The grand old man was talking about the larger issue of ethical philosophy of business.

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