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Principles for Building an Ethical Organization
by Miriam Schulman
Drawing on Indian mythology, company folklore, personal experience, and a sense of humor, R. Gopalakrishnan offered his observations on what it takes to develop and maintain an ethical organization to a group of Silicon Valley businesspeople convened by the Markkula Center for Applied Ethics this June. Gopalakrishnan is executive director of Tata Sons, one of Indias largest private-sector business groups.
He began by retelling the story of the Arjuna, master archer from the Hindu epic Mahabharata, who is sent by Lord Krishna to rescue the women from a city under siege. Comparing Arjuna to a turnaround CEO, Gopalakrishnan related Arjunas success at freeing the women (the assets of the company) from the besieged city using his bow and arrows. Everyone clapped, Gopalakrishnan said, likening their reaction to that of shareholders believing they will now have a better year.
Yet, on the way back to Krishna, while passing through a forest, Arjunas chariot came under attack and his arrows were ineffective. The moral of the story for businesspeople, according to Gopalakrishnan, is: You are only as good as your context shows you to be. The same techniques that worked in one context may not in another. The same CEO who was successful may not retain his or her magic over time or at a different company or industry setting.
With that caveat, Gopalakrishnan offered five general principles for executives who are interested in contributing to a company culture of integrity.
In his early days at the company, he traveled widely to visit various subsidiariespeople selling trucks, writing code, generating electricityand talked with them about their work. What was unique, he said, was that every PowerPoint presentation I saw ended with a chart labeled Community. Each group gave this subject its own spin: in some cases fostering AIDS awareness, in some cases helping local women find markets for their woven baskets. These projects are funded out of 13 charitable trusts initiated in 1932 by Sir Dorab Tata, but are initiated and executed by local Tata management and employees. About a third of the companys $3 billion in profits go into these trusts.
Gradually, Gopalakrishnan said, his cynicism began to dissolve. What has this meant to me personally? Its part of why I go to work every day. In some surrogate way, one third of every dollar I earn for the company goes into these charitable trusts.
Gopalakrishnan likened the story to a teaching of Krisha in the Bhagavad Gita: To action alone hast thou a right and never at all to its fruits; let not the fruits of action be thy motive.
As an example, he pointed to a 2002 scandal within the Tata companies, in which the chairmans protégé and CEO of Tata Finance was involved in a fraud that threatened to cost clients, shareholders, and creditors more than $200 million. At a meeting, an ordinary shareholder got up and told how he might lose his life savings. As Gopalakrishnan describes what happened, At that point, we didnt know the size of the scandal, but the chairman made a statement: You have my assurance. Not one of you will lose a rupee. We could have filed for Indias version of Chapter 11; he could have said wed stand behind the 22 percent of Tata Finance that we owned. But the chairman stood for 100 percent of the losses. This kind of attitude has also helped Tata to resist some of the petty bribery demands that are endemic to doing business in India, he said.
At Tata, the code is published in 15 different languages. Every employee signs it every two years, which, for illiterate workers, may mean putting their thumbprint on the document. More important, the company runs almost 300 workshops a year where employees discuss the issues they face. No great truths come out of this process, Gopalakrishnan said. Theres no new enlightenment except in our own hearts as employees talk about how to apply these principles to real-world situations.
For entrepreneurs who dont think they have time to worry about ethics in the early years, Gopalakrishnan had this advice. Thats negligent if you intend for your company to be around a long time. Its like saying, I dont have time to shape my childs character right now. Ill do it when hes 20.
As Gopalakrishnan has written elsewhere, History sheds some light on what I call the samskar, or values, of any given business. Much like individuals, business enterprises, too, have a samskar. It is the mark of a successful business that profits are earned competitively in the early days. It is a mark of a great business that, in addition, good samskar gets so deeply embedded that it becomes part of its DNA.
Miriam Schulman is communications director of the Markkula Center for Applied Ethics.
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