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Article by Mohan Babu


Ethics and integrity in corporate America

Companies in the US are suddenly realising that ethics and integrity of employees play a very significant role in the smooth running of their organisations. Business leaders are going to expect higher ethical standards from their business partners and companies they deal with, writes Mohan Babu

One topic receiving a lot of attention in recent times is the importance of integrity and honesty in the corporate world. The role of integrity in our day to day lives, especially of those in business and management, is being tested in light of the recent corporate scandals erupting in the US. Starting with the fall of Enron, Anderson and K-Mart last year, and the bankruptcy of a number of visible Fortune 500 companies, scandals and layoffs in corporate America have left people high and dry. In many cases, the public has found visible scapegoats like Bernie Ebbers (ex CEO of Worldcom) and Dennis Kozlowski (of Tyco), to identify corporate greed. These individuals, inspite of being among the highest paid executives, stooped to low levels for a few dollars more. Of course, for every documented culprit, hundreds are roaming free.

Just recently prosecutors charged Tyco’s former chief executive, Dennis Kozlowski, and its ex-chief financial officer, Mark H Swartz, with stealing $170 million in unauthorised compensation and illegally reaping another $430 million from stock sales. A recent Wall Street Journal report went on to add, “In the indictments, prosecutors painted a picture of a company run like a “criminal enterprise”, in which top executives paid themselves huge bonuses without Board approval and hid the payments from shareholders. Messrs Kozlowski and Swartz have pleaded not guilty.” On similar lines, New York Attorney General sued five current and former top telecom executives, demanding that they return more than $1.5 billion in profits allegedly reaped through self-serving relationships with investment bank Solomon Smith Barney. These are not just stray cases but a massive overhaul of the corporate governance system taking place in the US.

Companies in the US are suddenly realising that ethics and integrity of employees and workforce also play a very significant role in the smooth running of their organisations. The focus of boardrooms, that until recently hinged solely on corporate earnings, ROI and maximising shareholder wealth, is shifting towards other “essential” factors, including ethics and integrity. This back-to-basics approach ties in with the core values that we as individuals are expected to adhere to. Most of us have been raised to be ethical in our dealings and generally try to hold ourselves to the highest levels of moral and ethical standards. Problems arise when individuals with differing standards of ethics and morality work in organisations that give a free reign to personal behaviours. This renewed focus on integrity is bound to lead to a major overhaul of the system. Along with this, business leaders are going to expect higher ethical standards from their business partners and other companies they deal with. Dealings with foreign companies (including Indian IT companies) will start to receive a higher level of scrutiny.

In India, we are content to classify government officials and politicians into the “corrupt” category and turn our eyes the other way when it comes to corporate embezzling and white-collared crime. Of course, corruption among government officials and politicians is well documented, and a pet obsession of ours. However, even a cursory look around will tell you that corruption is all around us, even in the high-tech IT world. Surprised?

Let’s take a hypothetical example. A large Indian company bags a 2,000 man-month project to be implemented in five months. Simple math tells me that about four hundred people should be working on the project for five months before it can be successfully completed. Even if the company employed “super programmers” only, the project would need upwards of 350 people dedicatedly working all the time. However, in the real world, you and I know what really happens. A core group of individuals work their tails off and the management shuffles people in and out of the project since they are trying to manage a few other such “2,000 man-month” projects. Needless to say, the work gets done, client gets billed and the company receives payment. Did the company really need 350 or 400 people? Was the project really a “2,000 man-month” effort? I could fill the dots from my own experiences but I think I have made my point. While companies focus on the end results, i.e. delivery of projects and recovering the amounts due, they invariably cut corners, overcharge and resort to other such “routine” business tactics.

Individual consultants too are not blame free. If I, the programmer, had an opportunity to bill for (and receive payment for) overtime in a project, would I routinely do it? You bet I would! Would I be honest when I told the client that the project “really” needed overtime? Maybe. It is this “maybe” that has a way of coming back to bite us.




About the Author

  • A Bio and profile of the author, Mohan Babu, can be found at his homepage
  • Mohan has authored a book on Offshoring and Outsourcing (Publisher McGraw Hill, India), a link to which can be found here
  • Mohan has also authored an Online book on "Life in the US," available for free download.
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    ©Mohan Babu: All Rights Reserved 2005

    Mohan Babu is an international consultant trying to find the ‘sweet spot’ where IT meets business. E-mail: mohan He is also the author of a recent book on "Offshoring IT Services"

    All rights are reserved. Mohan Babu ("Author") hereby grants permission to use, copy and distribute this document for any NON-PROFIT purpose, provided that the article is used in its complete, UNMODIFIED form including both the above Copyright notice and this permission notice. Reproducing this article by any means, including (but not limited to) printing, copying existing prints, or publishing by electronic or other means, implies full agreement to the above non-profit-use clause. Exceptions to the above, such as including the article in a compendium to be sold for profit, are permitted only by EXPLICIT PRIOR WRITTEN CONSENT of Mohan Babu. 

    Disclaimer: This document represents the personal opinions of the Author, and does not necessarily represent the opinion of the Author's employer, nor anyone other than the Author. This Article was originally published in Express Computers


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