Each society needs to judge for itself how much it entrusts to the government — powers, duties, responsibilities. This evolves over time. Assessment of a system is always related to a point in time. What is relevant and good at a particular point of time may be irrelevant and even harmful at another. The relevance of some of our Vedic injunctions in the present day bring out this point. All the teachings have an intrinsic permanent value and a temporal component — the stamp of the milieu in which the teachings were made. The latter cannot remain frozen over time. When one considers how to improve the system, one has to operate within a framework of certain ‘givens'. Absolute honesty and integrity or absolute adherence to rules can exist only on paper. And no political setup can ensure total compliance. In any society, there is always a compromise to bring about a balance of varying objectives. For example, efficiency and social justice, growth and equity, etc. As Professor Sarkar says, we cannot rubbish the government's power to make rules. The attempt should be to make rules that are by and large acceptable to the people so that a reasonably high compliance can be expected. Also, the rules should not be addressed to the dishonest, thereby making it difficult for the honest to comply.There has to be a balance between total selfishness at the cost of the society or public interest and total compliance at the cost of hurting oneself. In the olden days, a balancing factor was provided by moral values, convictions and fear of unpleasant consequences. Slowly, this is getting decimated. This is part of the cultural shift now experienced, that Professor Sarkar speaks of. The emphasis has to be on imparting moral instruction at an impressionable age. And there should be a system of rewards, side by side with penalty and deterrence. There are areas where implementational problems can be overcome by suitable changes in policy. The older generation will remember the rule requiring registration of wireless sets in the post office by paying a small fee. The basic objective was to raise revenue for the Department of Communications. Very few complied with the rule. Then the policy was changed. By suitably adjusting the rate of excise duty, the government could raise the same amount of revenue. Distribution of the revenue between the two departments of Revenue and Communications was an internal matter. This at once relieved the burden on the public while safeguarding the government's revenue. This underscores the need for ingenuity and innovation among policy makers.Corruption is related to the value system adopted by the society, including all three wings of government — executive, legislature and judiciary. It is wrong to assume that better compensation alone would reduce corruption. It is public experience that there are a large number of well-meaning, honest, helpful individuals in bureaucracy, very poorly paid, whose actions cannot be swayed by the lure of money. There are areas where specific measures can be taken to reduce corruption. Technology has helped to some extent — railway and air ticketing, obtaining a passport, online payment of tax, etc.In the final analysis, whether one chooses to be honest or otherwise depends on the attitude, which one acquires from family, friends and workplace, as also from the training one undergoes. Of the three components of training — knowledge, skill and attitude — the last is most difficult to impart. Mostly it has to be by personal example. That is where, in JK's case, the action of the bank manager to get JK's signature forged would have impacted the attitude of the staff, not merely in the bank's dealings but in their dealings with the society at large.In Manas Modi's case, the villain or the tilting event was the failure of the system to bring into the open the hollowness and mischievous nature of the allegation when he objected to the payment for the computer before its full installation. What can be done to tweak the system so that such cases do not become a common occurrence? The system should have the mechanism to sift complaints to expose mala fide allegations. It is difficult to suggest a fit-all solution, as each institution has to make the best arrangement to get this result.One important aspect is to make sure that the conviction in the majority of the educated as well as the uneducated that nothing works without a mamool or hafta is taken away by projecting cases where things get done fast and in a routine manner. Undue publicity and excessive hype over cases of corruption to the total exclusion of good work done by different wings of the government is harming the system. There is a case, as Dasesh seems to hint, to curb the "over-performing" fourth estate in its trial by media, killing well-intentioned proposals, which is causing serious injury to the system.S. Venkatarama Iyer is a retired director general of Central Economic Intelligence Bureau, and was special secretary to the government of India(This story was published in Businessworld Issue Dated 15-08-2011)
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Shabad's had a normal day at office and university. Our everyday social milieu is rife with concern for the impoverishment of our ethical lives. Simultaneously we fret and thrash about with the moral catharsis that has a stranglehold on Indian public life. Occasionally, we do recognise the continuity between the latter public structural debates and our quotidian lived experiences. But our inability to galvanise our collective angst into a new secular intercultural ethical framework that establishes our baseline expectations of each other has prompted a serial bloodletting with no respite. Shabad's interlocutors help him traverse the social realms of the workplace, the university and our public institutions with keen insight. These vignettes illustrate and highlight the social complexity in which we are called to make ethical judgements. The intractable nature of the conversations in this case study suggests that our existing ethical frameworks are inadequate and invite us to transcend the limitations of our existing ethical imagination.JK finds himself dragged from the bank to the liquidator and then through the courts for 13 years. The bank officers glibly forge his signature on a loan document. JK does not deny that the document should have been signed by him in the ordinary course — he only laments the failure of the bank to observe protocols of due diligence. The liquidator is reluctant to initiate the liquidation process and would rather have this done by a collusive third party. JK has no doubt that the company should be liquidated, but is surprised by the convoluted process by which this is done.He concludes that both instances teach us that despite an adequate law and elaborate institutional practices to implement the law, the ‘people' who man the decks are irretrievably compromised, and pervert the functioning of the system. The dichotomy between systems and people is often put forth as the root cause of corruption. This dichotomy admits varied combinations: perfect systems, corrupt people; corrupt systems, corrupt people; corrupt systems, perfect people. JK proposes the first combination as the best explanation for the behaviour of the bank and the liquidator. Readers may not be convinced of this diagnosis and may prefer other combinations. In any event, JK is despondent that endemic corruption in the private and public sector condemns us to a land of no hope.The argument from culture that JK rehearses in this case tries to explain too much. We understand that the sub-cultures of our sub-continent have an elaborate vocabulary for liaison services: gift, baksheesh, mamool, hafta and so on. Our vernacular tongues give accounts of practices without the moral odium that may be attached to bribes and corruption. While there is no doubt that we need to draft culturally sensitive laws, it would be a mistake to assume that all local cultural practices are priori legitimate and hence should be sustained by laws. This confusion about the relationship between our laws and customs has hobbled our ability to envision a way out of our present corruption imbroglios.Shabad went to his college only to lose himself in the corridor conversations on the ‘supply-chain management' set up by Manas Modi, the head of the computer lab. Modi is right to insist that he operates on a micro-scale when one compares this with the goings on in Bellary in Karnataka. However, he concludes that ethical judgements are dependent on the scale of operations. His account illustrates why economic imperatives cannot substitute moral ones. If we are to sacrifice all our ethical values at the altar of economic efficiency or wealth maximisation, we loose our ability to build a civil society.Professor Sarkar oddly characterises this as an instance of prioritisation of individual needs over societal norms. It seems from Modi's explanation that his supply-chain management is essential to meet the multifarious needs of his family. By placing his family as the relevant unit in his moral calculus, the needs of the university or even society at large are rendered irrelevant in our everyday decisions. This privileging of family or the caste, kin and religious group as the relevant node at which we make ethical judgements is a significant aspect of how we reason ethically. But our social norms are not shared by the society at large — in other words, what is good for my family is good for me!It is the absence of an inter-cultural secular normativity that prevents us from agreeing upon shared ethical obligations. Unless we are able to make this connection between ethical transgressions and the absence of a secular inter-cultural ethical framework in our wider structural social inheritance, we are unable to correctly diagnose and understand our present condition. If we continue to explain away corruption — both petty and grand — as inextricably tied to our inefficient laws or our resistant cultural mores, we must brace for many decades of quiet desperation. Sudhir Krishnaswamy is a professor of law at Azim Premji University, Bangalore, where he co-ordinates a research initiative on law, governance and development(This story was published in Businessworld Issue Dated 15-08-2011)
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Shabad Kher lay on his bed shooting the soft, stuffed ball into a makeshift basket he had hung on the wall above the doorway. This was his way of contemplation every night when he lay there thinking between shots.Shabad was a final-year student at Arsha College of Business Studies, and was currently completing a four-week internship at Ably-T.The week before had seen an intense examination of Jaikishore Valia's (JK's) tryst with systems and regulations and the inability of people to implement systems. This morning, he said his goodbyes to everyone but lingered at JK's room. "We actually spend so much money on setting up committees and panels and what not, we develop very foolproof systems, yet we either do not implement them or we look the other way. I find it difficult to think that we are an innately corrupt, lazy, dishonest people, as Mr Mathur suggested last week. There has to be something to our culture, our history..."JK: I think we are essentially selfish. It may arise from many invasions and unsolicited occupation of our territory.Therefore, we are more prone to looking out for ourselves than others.Shabad: Looking out for ourselves... hmm... Yet, you did not look out for yourself, sir, when the system dragged your case for 13 years, 13 years of your prime time... why didn't you? ( see Malba, Mud Cakes ..)JK: It's our wiring. Some of us cannot and some can. Those who can, do it marvellously. They have an amazing set of justifications and rationalisations and reasons. It works for them. It does not work for other people.Shabad: So do you recommend it, or not?JK: There is nothing to recommend or not recommend. Finally, you will do what you will do. And I will do what I will do.Shabad: And education?JK: Education is just an ingredient. You can choose to not apply it. That also works for some people. This whole intensity of ‘oh! we must be value-driven, etc.', cannot be a dogma. You should not be ‘value driven' if you don't feel like it. If you want to go rob the system, you must go rob the system. Values have to come and rest in you. For that I believe the insides have to be expunged of desire to rob. Both cannot coexist. So go, finish it off!Suddenly they both looked at each other, and Shabad smiled, "That was a bit startling, ha ha, but I am getting your point slowly. I don't know if I have values and all that, but I am in no mood to rob anyone."JK nodded in a dancing sort of way as his whole body moved in rhythm and he said, "You don't have to overtly rob, Shabad. Often we do little things to rob, and then create fabulous rationalisations. Remember this company that Abhay Mathur, (JK's colleague now, earlier business partner) and I had to shut down? I had also mentioned that the bank had declined to receive the goods on which it had a lien, because they, in fact, did not have a procedure for receiving the goods and recovering the dues?"Okay, so then another curious thing happened. My bank had asked me to sign some papers — papers through which you sign away all assets to cover a loan. Since you are starved of money, you will sign any paper, which the bank retains. Now, as per banking rules, every year the person who has taken the loan has to confirm the balance amount outstanding, in writing, to the bank. My banker forgot to take these pre-dated letters, nor did I know about it. "Matter rested, for a few years we paid instalments, then crisis hit, we stopped repayments, I went bankrupt, and there was a default. There is a law of limitations that orders that if in a given year I do not confirm balance, then within three years the bank should move the court. The bank forgot to go to court when I defaulted and when they realised... it was five years. So what they did was pull out one of the blanks, signed for me (forged), and a date was created to show that I had confirmed the balance ‘within three years'. Unfortunately, the date that the bank put in there was a date when I was in the US! So when the bank chose to go to court against us, I pulled out proof, and said that it was a fraudulent document and you cannot go to court against me."Simultaneously, I asked that they please consider writing off a part of my loan as there were many precedences. But they refused. Finally, when I suggested they had committed fraud on me by forging my signature, an act that pulled the rug from under the very faith that the common man places on a bank, they relented."Having got that admission from them I said to my bank manager: ‘I had no intention to slap a suit on you; nor did I want you to write off any part of my loan. I have my education and I will repay, so allow me to pay in three years with post-dated cheques. Also, I the citizen have an ability to be honest which the banking system as a collective did not manifest.' I met the regional manager — I believe in feedback — and said to him, even if you prove there was no motive to defraud, it can be shown as negligence — and your guy will get caught for forging my signature on the document."Now, why am I telling you this? To show you how we train our subordinates through petty acts like this. He was not sorry or surprised. His response was ‘intention was to speed up process'. Now, it was not he who had ‘forged' my signature but his lowest clerk. This is of course the same ‘servant-the-menial' principle, which means ‘mean acts by menials and I remain untarnished therefore'. Oh no, he didn't think he was guilty of training his team in frauds."Shabad: He was looking out for himself...JK: You got it! You got it!When everyone looks out for himself, he also demolishes many other systems and processes. Recall the liquidator shirked his duty, looked out for himself, shied away from doing due diligence because it would add to his work! So he makes me do a silly thing like get my own friend and partner to sue me, so he could show ‘see they did not have the wherewithal to survive'. This was easier for him, to sit at his desk and write the order. But where then is his role as a liquidator, where he can make a judgement?break-page-breakThis is not to do with the system or the law but the constituents of the process — how they think and how they respond. And how they abuse the law to ‘look out for themselves'! See how this very ethos also injures the way we train our people. When I train you, I have to train you to not just be a good performer; good performance also includes your ability to respect that you are connected to million other people in terms of duties and rights. That you don't stand alone. That you are connected to everybody in the world and you owe a duty to them. The boss asking his subordinate to forge is training. The subordinate not hesitating is learning!Shabad: In that case, sir, we are doomed it seems. In every walk of life, there is now institutionalised corruption. My dad says these days a company that needs to get land registered or an order passed or a duty waived or a permission granted unconditionally, works through ‘consultants' who do all this for a price which the company pays as ‘consultancy fees'. Even product ratings are engineered through ‘consultants' who pay people for endorsing brands...JK: True. In short, nothing is real. Everything is engineered, ‘adjusted' for a price! Stylishly called jugaad.Shabad mulled over this as he shot more intense baskets. The next day, as he entered campus, students were talking about Manas Modi, the head of the computer lab — he had been asked to go. The students whispered, "Arre, I thought he was like us..."So when Barun Sarkar, their professor of behavioural studies, entered the class, the students pressed him for the truth."Hmm," said Sarkar. "Let us set aside ‘truth and lies'; let us look at cause and effect... yes?" For Sarkar knew more...Seven years ago, too, Modi was in charge of the computer section. That year he had ordered a computer for the college. When the huge computer arrived and was test run, it would not perform. So he held back the payment. While they fought over this, another director ordered that the payment be made but Modi objected saying that the machine is not fully installed, so why pay? Angry, the supplier alleged that Modi was angling for a bribe and told the college as much.So the college put Modi under surveillance, which meant no promotions or increments. Nor would it resolve the issue, but held him guilty of misdemeanour. Four years passed, nobody took up Modi's case. That was when Sarkar joined Arsha College. He said to the management, let us sack him, finish it off, then we do not have to either promote him or solve his case. Call it moral turpitude and close his case. But they did not!Having summarised it, Sarkar said, "They felt they had silenced him as a punishment. But the fellow is doing well. Has two cars and has booked a flat somewhere. He earns more from his suppliers who give him a lot of happy money."Sarkar's class gawked in confusion and shock when he said, "Okay, so I asked him why are you doing this and he said, ‘My children, who were 3 and 5 years old in 2004, are today 11 and 13. My wife, who was 27 then, is 35. Fees have gone up, we have to buy bottled water as the tap water is unclean; kids wanted a PS2, wife wanted a TVS, plus she has developed some health conditions... our monthly bill is crazy... who will pay? I know I did not do wrong in 2004. It is wrong to punish me, not just unfair. So I will now punish the company. I had to pay capitation for school admission for my little one, Rs 22,000; my older one was teased by his friends leading to behavioural disorder... 14 counselling sessions at Rs 1,200 per session. Who will pay?'"So he decided to take to kickbacks.... He says, ‘I am not doing Rs 500 crore and Rs 2,000 crore like some people. And you don't say anything to them... why are you grudging my Rs 3-4 lakhs?' So, a perfectly honest man, chose crime to survive. This is life's story!"A stunned silence fell and then a student asked, "Are we as a society ill-formed? Unformed? Deformed? Malformed?"Sarkar: Well... it's individual versus society. When we form societies we give up some autonomies to allow for society to govern us. An individual will instinctively assert his autonomy when the fabric of the society is not strong. When the society does not do much for you and you think you do much more for society, then you think it is okay for you to break the rules. Or if you think others have more autonomy and if they are able to get away with things, then why should you not be able to get away with things? The whole Indian thing about jugaad — or ‘manage kar lenge' type innovation to bypass systems — is about rationalising the breaking of rules by saying ‘Oh because the whole system is like this, we have to do this, if not, we would have done it differently.'Which is a reality, too, because the same people who surreptitiously spit on the street here, will not throw paper on the street in Singapore. Everybody justifies their autonomy and their need for it by saying everybody else has autonomy, everybody else breaks rules so why not me?Shabad: Sir, why would you say that Modi Sir's jugaad against a corrupt and unfair system, is wrong? In the end analysis, does it really matter where you provide for your family from? Sarkar: So I have black money because I don't think you are spending my taxes in a way I think is right, hence I will look out for myself and hoard my taxes and use them to provide myself conveniences? People quote Rajiv Gandhi and say, ‘only 0.1 per cent of the rupee reaches the poor.' But then isn't that how we got our BMWs with half cash payments?Shabad: So we keep on following the Ramdevs to say black money is outside the country, whereas most of the black money comes back into the economy as cash buying goods? Wow!Sarkar: True. Just as, if I want my child to celebrate his 21st birthday, I say alcohol to hona hi chahiye, but when somebody else's 20-year-old mows down six people in a drunken state, we complain the law is being flouted. So to answer your question, is society deformed... we form it by negotiating rules. Non-implementation is also negotiating.Chanakya: So Modi sir sought his own autonomy. Modi was only taking care of himself. And mind you, sir, he was working here for far less. He only took what they owed him anyway.Sarkar: We all try and get away with rules in our own ways. My generation has grown up with so many rules, we found the uselessness of rules as well. Most people in their 50s today have lived with rules that were senseless in the pre-1990s scenario. For example, I was in a school that wanted me to wear hair above my ears. It was pointless. I should have been allowed to wear my hair the way I wanted.break-page-breakMany people in the pre-1990s bought their first scooter by paying white money in black. Yes, that was how black became the new white. Most people bought their first properties paying cash. Most people bought their first CTV during the Asian Games (1982) paying a premium in black. Most people have watched blockbusters buying tickets in black. My first transistor was smuggled into this country because my mamaji did not pay duty for it! One has grown up with a disregard for rules.Shabad: Not very different for us, sir. We too are seeing a disregard for ethical governance. Most of our institutions are run on the premise that rules can be broken if the situation requires — from banking to judiciary to police to health all our institutional processes, there is no faith in rules. A minister after swallowing thousands of crores of taxpayer money says, ‘I did not even take as much as people before me did!' Chanakya: So we have a brand war there. One political party versus another. Like the Coke-Pepsi war, it is always initiated by the opposition which challenges and the ruling government has to defend. Then, there is an offensive followed by a counter defensive... But I ask, can you blame the government for not implementing rules? The government too has lack of faith in itself as much as the people have a lack of faith in the government. The people don't have faith in the governance. So where will you establish rules? Look at how the Lokpal Bill is being tossed around! Dasesh: It is quite messy, sir. The government's public behaviour, attitude to implementing the law, name calling... very embarrassing... how can you bring yourself to accept such a rulership? Or even their rules? Like this whole thing about raising the age for drinking... the media's power has sort of ‘frozen' the decision against the government. All this is paid for, I am sure. There are actors coming out vocally in print rubbishing the move to raise the age bar! I feel uneasy.Chanakya: I agree, sir! Paid endorsements of a product is easier today because the visual media delivers the verdict instantly. Then, there is so much money today! Paid media is quasi-legal.Sarkar: We may have so many reasons to dislike the government, but we cannot rubbish its power to make laws! When the government makes a law, and the media immediately rubbishes it, then a healthy verdict is lost. So what we see is, because you don't agree with me I will laugh at you, I will invite you on the chat show but will not let you talk!There is a WHO report on alcoholism. How many journalists have run stories about that? How many young people have read this report? And this report came out in 2011!India is the largest manufacturer of alcohol in the world and is growing at a very high rate. The documented and the non-documented use of alcohol have registered huge increases. Women are drinking more. Earlier, women drank less than men, and they drank wine only. Now there are numbers to say that women drink as much as men and binge on the same number of drinks.In 10 years, the cost of healthcare because of alcohol is going to rise by a few billion dollars. Who will foot the bill? These models and actors who are taking money to endorse drinking? Shabad: Sir, but grown-ups are already drinking, how will curbing the young change that? Sarkar: It is about a huge lifestyle change. A cultural change that is being brought about, as a result of that: unsafe sex, accidents, violence, road rage, abuse, all these are symbols of it. It is not one generation cribbing against another; it is a cultural shift that we are experiencing. The number of rapes you hear about is a function of passions fuelled in a state of lack of control.Drinking is about relinquishing the use of your intellect. It appears to soften your inhibitions and lets you do what you would not ordinarily do, conning you into a wrong sense of freedom. There is deep danger in that. Youth is the time when you have the spirit to struggle and climb tough mountains. Comfort with drinking leads to loss of perseverance. What kind of nation building is possible, and who will build it?In the past 60 years, we have not spent time, energy and money in building institutions; we have relied upon families to provide support and care. But the family as an institution is failing sadly! The family is only training to look after itself, not the society. When there is no collective Indian pride, what do you call that? Shabad: Looking out for oneself only, sir!Classroom DiscussionHas the speed of the new money led to a governance of innovative jugaad at all levels, everywhere?casestudymeera (at) gmail (dot) com(This story was published in Businessworld Issue Dated 15-08-2011)
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Kapil Shankar greeted the security guard with a warm namaste and a smile as the blue uniformed man in a peaked cap clicked his heels and swished a fabulous salute, and as briskly dropping his hand, he marched away gloriously. As Kapil smiled at his receding form, his 19-year-old son Naman let out a low cry, "Wow dad, that is primitive!" Kapil grinned folding his newspaper and said, "I like it."Naman was home for the summer and on the past many days, both father and son came down to the building grounds for a brisk jog after which they sat on the park bench reading. "It is a law enforcer's nature to want to greet you correctly, just as it is in the nature of our family pandit to greet us with a Jai Ramji ki," said Kapil.But Naman would not agree. "Times have changed, dad. The whole idea of having watchmen and servants and maids... I think is feudal!"Kapil: The security guard is a social necessity since we have a fabulous crime rate. My point is different: behaving correctly in accordance with your profession. I just like the salute, especially when it is done so marvellously. Everything has a manner in which it has to be done.Naman (laughing): That chap even recognises that you love it, because he clicks his heels harder and his salute is like a whiplash! But what do you mean ‘in accordance with your profession'? Is this some caste system thingy?Kapil opened the supplement to his newspaper and pointed to a headline that a certain actress had made: ‘Ramdev is hot, I would like to marry him'. Then Kapil said, "Both the actress and the newspaper have not, in my opinion, acted correctly." Naman: How is it the newspaper's error? She said it...Kapil: The world knows he has a title that goes with his calling — ‘Baba'. India knows we respect saffron. The Baba losing favour during the Lokpal drama was a matter of opinion, not crime. I don't see how the political media gets a licence to rubbish him. Naman: Does it not mean then that the leadership has to behave appropriately, dad? Kapil pondered awhile. The leadership did have a responsibility to behave according to its function, role and appointment. Therefore, thought Kapil, I have to think seriously about that exit interview. "Kapil was the HR head for Taffet India, a fast-growing electronics manufacturer in the market place. Six years ago, Kapil had joined Aniljeet Daman, owner of the Taffet Group. After six years of closely relating to the Damans, the business, the market, the brand building, the strategy and the products, which he had seen grow in front of him, Kapil was quitting.That itself had taken him four months to do. Kapil had struggled and suffered with the residual feelings of the proposed idea. He liked Aniljeet despite everything, and he wished it to be known that he was quitting after deep thought, not just as a reaction to any situationThat was two weeks ago. In his lunch meeting with Kapil, Aniljeet had said, "You know I was kind of expecting something like this to happen. It won't be easy for me to accept your envelope, so we need to get to the heart of why and why not. Your time begins now, haha!"Kapil explained in precise words, "I am going through a kind of a soul searching and I need to exit active working to be with myself, Anil. I know this may sound a bit madcap, but at 48, after working like a donkey for 25 years, I am surprisingly burning out — unlike my dad who worked for 37 years and could not have enough!"Anil: Take my plane and get away to the Bahamas for a month. Good beaches, good food, silence and great weather...Kapil: Anil, I have just come back from a very happy vacation with my family. I got all the break I wanted. It's not that. As long as I have my fingers on the keyboard and the mobile stuck to my ears, I will never dialogue with myself.Aniljeet was getting ready for a meeting with his bankers and had to leave, so he had said, "My dear chap, you get the pieces together in your head and let us keep meeting..."break-page-breakKapil remained deeply thoughtful. He had spoken the dreadful words, no doubt... but was he going to ask for an exit interview according to practice? Anil laughed it off saying, "You keep all those processes for the employees. I don't believe in ritual. We will meet, we will talk and you can tell me how terrible I am, that will be good!"Watching his receding figure, Kapil wondered how could he bring himself to tell Anil that he was beginning to worry about the way the general air at Taffet was all about cutting corners to gain market share? About Taffet hiring and firing for the short term? About Taffet dressing up books of account for the bankers and financial institutions to lead them to believe what was not true about Taffet? That he was tired of working a 19-hour day and often all night? That he did not think that employees should work on Sundays and that as an advocate of a work-life balance he was the most imbalanced? That he was unable to see eye-to-eye with the owner-chairman, Aniljeet Daman, on the business outlook and intent that Anil was suffocating the system with?That noon, Kapil had written to his son, "I quit today. Feel so renewed and good finally!" Naman read more into his father's words. Calling his mother Radhika, he asked "How's dad been, mom? Has he been overworking again?" Radhika: ‘Again'? When had he ever stopped? He has been like the chokra boy of the Damans since we moved here! He always lets the driver off at 7 pm saying ‘Somesh should have a work-life balance.' But his own? When you come home we will have a heart-to-heart chat with dad. It's time beta. He is not doing too well, is all I will say.Naman called his older sister Maansi in Cambodia where she worked with a Global Concerns project, and asked her what she thought. Maansi said, "Dad is tired in spirit. He does not enjoy working at all. He finds it all a huge strain. No no, not physically, but emotionally... I don't know the right word but inside, deep in there, he feels all wrong. He works all the time. They are on the phone to him at 3 am, at 12 midnight; he takes his mobile into the shower; he is BlackBerrying during a movie; he has three mobile phones; he has to battle a lot...Naman: Wow... I find this really thick. Dad tells me how to lead life, how to assess humans, how to this and how to that, but seemingly he is pretty messed up himself!Kapil stood atop Maslow's pyramid with not a road sign that pointed to any road ahead. He enjoyed his work, especially the one to do with building people. But as he was now seeing, building people on an edifice that was weak to begin with was not to be had. Then again, building people when you had a top team with a drive and a drift that was far removed from ethical business purpose, was again not possible.But Kapil's angst was different. Entrepreneurs like the Damans were skilled, good and moneyed. What they lacked was a larger vision. If only they would subscribe to a bigger cause, and align the business and their people towards that, it would be win-win for all. Money was an outcome, a by-product, he felt. The success stories the world talked about were of people with vision and conviction in their ability to reap greater good; they also made money, but incidentally.But at Taffet, Daman's focus was on only making money; purpose was incidental. Which was why the purpose was not even discernible. People had long ago disengaged from purpose and were intensely aligned to making more money.Kapil had joined Taffet six years ago, hungry for a driven management and Aniljeet had painted a glorious picture of national pride and so forth. Which was true, but Anil's routes were getting questionable. Not that unethical people frightened Kapil. In fact, they caused him to watch them more deeply. He had known that men pursuing business often changed track and pursued money instead. But before he knew it, Kapil found himself getting sucked into the family's situations; their dependence on him had been growing, while his disengagement with them was increasing — because he couldn't find purpose, any meaning. ‘This is not what I came here to do,' became the constant irritant in his head. Anil had started off well, or so it had seemed six years ago. "I want to do what Dhirubhai did, bring an advanced generation product for the common man." Enriching their lives, adding value, enabling product development — this is what Kapil was passionate about too. But soon Anil became a different person: the original intention was blurred, his vision had changed...Nothing wrong with wanting to make money, reasoned Kapil, but can that be your mission? But it was Anil's mission. Gradually the entire organisation had become ‘short-termed' in approach. Businesses were taken up — almost as if attacked, then quick monies were made and businesses were sold. The overall management philosophy, too, had evolved to putting off fires, not preventing them. Kapil had slowly begun to get thoughtful. A blurring of events was quickly affecting his own judgement at times. Every so often he would engage Anil to draw him away from a path that was destructive. Once he said, "Animals survive, we have to thrive. The difference between animals and us is we have an intellect. Animals are programmed to react; we are designed to reason, discriminate. Know fair from unfair, leading from misleading, correct from incorrect. Dreams one should have, but we can only project what is immediately realistic and achievable based on current infrastructure and ability." Anil: This is the difference between a middle-class person and me. You can't be adventurous!Kapil didn't take that to heart; his closeness to Anil had earned the latter the licence to say so... yet he cautioned himself in time. He was alert to his growing annoyance, but he (Kapil) never allowed that to flower into indiscriminate anger. How much money does man need? Yes, money is important, maybe he needs $5 billion, $10 billion; good. After that? But alongside we must build a long-lasting organisation, create value by offering products of long-lasting value; build an organisation that people feel proud to be a part of... If we keep that kind of goal post, then people, too, will stretch their potential to attain your goal! But when you place before them goals like ‘just earn money for me, no matter what you do', they will use all kinds of means to earn it for you.That was how Kapil had decided to take a break from everything. But now, over the exit interview, he said to Inder, Taffet's ex-director of production, and now a close friend, "How do you speak to a man who believes that everyone is replaceable, dispensable, etc.? What is the value of telling him ‘I chose to quit because I find your short-termism contrary to sound business ethical conduct'?"Kapil and Anil had deep respect for each other — Anil thought Kapil unadventurous; Kapil thought Anil reckless. Kapil had once told Naman, "He is the kind of person you can watch for a long time and be engrossed. He is like a story in process. There will be a lot you will dislike, but there is an unmistakable dynamism." break-page-breakNaman: Then why are you quitting, dad? Inder had asked the same question and to both he had explained thus: "Because I am so deeply involved in transacting with him as his shadow, I have my feelings involved too. But if it was not me there, or say, if I stand outside the relationship and just watch him, he is very interesting. His understanding of people, markets, money, of everything, is deep and fascinating. He is a self-made man. You can watch him ‘buy' people, he has that Mario Puzo like construct of a Godfather. "For example, I brought in a guy — good chap, good pedigree, good B-school, good track record... and now, within two years, he is doing anything and everything to stay on the right side of the boss, espousing his own cause to get raises and bonuses, becoming a yes man, short circuiting the processes, etc. Now, others want to do the same. And if you make this kind of offer to someone at 32-35, chances are you have bought his soul than his value."Inder: I guess as the HR head, it is a bigger burden on you, no?Kapil: I don't think so. For any functional head, the burden is huge. The marketing head has a promise to deliver to consumers. The head of production is responsible for ensuring the assured quality. But the means you use to achieve it can vary, and when that can be varied by the man at the top with an eye on profit and not promise, you don't really question yourself!The other day, a production chap told me: "I am being compelled to buy this raw material and I know its behaviour in high temperatures. I know that in markets like Delhi, etc., this product will have immense problems. I am pointing it out to them, but nobody is listening... the brand will be dragged down."To make things worse, he goes and shares it with a colleague in marketing. That guy went and quit right in the middle of the product launch stage! He said he would not put his neck on the block. Now, as HR, I have to be witness as well as the accused! What do I do? My struggle with myself is: what is my professional role? I have some ideological issues linked to my profession that I wish to stand by. If I am not able to espouse that beyond a point of influence, then a stage comes when I will abandon my philosophy, my ideology, and do whatever is required to make money. Or I must stick to what I believe in at all costs.So, should I ask ‘what is my professional role'? Or do I ask what is my duty? Which comes first? Point is, both lead to the same answer, because profession will also force you to address, ‘what is my duty'? Say, professional duty replies ‘to meet the goals of my organisation', the next question will be ‘by what means?' By any means. Hence maalik bhagawan hai. Or is it that, supreme to all this is the organisation's goal and means do not matter?That is my process of struggle. To be ever at their beck and call... ethically too..A few weeks ago, Anil asked for a five-year projection. The unit figures had come only on Friday night and to have them ready for Sunday 8 pm, Kapil had to ask Alex Rego, his management accountant, to work on the weekend along with him. Later, when Kapil found out that Sunday had been Rego's little boy's birthday, he felt a certain something that he could not define. Something snapped, broke, crumbled, perished. "Yes, yes, wives go into labour and children have birthdays and elders fall ill. I know that, but I also know that an employer, a senior, needs to have the sensitivity to know a Sunday from a Monday, office time from family time," he said to Radhika as she asked, "Did Alex say anything?"Kapil: What will he say, Radhika? There is a certain middle manager mentality, which is ‘boss bhagwan hai'. My team, my colleagues have never said no to me. Not once. They see me working like a donkey so they feel they should work at least half as much! Unfortunately, I have staff who are so decent, so well-mannered that they will not say ‘no' to me because they know I am under pressure too."The next time he had to submit something in a tearing hurry Kapil said he could ensure this by Wednesday as he could not call people to come to work on a Sunday. Anil's eyebrows shot up. "If I can call you, you cannot call them?" he asked. Kapil recalled looking at a swinging pendulum kind of stress buster on Anil's table, and thinking, what am I perpetuating? Yes, it is pressure on me, but that is my responsibility. If I want to change all this, I have to take the heat and ensure this madness stops at me. That is my belief... but it is affecting me. Because I am resisting him, I am under pressure. My anxiety is I am forcing this culture upon my organisation...Inder: Is this at the heart of your entire angst?Kapil: My problem is that I am not getting a chance to stop the wheel I am on; it is being propelled by my own running and I don't know how to stop it. I don't think there is any way I can stop the wheel.Inder: Are you the custodian of virtues? Kapil: Then who is? Anil is the leader and owns the values of this organisation. But to run it in an ethical and value-based manner is my job! I am the custodian of virtuous conduct here!Suddenly looking up, Kapil asked Inder, "Who do you like? Who do you find likeable? Top of mind, top of mind…"Inder stared, then stammered and stuttered and said simply, "Katrina Kaif?"Kapil smiled and said, "See? We do not even have someone likeable. People in the past hung out with people they found likeable. We hang out with people from whom we earn, and mostly we do not care very much about them from the standpoint of our soul. They are colleagues and we are polite to them, and if they need medical assistance we are ready to admit them into a hospital. Full stop. But we don't have a person we like deeply because we do not have the time to examine all that is around us, with us!To be continuedClassroom DiscussionCan ethics create successful businesses? Can successful businesses espouse ethics?casestudymeera (at) gmail (dot) com(This story was published in Businessworld Issue Dated 29-08-2011)
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Naren Kant walked into his office and was surprised to see two people already at work there. Dhananjay Singh, the admin head, was pointing to some electric points under the table while another man was busy fixing wires and things. "Good morning, Naren! Installing the conference screen, and your new desktop has come, too. This man is from Talcy," said Singh.Kant shook hands with the engineer and admired the flat screen he had been allowed by Delana India. "It's a privilege to be the MD," he said laughing with Singh, who looked at the engineer and said, "OS installed hai? Achcha... okay, CD hoga...?" The man said, "Yes, yes, I have brought a CD, load kar deta hoon, sir...."Kant was confused, "You mean the computer does not come with the OS?" The engineer shook his head. "You can choose to buy ‘with OS' or without..." Kant was still confused and asked, "Then how is the buyer expected to use the PC?"Talcy engineer: Pirated, sir, pirated! PC is also meaning ‘pirated copy'. Sometimes also Priyanka Chopra, ha ha ha! It's simple. Kuchh nahi hota hai. For you also I have PC....Kant: Does your employer know this?Talcy engineer: I am from dealer, sir. Not Talcy direct. My boss says if customer won't buy, take out OS and offer as discount, then put PC. PC equals pirated copy, sir.The engineer's smile was heartbreaking. Kant said, "Piracy is same as theft, you understand, no?" The engineer grinned and replied, "Sir, saare karte hain! Rs 16,000 is a lot of money. Usme fridge aa jata hai, sir!"Kant gave Singh a withering look and told the engineer he should kindly take back the desktop and get him one with original Windows. When the engineer had left, Kant looked at Singh with his hands on his hips, "What is this? I don't understand why should a company sell only the hardware without the software? God also sends man to earth with his brains installed, no? So why sell a computer without the software?"Anyway, I don't want us to be buying pirated copies, please. Let me call Raju Pandit (chief accountant) and ask him."Pandit said: "Everyone has his own trip, Naren. Last year, when we set up a new sales office in Bangalore, I approved a capex for 36 PCs. The budget was of Rs 60k each and I told them the model and brand of computer to buy. When the bills came, the branch manager submitted only the hardware bill. He had saved on the OS cost and had the dealer give them pirated ones!"Kant was disturbed. When he met his board at 11 am, he asked, "Do managers have to be told to be ethical? What shocks me is that it did not faze Pandit when the Bangalore office saved money on original copies of the OS. Why? Yesterday it was Samar.... unfazed." RECAP: Samar Das was the head of Newtree, a business unit of Delana India, located in an SEZ. Auditors Bright & Thakur had qualified the recent tax audit to say that there had been fraudulent misuse of its SEZ status, an intention to cheat, etc. Samar had deposed before the MD, Naren Kant, that he had not done anything that others had not done before him (see ‘Tax Planning: The Stock Option', BW, 28 March). Instead he argued that he had been trained to lead a life of avoidance in the garb of tax planning, bottom line management, proactiveness, and so forth. He claimed that every Board member who had benefitted from his being the tool for all this, now feigned alarm, accusing him of "corrupt practices and lack of integrity".Kant continued, "Then I began wondering, are we really law abiding? What is law abiding? It is not merely following the law. It begins with accepting the law! Law is not up for debate. Now when I see what Raju Pandit says, what Samar said yesterday, I ask, is our claim that we are ethical, misfounded?" Then, after a long pause: "Was Samar Das wrong or right?" Voices muffled and feet shuffled — a garbled emission of sounds, and Kant continued..."I find we are all in the grey zone where corporate ends and individual means appear divorced; where corporate goals are seen as wars to be won for Delana. The grey zone is made of good managers from good families with good education who negotiate to gain fraudulent savings on a rental bill or use pirated software, which they justify saying, ‘others are doing it too!'"Are we the grey zone guys? The corrupt thieves? The Jekylls by day who Hyde by night behind this company, which is touted as a clean company, where we tell our customers our products are dependable because we are a dependable company! Where we are touted as a good example in b-schools... Is the grey zone manager the one who has failed to think?" Jatin Roberts (director): Naren, many are in the grey zone. It perpetuates because when I see the other guy getting away year after year, there is a cause-effect that tells me it is okay to not pay taxes. Why did we shut down our Kopla unit? We began to lose money on our product! The entire seven years, too, we lost money. The tax holiday was barely enough to see us through. Why did we accept the offer? Because we wanted to do something for the government of India (GoI). Did we not know that it was going to be a loss proposition? Yes, we knew. How did the idea come up? Recall O.P. Sharma. He had met with the commerce minister that year; the minister was from Kopla and so was O.P.. The minister said, "O.P. saab, hamare Kopla ke liye kuch karo bhi" So O.P. said set up a unit there, and we did. The next year O.P. retired."See Naren, you know, there are always compulsions. Business is like that! We developed Kopla and the next thing we knew, many regional brands mushroomed. The consumer was happy with the regional brands. What were we doing there trying to survive? Samar can say what he wants... I know the truth!"break-page-breakNaren was deeply confused. What compelled people to abandon logic? There must be something to show for our past — we, the few, who had the opportunity to live with respect. Why are we compromising? Managers from good homes, good schools, food three times a day, always had a fan and light in the home, always had shoes on feet. "When you come from a background of strength, faith and balance, why would you give all that up to do something so lowly?" he asked.Dhanesh Pillai (all-India sales head): You know, Naren, it is exactly such a person who will get extremely upset when he encounters another refusing to play the level field. When he gets into the competitive market and sees others breaking the rules to get ahead, he says, why should I be losing? His boss is weighing down on him saying ‘you are not able to do anything about these guys...' Does he live with his boss thinking he is useless or does he get up and make the competition feel useless? Life out there is tough, Naren!Naren: Are you saying the ends are more important than the means?Were they disagreeing with him? Or were they saying you need to change the way you think? That night Kant met Alex Roy, an organisational behavioural specialist who advised Delana from time to time. "Do you agree that even a person of good stock can be made to bend and break the law in the face of competition? Aren't values sacrosanct after all?"Alex: If a person is competitive, he might end up chasing the other person's way of working. But if his value system is well rooted, he won't change his approach to work as in gundon mein gunda, shareefon mein shareef (A thug among thugs, a saint among saints)! How much of your brand equity comes from values is a serious part of building your corporate equity, Naren. I am, in fact, doing exactly this work for an organisation.But to give you an example, take two hospitals, say, Innova and St. Martha's. Innova would not worry about giving Diwali presents to the GP who recommends them to patients. But a St. Martha will not do that because they are rooted in the missionary way of work. Yes, they will modernise, have wooden parquet floors and smart light fittings, like Innova, but they will not change their approach to work. Ethics are the substratum on which organisations are built. In other words, whatever your ethical framework, that will play out.Kant: Then what is Jatin saying? Is he saying something has changed? What has changed? Alex: The definition of success and the value that is placed on one kind of definition of success. There is the organisational culture and the societal culture. The societal culture had not harmed them. But the definition of success within the organisation has harmed them.I understand there has been an unexpected turn in behaviour at work... Some time ago, we were rocked by Satyam; before that, Andersen; before that, Enron.... In all these cases — don't be alarmed — they said the leadership leads behaviours. These companies were in stage C of a certain behavioural disease. Take a look at the macro substratum on which all this is being played out. People ask me these days: is the ethical framework at the national governance level being mirrored at organisational and individual level? The leader says ‘I cannot be responsible for a coalition'. But when the coal, energy and telecom ministries were called ‘any time money' ministries, you did not change anything about the way you governed, no? You gave away these ministries knowing that money will be made from them! This can be called ‘not doing all that needs to be done'. So Delana will need to scratch deeper and examine what it needs to do, so that you don't let it precipitate to stage C!Naren: I know that the marketplace demands your soul in exchange for success. But I also know that there have been many who have not succumbed. Is it a kind of person who breaks or is it a kind of circumstance that bends you? I really want to be able to see the fabric if it was possible.Alex: The end game is surviving the onslaught of temptation, being able to see temptation for itself... That depends not on the personality of the person — as a person I am a competitive personality, and I want to beat them at their game, yes — but survival depends on values; my value system takes precedence over my personality... my values are so integrated into my personality that I won't let the competitive bits of my personality take charge. In Sanskrit there is an apt word for this, vasana. These are ‘tendencies' in my personality, some dormant, some active. So, say, competitiveness is active in my personality and it gets activated owing to being present in a competitive environment, such as business. Equally, there is a tendency in me to be dishonest, but it is not active in an environment where dishonesty is not active. Then you encounter dishonest tactics in the context of competitiveness... the mind then gets excited. What reins you in or frees you is your values. Mind you, even honesty is a tendency latent. We have positive tendencies, too, but what we activate is a function of intellect. What gets activated is, to an extent, a function of the environment, too. The determinant, then, is the value system. If somebody changes the goal post, am I too wanting to do what others are doing?Naren: So what we have here is: what a manager says about survival in organisations requiring me to do this or that is a moral excuse. It has been my experience that as a businessman if you do not stay within the framework you have designed for yourself, you will veer towards exploiting opportunity by being reactive, but you will not be able to survive as an organisation...Alex: Correct! Today a set of managers may ‘interpret' the law, rearrange variables to enable a certain tax benefit — avoiding tax and calling that planning tax — and thus achieve one goal; tomorrow they will do worse... like Satyam, playing with changing goal posts. Yet, Naren was not satisfied. Personality and value systems were thus explained, but did humans need to be herded or shepherded all the time to be reminded of their value orientations?Naren met his HR head Kaustubh Mehta that evening to examine what Delana needed to do to relieve Samar Das, but importantly make good the past sins. "Why do perfectly raised human beings find the devil attractive, Kaustubh? I am so bothered by Samar."Kaustubh: First of all, Naren, I will still say what Samar did was not intended devilry. It was playing with power and enjoying its risks. Like people who love guns for the power and then use it unwittingly. Mindless, of course. Two, there is the competitive side: bhala uski kameez meri kameez se safed kaise. The corporate world is exactly this. Three, organisations selling similar categories, both brands doing very well, and then you want to be the better of the two. So you use advertising chatter to massage your ego. You use promotions, endorsements, etc. Tax avoidance is just a part of the same continuum. If not, why would you not want to pay what is legally due or payable? Because in reporting a better PAT (profit after tax) you look better! break-page-breakFour, many a times, many of these unethical practices become standards. So somewhere tax avoidance is degenerating to a stage where everyone you meet is accepting that paying taxes is a pain. Let us be honest: when R.J. Mehta (ex-MD) accepted the GoI's offer to set up a plant in Kopla, did we do it for the love of the country or because paying taxes was a holy pain? We did it for the benefit that would accrue to us, not for the benefit it would give the country. I am not sure, I don't have an answer, but I am grappling with all the tax gearing we keep doing with salaries all the time... pay more of this, less of that, not this, but that... what is all that, Naren? And it is getting to a stage where ethical people are joining in without guilt!A few days ago, you were upset that our people did not seem to think that using pirated OS was thievery. I asked some of the managers this over lunch. It was just guilt based rationalisation, Naren. More like retaliation. You seek this justification and then you make the leap of immorality, thus also blaming the manufacturer for your sin! ‘If he had sold it with an OS, I would not have done this!' Likewise, avoiding taxes or messing with it is our way of being very angry with a government that penalises us for the good work we do! And on top of that to siphon out tax payers' money to build statues or give to family! ‘I am angry with you' is also a rationalisation! Naren: Kaustubh, we evaluate people in every which way before we hire. We ensure we are hiring from good stock... how come then? Kaustubh: It is the temptation of the consideration. What you stand to gain is greater than what you stand to lose. This is wagering! Perception, of course. Next time you are returning from Brussels, pause at the green channel at the IGI airport and watch how many women wearing chunks of diamonds walk through customs not declaring their purchases; how many people are wearing 4-5 watches. The temptation of the consideration versus probability of losing image.Let me share with you a deep HR crisis at a large company. I am part of a lab where this is being discussed with a view to finding solutions. There are four very senior managers at Company K India (CKI) — the CFO, the accountant, the business head and the president — whose bonuses from international depend on certain performance parameters, chief being, cash flow on the last day of the year. On 31 December, year-end, Rs 47 crore advance tax was payable. If it was paid, they would fall behind the cash flow parameter. If that happened, then the bonus implication (forfeiture) was upwards of Rs 20-25 lakh at the maximum, Rs 7 lakh at the minimum... okay? The advance tax was well budgeted, so it was not a surprise element. But the crisis arose because some supplier bills of Rs 60-75 crore were urgently payable because of, I would imagine, a similar teeming and lading in the past. Since the suppliers threatened to suspend all scheduled supplies, a balancing act was needed. The business head asked the chief accountant to delay the Advance Tax payment — pay it on 8th or 9th, chalega; 4 per cent penalty pay karo... if asked by audit, say you clean forgot. We will, in turn, work out 1 per cent further rebate from suppliers on future supplies to make good the penalty that will impact bottom line. Promise! Naren went white. "This is shocking!"Kaustubh: Yes. The lab is discussing the warped sense of quid pro quo. The whole ethical issue behind four people taking decisions that topples a corporate image and equity. And, four people who agree among themselves to negotiate prices as consideration for partnering or, say, aiding and abetting an unethical, unlawful criminal delay of advance tax payment... See what is going on at a deeper level, Naren. The guys who could influence the suppliers to accept a delay in payment have no business talking to suppliers. That in itself is a major control weakness in the system. But if the accountant helps them achieve their target cash flow, they promise to help the accountant achieve his cost efficiency target. After all, his 8-9 lakh bonus is also at stake!Naren and Kaustubh looked at each other dazed. Kaustubh grimaced and said, "And these are all ‘good people from good backgrounds'. Where is the genesis of this? Competition. Consideration! Not achieving that cash flow would mean a loss of 25 lakh each on bonuses... see?"We avoid taxes and legitimate costs because we feel the recipient is unfair in asking for it!"To be continuedClassroom Discussion Incentives and bonuses are short-term and tactical in spirit and prone to abuse.casestudymeera(at)gmail(dot)com(This story was published in Businessworld Issue Dated 11-04-2011)
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In the Harvard Business Review issue of September-October 1987, Sir Adrian Cadbury wrote an article titled Ethical Managers Make Their Own Rules. Parts of it are reproduced here: In 1900, Queen Victoria sent a decorative tin with a bar of chocolate inside to all of her soldiers who were serving in South Africa.... At the time, the order (placed on Cadbury) faced my grandfather with an ethical dilemma. He owned and ran the second-largest chocolate company in Britain, so he was trying harder and the order meant additional work for the factory. Yet he was deeply and publicly opposed to the Anglo-Boer War. He resolved the dilemma by accepting the order, but carrying it out at cost... made no profit out of what he saw as an unjust war, his employees benefited from the additional work, the soldiers received their royal present....My grandfather was able to resolve the conflict between the decision best for his business and his personal code of ethics because he and his family owned the firm which bore their name. Certainly his dilemma would have been more acute if he had had to take into account the interests of outside shareholders, many of whom would no doubt have been in favour both of the war and of profiting from it. But even so, not all my grandfather's ethical dilemmas could be as straightforwardly resolved.How many of us would even think of this as an ethical dilemma? How many managers in a cigarette or gutka company see any ethical dilemma in selling a harmful product? They can justify it on the grounds of "earning a living". Such rationalisations annihilate personal ethics.Ethics is all about business and social interactions based on the belief that the self and all others deserve equal consideration. Ethics are dictated by the leaders. If there is no explicit code of ethics (COE) in an organisation, an implicit code develops, which can be dangerous because it is open to multiple interpretations. And if the explicit code is observed more in the breach, as in the government, then people tend to follow the implicit code.We know that our national leaders' rhetoric against corruption is hogwash. The code of conduct, implicitly communicated, seems to be: "Every man for himself and the devil take the hindmost!" There is frequently a gulf between people's ‘professed' and ‘espoused' philosophies. That is how capitalism thrives in communist states, and why our lawmakers are lawbreakers.Writing and communicating a COE is vital, as is a code of conduct for all employees. An explicit COE is like a map. If everybody does not operate by the same map, they will go off in different directions. Clearly, in Delana, there was no COE. In fact, the conflicting messages could potentially unleash a schizophrenia epidemic in Delana. When Kant asks, "Do managers have to be told to be ethical?", is he being naive or is he in denial? It is the bounden duty of management to communicate the COE to all employees. It also needs to be understood that ethics is not synonymous with legality.Tax avoidance (taking advantage of favour-able tax laws) is not necessarily illegal, but it may be unethical. Legal compliance is a necessity, but not a sufficient precondition to being ethical.In life, difficult questions have to be constantly answered. Is it more important for me to win or be ethical? The answer has to come from deep within. In the corporate world, I suspect, widespread cardiac diseases are not only due to sedentary and unhealthy lifestyles, but often because of conflicts between one's beliefs and actions. Sadly, corporate success (read politics) frequently requires one to bend one's ethics. The ‘headline test' is a good one: am I happy to have my actions reported in tomorrow's headlines? If yes, go ahead. Employees focus on what is measured. If competence is measured on the basis of the bottom line, then that becomes the focus of all effort. I personally do not know of any company that measures and rewards ethical behaviour. Delana is no exception.In many ways, Delana is a microcosm of society. Socially, we revel in discussions on ethics. How can people from good backgrounds have dubious standards of ethics? How much of a company's brand equity comes from values, etc.? And yet, how many companies have a regular ethics audit? It is comforting to have drawing room debates on such issues because it externalises the problem leading to that warm ‘I-am-okay, you-are-not-okay' feeling. We bemoan the lack of ethics and morals yet how many of us have the courage of conviction to stand up and be counted? Does any chamber of commerce require all its members to sign a code of ethics? Does any industry body or company stand up and warn corrupt politicians or a state government that it will curtail or pull out its investment if the state does not clean up? No. Because adherence to ethics needs both courage and sacrifice.Nripjit Singh (Noni) Chawla is an independent management advisor. An alumnus of IIM Calcutta, he has worked for 20 years in ITC and was the managing director at Max India(This story was published in Businessworld Issue Dated 11-04-2011)
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Naren Kant's experiences at Delana India truly represent a leadership crucible for him. He has few choices before him and those represent diagonally opposite stands. From buying pirated operating systems for company machines to fraudulent misuse of SEZ status by a subsidiary company, Kant has much to worry about. When he took the issue to the Board, which is where the operation ‘clean up' has to start, one member responds that evading tax is part of running a business, and even elevates it to a ‘level-playing field'.Kant's situation reminds me of what Jim McNerney faced at Boeing as its CEO. Boeing was going through a serious crisis of confidence and was in the midst of scandals. The Department of Justice was probing its misdeeds including: a) improper acquisition of thousands of pages of rival Lockheed Martin's proprietary documents; b) illegal recruitment of senior Air Force procurement official while she still had authority over billions of dollars in other Boeing contracts, and more. McNerney sized up the situation, and recognised that how he handled the crisis would be a watershed in his leadership and, at the same time, provide him and Boeing an opportunity to transform the company's culture around ethics and opportunity. McNerney did not waste his time contesting in court, but quickly acknowledged the wrongdoings by his company's senior executives and paid up the $615 million in agreement to settle. Kant, too, can determine his company's future culture. Easier said than done, of course. An organisation's culture is often defined as behaviour that leaders practice and tolerate. Unfortunately for Kant, the leadership of his company in the past has both practiced and tolerated wrong doings and perhaps even came to believe that they owed their success to such ‘smart business practices'. This is a classic case of mistaking success as ‘because of' rather than ‘in spite of' certain actions.Kant's discussions with Alex presents a whole range of issues. Alex gave psychological explanations — "value system takes precedence over personality", "tendencies in personality that tend to be active or dormant" and "even honesty is a tendency latent", and the like. Understandably, Naren is not satisfied.Discussions with Kaustubh, Kant's HR head does not help him either. Kaustubh goes about counting many reasons with the objective of helping Kant understand that the problem is "temptation of consideration".Kant is alone — his colleagues do not seem to share his high standards of morality and ethics. It is a crisis of judgement for him. Such situations are not unusual for leaders in their pursuit of progress and success for themselves and their organisations, particularly in an environment of roller-coaster ride and cut-throat competition. Corporations that hire high-profile officials retiring from government service do so to use their rich experience and ‘competence' and, even more importantly, ‘rich connections', so that the machinery could be influenced in the desired direction. Noel Tichy and Warren Bennis, both internationally acclaimed leadership gurus, wrote a must-read ‘bible' on leadership for managers and titled that book Judgement. They drive home the point that leaders' lives are full of judgements: about strategy, people and crises. They make a powerful observation and reinforce the same throughout their book saying, "with judgement, little else matters; without it, nothing else matters!" Kant is faced with a crisis of judgement; but then that is also an opportunity to redefine the culture of the organisation and emerge a great role-model corporate citizen. Like McNerney, how Kant handles the challenges, will determine the future course of success for the company.Look at the landscape of many large IT companies whose claim to fame includes being ethical and you will recognise:They cook up the attrition data presented to the analysts to paint a picture of stability;They lay-off thousands during downturns, but claim to be getting rid of non-performers;They tweak and fudge the résumés of employees to present to the clients to show that they have plenty of skills.Where do you place them on the yardstick for integrity? The argument is often the same: everybody does it, so what is the big deal? Or, does success forgive all these behaviour and provides legitimacy?Kant may be alone, but leaders do not get agitated by this loneliness. As much as there are Satyams, Andersons, Enrons and Global-Crossings, there are several others who refuse to profit from grey areas but draw the lines clearly and make ethical behaviour non-negotiable. Kant must do what McNerney did: own up, clean up, get the right people on board, and not play by the Jekylls who Hyde by night! Leadership is neither easy nor for the weak-hearted.C. Mahalingam is executive vice-president and chief people officer with Symphony Services Corporation(This story was published in Businessworld Issue Dated 11-04-2011)
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Gautama Dev tapped his forehead as if reaffirming what he had written to Amit Dave, head of Relationship Banking at Kiminey Bank (KB): "When I look back... it seems there was a deliberate move to keep this info away from me...." Now, Gautama simply knew those words held the truth behind what was going on. Gautama was a 10-year-old NRI customer of KB, which also looked after his wealth and investments. The Bank sent him monthly statements at both cost and market value, a practice it kept up until he invested in Instep. Two years ago, KB had suggested Gautama invest in Instep Insurance's pension-oriented investment product. KB said it was better than mutual funds (MF) as the cost was 50 per cent less (see ‘To Market, To Market, To Buy A Fat Pig'). After Rs 16 lakh and 16 months, Gautama found the net worth of his investment was a negative 3 per cent! And, he accidentally discovered that all this was owing to an upfront 7.5 per cent charge on his premiums of Year 1! And when he began to question this, his bank of 10 years adopted a clipped, dispassionate attitude and told him to take it up with Instep. So, from being wealth managers who operated on his behalf, KB — especially its Nambiars, Naiks and Suris — were now choosing to play lower division clerks. KB, which had hired these men and women, was effectively backing off its fiduciary role, and protecting itself. Gautama had seen this coming. He knew what it took for an organisation to be ethical; to admit error when it had been committed. As KB dodged, backed off, cold and unsupportive, he wrote to Dave about how Instep's insurance-linked pension had consumed more of his money as investment but produced negative returns. Then "Instep was mis-sold to me on pretext that the annual cost was very low at approximately 1 per cent, versus 2 per cent for MFs, and no mention of the upfront charge of 7.5 per cent made transparent. None of the 24-25 emails KB has written to me about the Instep investment, refers to the 7.5 per cent charge! I do not believe this meets KB International's standards of ethical conduct in business. "I request KB to use its relationship with Instep and have the policies terminated without any penalty, which is a reasonable enough request. This means I will get back the amount invested over two years and Instep would have had free use of my money over this period. This opportunity loss is acceptable to me. However, I should not be forced to continue an investment where facts, material to the investment decision, were not disclosed to me." break-page-break Twenty seven days passed and the head of relationship banking of KB, a large MNC bank, had not replied. Gautama wrote again: "I am sorry to be taking your time, Mr Dave, but it is a month since I wrote to you. This long delay is not making me feel valued as a customer." Dave replied with an auto responder type of script... "Appreciate we are only referral agents; Instep's product features are theirs, approved by Irda...." KB chose to ignore Gautama's mails. Gautama, who had managed a Rs 15,000-crore business for eight years of his 26-year career, had done so successfully only owing to his ethical conduct and decorum — something he was both known and feared for. He was now surprised. Referral agents? Then what happened to "we have a very special relationship"? What happened to "we have advised all our HNIs to move out of MF to Instep"? That was not how a referral agent behaved! Gautama finally wrote what he had refrained from till now: "I would like you to think about this, Mr Dave: as a leader of a global bank, the values that guide your decisions in a crunch situation, are what shape the values and culture that people down the line will follow. [I run an organisation as well, and talk from experience.] KB was my trusted wealth advisor for many years. My question to you is: Did it meet the bank's stated customer policies, to advise me to shift investments from MFs to this Instep product knowing that the 7.5 per cent upfront charge would mean an additional cost to me of 2.5 per cent per annum over a three-year period? "To then fail to advise me of this charge, but instead emphasise that the annual cost would be 1 per cent lower than what MFs charged, does that meet the ethical standards of service of KB? "Lastly, as a long standing customer who was mis-sold a product, once I have escalated this to your level, should you not, as my banker, be standing shoulder to shoulder with me in taking this up with Instep? "The banking business is about trust and relationship, both when you deal with your customers and when you deal with your ‘suppliers'. Why then is it not possible to resolve this issue in a spirit of partnership ensuring fairness to me and to Instep?" Gautama was leaving for a 10-day lecture trip to the US. Three of the Indian managers in the Gibbley Group — Advait Kundra, Shailesh Karnik and Tara Swamy — who had been in close touch with Gautama, came to bid him farewell. They sat and chatted even as he was running around getting his papers together. "The newest is that now Instep wants to charge a penalty of 25 per cent of premiums paid, if I want to discontinue the policy," said Gautama. "This is misuse of a monopolistic position vis-a- vis a small investor; and there is no commercial justification for such a high penalty especially after 16 months of free use of my money!" Advait: Firstly, there is no commercial rationalisation for a pension plan to have an upfront charge of 7.5 per cent. Secondly, you state it bold and clear, not hide it in small print.They discussed as Gautama remained busy. Shailesh: See, the very fact that the bank failed to reveal the MV of the investment for 16 months tells one story. But I am stunned they would do this to an HNI! I thought they did it to paupers like me — give a loan, then send the debt collectors snarling after me! Advait: Every bank that is managing portfolios is working on luck! They may have a specified menu of funds in which they will claim they invest... but, in fact, the promiscuity is unimaginable. Just watch how the market has been moving — 14000 points one day, up to 21k, then down to 18k. In this scenario, the fellow has your 3-4 crores. They hang on to hope, living from one week to the next. Everybody in the industry is breaking Sebi rules and there is no one to find out. That is how fluid the market is. Tara: But to risk this with an HNI... Advait: I would say the HNI is the easiest target! Just think. Who is your HNI? Senior directors, MDs, CEOs, senior VPs. These are people who groom people, systems and situations to be dependable and who are prone to work with the bigger picture, leaving verification, cross checking, etc., to their subordinates. Isn't he a sitting duck? They sign papers with faith in people who work with them. So here is a bank that has built the HNI's faith through its brand and superior English. It comes and says "I will take care of your investments," opens five pages of a 40-page document and says, "Sign here, here, here and here. I will give you back what you value most: time!" And the HNI signs! Tara: I think the warning signal was flashing bright when relationship manager (RM) Atulya Ambi was moved out. An RM is a psychological ploy, to create for you a sense of care, attention, etc. It is cheaper and more revenue effective than the customer changing bank! So, that is achieved by giving you a sense of ‘You didn't like that RM? Okay, I kicked him out. Let me bring you our best....' as if selling you good wine. Advait: Amazing! See how this industry has shaped its strategy with the behaviours that come with it! The HNI himself is used to excusing people, used to small inefficiencies and thinks "organisations are mammoths, finally run by people and people make mistakes, it is part of life". Because this is exactly what happens in his own organisation, and that is how he manages teams — by forgiving, shepherding and indulging now and then. Tara: A large part of this is behavioural; living overseas makes you sad and grateful every time you deal with India from here. This is a major bonding situation that NRIs fall for. They probably look to bond with their bankers, "Yaar, look after my money." And when your banker tells you, "Sir, just leave it to me...", you heave a sigh of relief. We are such suckers for that kind of talk, and service companies, especially banks, leverage on that emotion! Advait: Exactly. The HNI is looking for comfort and convenience with no investment of time, because that is one thing he does not have. (They are the last ones who get to use their money, incidentally!) He asks for loyalty, and believes that the person is loyal and trustworthy. Why? Difficult to give one reason, as this is an emerging market of Arrow Shirts and rimless glasses and Oxford English to whom you hand over your wealth. Maybe you see yourself in his demeanour — educated, senior management — and you feel this guy can be trusted. Actually the idea of being cheated does not even occur. In two meetings you gauge that he is a sharp shooter. But ethics is never in doubt! So you drive him away genially and say, "jao yaar, don't ask me to read these 40 pages, I have other things to do". Why? So many options are thrown at you, and if you are a non-finance guy, you are demolished. Cost? MV? Yield up to maturity with current realisations? That's not even English! One sheet of paper can show you several percentages pulled out with several formulas! These may not be impossible to decode, but it means investing time, you see! When you see money come into the bank regularly, the regularity and not the composition of the amount lulls you into a sense of well being. You do a quick corner of the head calculation and it makes sense... But do you have time? This is the malady of the post-liberalisation wealthy corporate man! The market for portfolio managers has grown faster than his investments and, just like detergents these days have power boosters, are oxy-activated, biological, sensory, and what not, the investment business has also thrown up nuances to its products, which we frankly don't care about because the details are more forbidding than the process! Do you care that your toothpaste has gobbledygook and hibbledylook? Who cares? Need toothpaste at 7 am, anything in tube with a flavour of mint will do. This is broadly the definition of the corporate investor who uses a banker to invest. He is in deep trouble... because the banker knows much more than what the customer does and the banker does a lot more with his money than the customer knows! Face it! Gautama (stopping by while buzzing about): You guys still discussing me? (answering various questions at the same time)... Sorry? Oh well, actually I caught on much sooner. I noticed in the first statement itself that MV was not showing. I said to myself, she will do it, she is efficient. I didn't want to remind unnecessarily... I thought the system was taking time to respond to the new investment added... Shailesh: Okay tell me, if the insurance company is telling you that the 7.5 per cent was tucked away inside, you don't have a case, na? Gautama: Based on my limited reading of the Law of Contract, no. I was supposed to have looked at the 40 pages and unearthed the 7.5. But my view is that I had a wealth manager and I trusted him to look after my decisions. That's what I expected this relationship would do: poke my decisions, question my choices, point out the details, caution me... I use a wealth manager not because I have wealth but because I don't have much time! break-page-break For the Law of Contract to be invoked, a consideration for services is crucial. Banks will not document a wealth advisory relationship, and naturally will levy no fee. Hence, there is deemed to be no contract, as there is no direct consideration! Tara: Yes, ‘the banker does a lot more with his money than the customer knows!' Advait: Everybody is in cahoots! I invested in some MF in September. When I looked at my statement now, I was expecting 7 per cent but the yield was 5 per cent. Duniya makes money on MFs, but not me! Yeh sabko maama banaate hain! This is standard operating procedure. People don't talk about it because you don't want to look like a fool in front of others. Tara: But MFs advertise that you can earn crazy amounts... AK: Grammatical error I would say. The MF earns the money. Their definitions are always so nebulous. A 7.5 per cent upfront charge... 16 per cent gross margins — what is gross margin? So who knows what is being put on a piece of paper is gross margins, net margins, what are the loadings, net of overheads? You expect banks and insurance companies to tell you there is an entry cost, but they don't. Colleges and schools tell you fees is Rs 5,000 a month; until you discover there is a Rs 25,000 registration fee! Most nebulous and meaningless! Everybody is playing with words! Gautama: Okay, enough bitter talk. The core issue is this: when I hand over my money to a bank that offers to invest it for me... what happens to the trust? To the fiduciary relationship? To the "don't worry, sir, you are in safe hands"?This trust cannot be documented or proven in a court of law, because that is what goodwill is all about. Trust is the underlying substratum on which the banker-customer relationship stands. But the moment you disagree with him or he errs, he will blur away and become scarce. How can trust be based on opportunity? Advait: I have a theory called The Fig Leaf of Rationalisation. In India today, 75 per cent of the software is pirated. Try telling the guy who is using an underground version of Windows that he is thieving. This behaviour is subscribed to by the team first, then the department and then the organisation. This rationalisation is called ‘common practice'. Therefore, ‘he is an HNI, it is his job to take care of his investment'. Shailesh: Every industry has these rationalisations. In Teffer India, we had zero defect factories and the defect rates were factored into our bonuses. For the factory manager, the key parameter was cost per tonne. So when faced with a quality problem, his dilemma straddled release or reprocess the batch? My bonus or company's short-term gain or loss? Release the minor defects for sale or reject the lot? Both are tough choices that impact conscience and coffers. Advait: Fabulous! So let me add, as the bonus component or ‘opportunity to earn' gets bigger, the brain conjures up more rationales making choice difficult. Now, if a majority in the industry is making similar choices, that becomes a way of doing business, loosely called industry practice. Customer wealth improvement may not, therefore, be an overpowering goal.Shailesh: All this is symptomatic of the fact that if you don't balance off the variable component of a manager's salary with the fixed, then such things will happen. Advait: Very true... Intelligence should definitely be rewarded, but not so much that it dulls an individual's ethical quotient. Shailesh: And a consideration for these rationalisations, powers it. So be it a murder for fuel, or a 2G scam, or land usurped or a garland of currency notes, the impetus is money.I will sell what sells, as long as the consideration is money. If sex sells, I will sell it saying India should not be a prude! It is a question of rationalising it, and when your rationalisation gets stronger, you get more voices behind you as the money riding it gets bigger and bigger. And presently, you believe in your stupidity. Tara: See, the dividing line between a greed-led rationalisation and wilful fraud is very thin. The lure of bonuses is definitely the silent persuader. Then it comes down to your personal ethics quotient, and how hard you have trained your mind to stay on the line. I know there are audit practices and standards such as Companies (Auditor's Report) Order (CARO) for every operation in a manufacturing process, but are the sections pertaining to banks and service companies as sharp? I doubt. If a small coterie was to operate to further its personal interests or be target-driven but contrary to accepted procedures (not being rationalisations) — like the Citi case — are there control objectives woven into the system that will beep weakness on encountering them? Seems not, considering that the fraudster got away with his work way past a financial year and CARO did not ‘find' him! Kundra: Good point! Then again, banking customer service is qualitative and even CARO can only opine on fairness, not on accuracy. Shailesh: I feel there has to be an internal audit procedure for bankers as individuals because they are the housing in which the entire service resides — the thought, the creative, and the intention from where the strategy is manufactured. Hence, their functioning has to be auditable. Therefore, a banker as a human has to be under continuous audit! Gautama: As Alan Simpson says, "If you have integrity, nothing else matters. If you don't have integrity, nothing else matters!"Classroom DiscussionA designation and salary is not for our academic might but in the consciousness that we deserve them. casestudymeera(at)gmail(dot)com (This story was published in Businessworld Issue Dated 14-03-2011)
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A lot of people including me would be able to empathise with Gautama who feels wronged by KB. Under pressure to meet sales targets, often wealth managers try to sell products and services to their trusting clients without disclosing the underlying risks. Wealth managers rarely explain what is in the documents that they want their clients to sign before actually selling any new product or service. Clients, on their part, rarely ask their wealth managers to explain what is in the documents they are asked to sign. As documents often run into several pages of fine print and are full of legalese, it is almost impossible for a busy client like Gautama to read them and understand what they are signing. The general legal principle is "caveat emptor", which means "buyer beware". So, the client cannot later on say that he/she did not understand what he/she was buying. Moreover, the documents signed by the client usually contains a statement that he/she has read and understood the contents of the documents and that the bank has provided all the necessary explanations sought by him/her. Notwithstanding such waivers obtained by the bank, the client should be able to take legal action against the bank if he/she feels that the risks embedded in the product he/she bought were not explained by the bank. But the reality is no individual client like Gautama has the time or the patience to pursue such action. I guess from the bank's point of view, according to the law of averages, only one in a thousand clients may resort to such action. So, it is not such a big risk for them, given the risk-versus-reward trade off. Even in countries such as the US, where class-action suits are common in which hundreds and thousands of aggrieved parties take legal action against the bank and where punitive damages running to hundreds of millions of dollars are awarded, instances of banks selling risky products to their clients without explaining all the underlying risks are not unknown. In this fast-changing world, where every day some bank is coming up with a new product with new features promising more return or more safety, often using derivatives and synthetics, it is also difficult for the bank's wealth managers to fully understand the risks before they start selling the products. Often unintentionally and more out of sheer ignorance, wealth managers fail to explain the risks to their clients. While I will not defend KB and its officers for what they did to Gautama, clients like Gautama have to realise that there are no free lunches in this world. When they are offered an investment product, which is claimed to yield a higher return than a plain vanilla mutual fund, they have to be on their guard and find out how and why. Generally speaking, higher yields cannot be obtained without higher risk. Most large banks have a structured products group that keeps churning out products using derivatives and other instruments. Obviously, selling structured products is more profitable for the banks than selling plain vanilla products. So, wealth managers are asked to sell these structured products to their clients to whom the attractive features of the products are highlighted but not the underlying extra risks. Derivatives were meant to help large corporations to hedge risks underlying their businesses. But they are being now indiscriminately used to structure products touting higher returns to unsuspecting retail clients. A possible explanation as to why KB's wealth manager did not alert Gautama to the 7.5 per cent upfront charge by Instep is the fact that KB was the main beneficiary of the amount taken out of the first premium. The insurance company, in order to induce distributors like KB to sell more of their policies, could have offered an attractive commission on sales that naturally comes out of the first premium paid by the client.Finally, there is no question whether or not KB betrayed Gautama's trust and confidence in it and its wealth managers. Also, I don't believe that KB intended to cause such loss to one of its longstanding clients because it is not in their interest. Obviously, KB's overemphasis on its sales culture, and their wealth managers not taking the time to understand the real risks for their client in their anxiety to reach their sales targets, are to be blamed. I wonder if hard selling is at all appropriate for banks, which are supposed to be guardians of people's savings. Secondly, when they realise that a mistake has been made, they should immediately acknowledge their mistake and try to make amends. In this case, KB could have easily admitted their mistake and made restoration to Gautama, which would have further reinforced his trust and confidence in his bank. It is probably the peculiar Indian psyche that prevents wrong doers from admitting their mistake and making amends. They don't realise that while for the time being they can escape retribution, in the long run such behaviour will come back to haunt them. K. Balasubramanian is former executive director of American Express Bank (This story was published in Businessworld Issue Dated 14-03-2011)
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I do not understand law, finance, investments or audits. I do, however, understand relationships and trust. Mr Gautama you have been jilted in a relationship by an organisation that had professed to protect you. And you are being blamed for it. Please end your confusion and ensure that these people do not hurt anyone else. Here is why I say this. There are four dimensions to a relationship. To be in a valued relationship we have to care, we have to respect, we have to behave responsibly, and we have to work with the knowledge of the person we have a relationship with. Such a relationship, where you feel cared for, you feel respected, you feel that the other person is likely to behave with responsibility towards you, you feel that the person has the knowledge of your strengths and limitations and helps you acknowledge your strengths. In your relationship with Kiminey Bank, the bank pretended to show care and pretended to respect you. The bank used the knowledge about you to benefit itself. It did not behave responsibly towards you as it continued to blame you for your decisions, instead of owning responsibility for having guided you in a deceitful manner. In your relationship with Instep, the company again used the knowledge of you to its own benefit, and it did not respect you as it hid the knowledge about its charges in the fine print. It did not behave responsibly as it chose not to respond to your anxieties, and it used knowledge about you to its own benefit. So, both these organisations have wilfully treated you in a manner that betrays a common understanding of trust. If you as an adult encouraged a child to jump from a height and then were not there to catch her when she did jump, would you accept the responsibility that you contributed to the hurt or would you point to the fact that you had pointed out she may get hurt as fine print? It may seem that you used your will and preference, and you made an unwise decision so it is your responsibility. However, the reality is that you were not given the information in the form that you would make sense of and you did not make an informed decision.The behaviour of both the bank and the insurance company has been a conspiracy to exploit. If any of your friends or family had done this to you, believe it or not, you would not have been on talking terms with them for the next few years. You would have felt abused and betrayed. The sense of betrayal would make you feel violated. But your bank did this to a high-net worth individual (HNI), so it is called ‘reasonable practice' of business. It will continue to be so, as in providing such services, the service provider forgets to ask some pertinent questions. Let us together ask those questions. Question 1. What was the basis of the relationship on which the service was being provided? Trust, is the obvious answer to this. Trust built over years of not harming and fulfilling promises, smiling and being nice. Now, the supplementary question is that can this trust be then suddenly monetised to benefit another commercial relationship? Question 2. What was the service being provided by the bank to the HNI? Was the service that of a referrer? Or was the service of a consultant that helps the HNI to make an informed decision? The bank seems to be working as a surrogate solicitor under the garb of the consultant. It cannot be both. Such conflict of interests should disqualify the bank from the role of being the guide and coach to its customers. Question 3. Whose agent was the bank? In this relationship, was the bank the agent of Instep or the HNI? The bank, again, was trying to have two relationships at the same time. While it promised fidelity to Gautama through its use of trust, it promised ‘a catch' to the insurance company. It should not have been doing both. It should have been commercially benefiting from one of the two relationships, and it had to be transparent to both about its relationship with the other. Question 4. What are the redress mechanisms for people who are affected by this cheating? There are only a few solutions. The first is to undo the impact by making the bank and the insurance company pay the customer his reasonable loss. The second solution is to audit all HNI relationships at the said bank and see who else is being sold the broad dream and the fine print. The third solution is to stop the banks from soliciting on the behalf of insurance firms. The vacuum of values extends beyond all transactions and across the geographical boundaries. So the long-term solution for challenging the cynicism is reintroducing a reflection about what we do and how we do it in our everyday practice. Achal Bhagat is senior consultant psychiatrist and psychotherapist at Apollo Hospital Delhi. He is also the founder director of Saarthak, a not-for-profit organisation for mental health (This story was published in Businessworld Issue Dated 14-03-2011)
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