More and more leaders of businesses and other organizations are now waking up to the reality of social responsibility and organizational ethics. Being more ethical and responsible now produces clear measurable outcomes Organizational behavior - good and bad - is more transparent than ever - globally Injustice anywhere in the world is becoming more and more visible, and less and less acceptable. Reaction to corporate recklessness, exploitation, dishonesty and negligence it is becoming more and more unacceptable. Employers, businesses and organizations of all sorts - especially the big high profile ones - are now recognizing that there are solid effects and outcomes driving organizational change. Automotive giant like Toyota, technological leaders like 3M Corporation, pharmaceutical baron like Johnson & Johnson ltd. Ethics has become an integral part of the functioningÂ
of the business and has direct impact on all traditional functions such asÂ
marketing, operations, strategy and human resource management
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There are now real incentives for doing the right thing, and real disincentives for doing the wrong things. Hence you can say that ethical leadership revolves or contain the values of both moral and good leadership. It is rather related to right doings that's justice and fairness. Ethical leadership is all about knowing your core values and having the courage to integrate them with your actions, being mindful of the common good. The core values exercise can be used with an intact group to build common ground, develop a mission statement, resolve conflicts, and improve work relationships. There are huge organizational advantages from behaving ethically, with humanity, compassion, and with proper consideration for the world beyond Coe's and the shareholders. Ethical organizations have significant improvement in competitive advantage, better staff attraction and retention, investment, morale and culture, reputation, legal and regulatory reasons, and legacy. Ethical decision-making is important for transparency, effectiveness, fairness of an organization.
We are trying to answer few of the very important issues related to ethical leadership.
Can ethics be taught or leaders are born, examples of some popular ethical leaders who are admired around the world, for their qualities, skills and specialty ethical or non ethical issues, importance of ethical leaders, their roles, decisions, creating and maintaining a legal, ethical, and diverse work environment. Areas include diversity and change management, legal issues for supervisors, and ethics. Ethics and moral conduct differ in various parts of the world. Executives who seek to go globally should also have flexible norm and traits that change country to country, but individuals who are responsible for business must maintain the standards of ethics, honesty and integrity. The success of relationships depends greatly upon the company's representatives understanding the ethical standards and expectations of others in terms of culture and customs.
In the U.S telephone helplines or" hotlines", as some companies refer to them are considered normal part of business. In some parts of the world, the same hotlines may be greatly mistrusted or even viewed as personally offensive and dangerous. Say Middle East countries
Chinese companies and Chinese citizens are subject to certain laws wherever they are, but these laws may not imply to Sweden or Russia. Laws which are common part of practice in one part of the world may be differ or invalid in others. Government policies, rules and regulation, procedures are some of the examples
Workers in some parts of the world consider the concept of ethics to be very personal, and they may not fully understand that it is also a global or company-wide issue to be discussed or even questioned.
Businesses with issues like conflicts of interest, whistle blowing, confidentiality and privacy, environmental issues, sexual harassment, diversity in the workplace are generally related to core unethical practices and millions of dollars in market share and invaluable trust of customers around the world.
A very good example for unethical business practices are companies like WorldCom, Enron and Arthur Andersen. After a series of scandals involving irregular accounting procedures bordering on fraud, involving Enron and its accounting firm Arthur Andersen, it stood as the largest bankruptcy in history. Enron shares dropped from over US$90.00 to US$0.30.
On the other hand businesses like
Always on Time
Marked to Standard
Johnson & Johnson
Procter & Gamble
Are some of the most admired companies in 2007 and renound names in global market. All the above business not only able to obtain the trust and loyalty of the customers but also wider market share world wide.
Ethical leader Born or Taught
Ethical leadership starts at the top. If it is not right at the top, it is never going to be right at the bottom, or anywhere in between. Leaders may be born not made, but ethics and ethical tenets of leadership training remain an undisputable necessity for every person assigned to positions requiring leadership and command responsibilities
Leadership skills can come from genes or education. Some people are born leader, it actally depends on the background, soceity and culture, but most of the ethical leaders are taught though education, experience and organisational training programs.Ethical leadership includes set challenging goals, translated failure into "how to succeed next time" and lived by high standards of moral conduct helping their companies.Goal attainment is always the object of leadership, because leadership involves a focus of energy upon something to be achieved.a leader should always watchful of his actions and there end result.under. Understanding and clarifying standards of ethical behavior thus becomes critical to a leader's success .Analyzing political implications, long term impact, gains and risks, are all part of information before any decision turned action makes an impact. Leadership education that is multidisciplinary, global, and ethics oriented is a remedy for many of the leadership challenges that are currently facing in the business world. Things that can be taught are moral imagination, prioritization, ethical analysis, and consistency, application to real life situations, understanding the impact of cultural differences and personal values and integrity.
For instance, Bill Gates-Microsoft, Steve jobs-Apple, Warren Buffett-Berkshire Hathway, Lakshmi Mittal- Mittal Steel, N.R.Narayan Murthy-Infosys technologies, Jeffrey Immelt - G.E are some of the finest, most recognized and admired names in the corporate world. It not only elaborate the powerful effect of ethical leadership, but also acknowledges the company's goodwill in all the stakeholders-customers, employees etc.
Bill Gates and Melinda gates foundation founded in 2000 believes that every life has equal value. Foundation aim is to help people suffering from hunger and poverty, inadequate health facilities, higher school education and AIDS. In company's key policies they further discourage unethical conduct and discrimination.
Leaders and their companies can no longer safely ignore the value placed on corporate responsibility and commitment this helps company to gain long term profits and improved track records.
As the CEO of General Electric Jeffrey Immelt wrote in 2002, GE spends billions each year to protect one of our most valuable assets - our reputation
Narayan Murthy and Infosys
Infosys Technologies Ltd. (Infosys) was voted as the Best Managed Company in Asia in the Information Technology sector, in leading financial magazine. in 2001
Rated Best Employer of India in a study by Business Today-Hewitt Associates in 2001 and 2002.
First rank in the Business World's survey of "India's Most Respected Company." in 2002
"India's Best Managed Company Award" based on a study conducted by Business Today and A.T. Kearney.
Infosys technologies ltd. Was voted as the best managed company in Asia in the information technology sector, in leading financial magazine euromoney,s fifth annual survey of best managed companies in Asia .Infosys started in 1981, by seven software professional entrepreneurs led by Narayan murthy, chairman and CEO of Infosys with total capital of Rs 10,000 or say $ 350.it grew like anything in 1990s with the liberalization of Indian economy.in 1999 it became the first Indian company to be listed in NASDAQ. In 2002 Infosys bagged the respected by grabbing the "India's Most Respected Company." In the survey held by Business world and also ranked no. 1 for the "Best Employers in India 2002" in the same year. Business today made observations about Infosys on aspects like best practice, key differentiator, people focus, knowledge sharing, competitive advantage in its cover story March 27, 2005.
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With the rapid growth of Infosys, stature of Narayan murthy has grown too. He has been given many honors and awards. In June 2000, Asiaweek magazine featured him in a list of Asia's 50 Most Powerful People. Narayan Murthy also topped the Economic Times Corporate Dossier list of India's most powerful CEOs for two consecutive years - 2004 and 2005.Infosys was the first Indian company to follow the US Generally Accounting Principles (GAAP) disclosure norms before going for a NASDAQ listing in 1999.
Narayan Murthy is the Non-Executive Chairman and Chief Mentor of Infosys Technologies Limited. He was born on august 20, 1946, acquired B.E.Electrical from university of Mysore in 1967 and further finished his M.Tech from IIT Kanpur in 1969. Narayan Murthy began is career with Patni Computer systems, but in 1981 he lead the foundation of Infosys wit other software professionals. In 1987, Infosys opened its international office in U.S.A. He is a living legend and a perfect example of the fact that honesty, transparency, and moral integrity are integral part of business. He set new standards in corporate governance and morality when he stepped down as the Executive Chairman of Infosys at the age of 60.
Mr. Murthy has received several honors and awards:
The ET Businessperson Of The Year Award [2000-2001]
The Max Schmidheiny Award - 2001
He has been featured in the Asiaweek Power 50 (June 2000) - a list of Asia's Most Powerful People
He has been named by Business Week as one of the Top Entrepreneurs of the Year 1999.
He was chosen as the Business India's "Businessman of the Year 1999", the Indian corporate world's most coveted award.
Business Week chose him as one of "The Stars of Asia" for three successive years, in 1998, 1999 and 2000
"A true leader is one who leads by example and sacrifices more than anyone else, in his or her pursuit of excellence"
-N.R.Narayan Murthy, Chairman, Infosys
"The US. Has discovered India's high-tech industry, and the credit is largely due to shy, unflappable engineer N.R.Narayan Murthy."
-Business Week, June 14, 1999
From the beginning of his carrier Narayan murthy was a strategist .He was very focused on the world market, but first the target U.S market. He wanted India to be the hub for developing softwares for clients all around the world; since he believed that India has needed resource skilled labor and that could lead to competitive advantage. Infosys was the first company to built Distribution Management Application Package (DMAP) for Reebok's French operation of the company .During 1998-99 Narayan murthy planned to position Infosys as a true global lead company - global clients, global operations, global brand image.
Narayan murthy is also very concerned of his employees and in an attempt to compensate for his employee, Infosys became the first company to adopt an employee stock option plan (ESOP) and create additional wealth for its employees. He believed that employees created wealth and unless Infosys had a mechanism to make them principle shareholders, it is unlikely to grow. Employees are also encouraged to communicate with each other and generate new and potential ideas to ways to solve problems in the organization. Infosys corporate governance practices were better than any other competitor in the Indian market. Mr. Murthy believed in commitment to values and ethical conduct of business. He valued fair dealing, transparency and no discrimination on cast or religion; he preferred intelligence and honesty of the employee in the organization.
Major Ethical Issues
Ethics is set of rules that define what is right and should be done over what is wrong and should not be done. These ethical rules or norms tell when our behavior or actions are relevant or irrelevant. Ethical rules as same general rules, but difference is when we adopt these general values, norms or so called regulations in a set pattern according to the preference and choice of an organization. Thus business ethics is general rules adopted in business behavior. In most cases the general public expects business to exhibit high level of ethical performance and social responsibility. Business ethics encourage business firms and their employees to act ethically is to prevent harm to society. Ethical behavior is to protect business from abuse by unethical employees or unethical competitors. Doing business on global scale is far more complex than doing business domestically, because companies must operate in societies with different culture traditions, laws, values, and public attitudes. Multinationals corporations need to be aware of these cultural differences while trying to be economically efficient as possible. It shows sensitivity.
There are major issues related to business and MNC's
Individual values/Personal gains
Local government Laws, rules and policies
Human rights and labour relations
Health and safety issues
Customs and Practices
Cross cultural contradictions
Discrimination-cast, colour or sex
Corporate and Social Responsibility
Cross cultural contradictions - A Major Issue
The greatest challenges that face businesses operating in foreign countries are cultural and moral standards of host country. Should a business continue practicing same ethical standards for should they change? Customs, pattern, habits, taste are some of the things business should consider before operating businesses in multi cultural societies.
For example when food giant McDonalds opened it chain in India they have to change their menu. It was changed according to the taste and likings of the Indian food. Beef, Ham and pork was taken off, special vegetarian menus were introduced and made relatively more spicy than normal food, since Indian's prefer spice in their food.
Culture is core of a country ,it not only effect people in their growth , but also influence all major parts of the economy, like government rules and policies are directly related to culture, customs and rituals practices. Rules which suits in U.S.A can not be implemented in Iran and Iraq. Thus culture affects every major part of life in a country. For example Japan Besides the obvious challenges from a language standpoint, there are many subtleties of Japanese culture that differs their business style. Always bow slightly when introduced or leaving a meeting in Japanese business on the other hand western countries prefer handshake.
Similarly in Pakistan, never shake hands, touch, or sit close or next to a woman on the contrary in Brazil or Mexico Women should initiate handshakes with men. Mexican men may exchange a type of bear hug, called an "abrazo". In lot of Middle East countries working women in society are not allowed, but in developed counties like U.K & Australia it's a sign of women liberation and broad minded society. What is right in one part of the world may or may not be expectable in the other. Things which are part of pride and glory in one country could be a major issue of avoiding cultural norms and values in the other. These aspects also influence business operating in these different societies and business with future plans to enter in the markets.
Local government policies, rules and regulations are also an important issue for MNC's. For example (countries)government with poor health facilities and inadequate funds always force global Pharmaceutical companies to license their patented medicines and drugs to local companies on low prices, and thus lowering the price, because of this many multinational firms simply withdrawn from the market, and that leads to unavailability of drugs. Support of government regulation for MNC's to come and set up their projects is a good way of providing not job to local community but establishing and enhancing healthy competition among local competitors. for instance when Intel organization were in search of a location in Ireland for putting a manufacturing plant for chips, Irish government after few negotiations allowed Intel to set up it s plant. It help the local community to get great jobs and local competitors to provide raw materials and other resources, so in a sense it helped the whole economy.
The global corporation must develop a system of values that has a common denomination of ethics practiced by its stakeholders such as stockholders, customers, vendors, managers, workers, and the international and local communities.
Justice, Self-control, Courage and Wisdom must prevail in all Coe's and major employers and stakeholders. etcâ€¦.
Business with well supported ethical business practices would lead to a profitable, successful company. Maintain accounting control and record keeping, not only means of gaining a better progress of the company, but as a resource for any questionable situation or activity. It allows ending any dubious activities. Evaluation of business documents like brochures, advertising and other documents. Makes sure that they are clear, precise and professional. Moreover they must not be misrepresented or misinterpreted. Keeping an open mind and ask for opinions and feedback from customers and team members will help company to grow. When ethics are core of a company it's easy for customers to recognize, big names like Microsoft, Infosys, I.B.M relay on character, ability, strength and truth of a business. Companies can also reclaim their business by meeting customer's and client's obligations. Businesses should support and respect the protection of internationally proclaimed human rights within their sphere of influence. Make sure that they are not complicit in human rights abuses. Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining. The elimination of all forms of forced and compulsory labor. The effective abolition of child labor, discrimination in respect of caste, colour, sex Understanding community responsibility by getting involved in community related issues and activities like health programs, primary and secondary education, environmental hazards etc demonstrating that your business is a responsible community contributor. The community expects the business to preserve the environment and to make the community a better place to live and to work through charitable activities.
Socially responsible business practices strengthen corporate accountability, respecting ethical values and in the interests of all stakeholders
Microsoft charity foundation, Bill and Melinda Gates foundation have raised millions of dollars for global issues like AIDS/HIV, Cancer, Education and Basic necessities programs in African counties. He helped not only the communities to start a better life but, Bill Gates earned immense respect and goodwill for his company. Businesses should support a precautionary approach to environmental challenges, undertake initiatives to promote greater environmental responsibility and encourage the development and diffusion of environmentally friendly technologies.
Last but not the least treat others with utmost respect. Regardless of differences, positions, titles, ages, or other types of distinctions, always treat others with professional respect and courtesy.
"If you have integrity, nothing else matters. If you don't have integrity, nothing else matters."
Alan K. Simpson