Missing Men of Honor

The Story of Disgrace

A wave of shame and disgrace washed over Indian Premier League’s (IPL) Rajasthan Royals team. Three players of the team – S Sreesanth, Ajit Chandila and Ankeet Chavan – were identified as part of the spot fixing racket. Eleven bookies were involved. Investigators have found some evidence connecting it to underworld don Dawood Ibrahim.

As per police disclosure Chavan was paid Rs.60 lakhs by the bookies, Sreesanth and Chandila got Rs.40 lakhs each. By the number of matches they have played they would have earned a few crores each. The bookies lured the players by throwing parties and providing female escorts.

It is shocking that players with such international repute and excellent career opportunities would take a criminal route to earn money. One wonders what they were thinking. Were they joyously throwing up their hands in the air and dancing with happiness. Did they think that for a few millions they would be breaking the hearts, trust and expectations of billions of people, starting with their family?

It is reported that Rahul Dravid, the captain of the team suspected something. He made Sreesanth sit a couple of matches and the team managers asked him to leave the team. How painful it must have been for Dravid, a man reputed for gentlemanly conduct.

This isn’t the first time followers hearts have been broken by their idols. It started with the political leaders. Now the cancer has spread through all facets of life. Indian politicians – Gandhi, Nehru, and Azad – were known for their impeccable behavior  Congress leaders fought for Indian independence. They spent years behind bars to fight for a cause. Now Indian politicians spend time behind bars for corruption and fraud. Instead of feeling shame or humiliation, they get back into public life with renewed vigor to mislead people and make money.  Over 30% of Indian politicians have a criminal track record.

The new breed, who have joined the infamous bandwagon are senior managers of Indian corporates. After Satyam and 2G telecom scam, their names appear frequently for being interrogated by CBI and spending time in jails.

Valuing Honor in Our Lives

So where has honor disappeared? Previously, the mark of distinction for a man was when people referred to him as – “he is an honorable man”.  Having a dishonorable reputation was disastrous socially and professionally. Now, honorable men among leaders can be counted on figure tips.

As a world civilization, we need honor back in our bloodstream. Without it, humanity will reach new levels of depravity. We require men and women to work dedicatedly to get it back for the sake of next generation, though it is a challenging task.

The cynics will say it is a pipe dream and point out various flaws. The idealists look at the times gone by and wish the same could somehow come back. The practical breed has learnt to work like an automaton to earn a living and look at nothing else.

So where do we get our heroes who will change the world for us?  The heroes have to pay a price. Lincoln, Gandhi and King – were all assassinated because they dared to bring about change. From the first step to the end of their journey they made personal sacrifices. They repeatedly saw failures, their hearts sank with despair and somehow they gathered their strength to walk on thorns again.

In the present world, who would wish to trade the high life, luxuries and comforts for a life full of dynamite?

But unless we do so, we are bestowing the next generation a dangerous life.

So our choice is between our generation and the next. Do we want to look that far ahead?

Closing Thoughts  

When we talk about change, our hackles rise. Even when it is obvious that we should change, we don’t want to. That is a human failing which 100% of us have. Our best excuse is that we can’t change the world, who would listen to us, how can all the people change? But if we study change, we just need 10% of the people to believe in our cause. That is, we need to influence just 1 in 10 people in our life. That doesn’t sound very difficult; all of us are capable of doing it. So why not give it a shot, and bring honor back in our lives. I leave you with words of Dorothy L. Sayers from Gaudy Night:

“If it ever occurs to people to value the honor of the mind equally with the honor of the body, we shall get a social revolution of a quite unparalleled sort.”

References:

IPL match fixing 

Risk Managers – Tone Down That Report!

This week three renowned figures – Angelina Jolie, Larry Page and Christine Quinn – disclosed their medical problems to the world. They discussed battle with breast cancer, paralysis of vocal cords, and struggles with bulimia and alcoholism. Jolie, a woman famous for her beauty bared her mastectomy details. They talked about fear of death and handicap, and frailty of human character. They risked high-profile careers by being candid. One word describes their actions – Courage.

However, the corporate world wants to hide behind lies and window dress their weaknesses. The corporate leaders sometimes threaten risk managers and auditors to tone down their reports. The messengers of bad news get shot. Risk managers face bullying, retaliation and threat to their jobs for showing courage to speak the truth. If they refuse to bow down to pressure, the business teams label them as politically dumb or difficult to deal with. Question is – should risk managers tone down their reports to please the business teams?

I want to discuss a couple of scenarios here and you decide the course of action.

Scenario 1- Don’t report correct facts to avoid giving bad news

Let us say, you are a CXO of an organization. You have a heart problem and visit a doctor who is a good friend of yours.

The doctor realizes your heart condition is bad. You require a heart surgery for four bypasses. The doctor doesn’t want to deliver the bad news to you, because he doesn’t wish to hurt your feelings.

The doctor tells you  – “You just have too much stress. You need a vacation to relax and have some fun.” He prescribes you some vitamins and discharges you.

You follow your doctor’s advice, take a vacation. You swim and jog for a couple of days and have a heart attack. You arrive at the hospital with a survival chance of 5%.

Did the doctor do the right thing by not telling you the truth?

Scenario 2 : Don’t report correctly to protect a friend

A civil engineer responsible for doing quality and inspection checks of a bridge notices that sub-standard quality of material is used. There is a high risk of bridge collapsing. However, he issues a clean report to his seniors because the engineer-in-charge of the bridge is a friend of his.

An organisation’s senior managers drive daily across the bridge to reach their office. One day all of them are on the bridge and it collapses. All die.

Would the families of the senior managers be happy with the quality control engineer’s for not disclosing the risks?

My guess is most of the corporate readers would have answered no. You would have preferred the truth when it is a question of your own life being at risk.

Corporate Scenario

So why don’t corporate citizens hesitate when they put other people’s life at risk. See the Bangladesh factory fire, Japan’s nuclear disaster or US banks home foreclosure and mortgage mess. Employees, customers and public lives or life savings were put at risk.

Wouldn’t a few honest risk management reports helped in fixing the problem in time to prevent the disasters?

The corporate world maintains double standards on reporting risks. They want full disclosure of the risks to them but not to others. Before setting these expectations, corporate citizens should answer these questions:

1) Isn’t it a risk manager’s job to identify the health problems of the organization, prescribe a cure, suggest amputation where required and nurse the organization back to health?

2) Is it right to compromise professional ethics and code of conduct to keep a few people happy?

3) Aren’t risk managers responsible for calculating the direct and indirect cost to others for non-disclosure of risks?

4) Shouldn’t risk managers hold their ground and stick to their independent advise as you will benefit from it in the long-run?

Closing Thoughts

Moral courage is one of the most difficult qualities to acquire. Larry Page, as CEO of Google fulfilled his responsibility to the investors by publicly disclosing his medical problems. Now the investors can make an informed decision. One has to admire Page for taking such a difficult call. It takes guts. Disclosing personal weakness makes one feel vulnerable, exposed and fallible. He has shown the path for corporate leaders to follow.

Leadership of Dead Bodies, Stones and Flowers

In April, two Air India pilots handed over the controls in auto-pilot mode to two female cabin attendants to take a short nap. They decided that their sleep was more important at 33,000 feet while flying the 160-passenger flight from Bangkok to Delhi. They returned to the cockpit after 40 minutes when one of the cabin attendants accidently knocked off the auto-pilot mode.

The angry Twitterate asked for pilot’s license suspension, removal from job and legal charges for culpable homicide. Everyone questioned their work ethics and shock at their irresponsible behavior. Air India investigated the incident, suspended the pilots and sated that passengers’ safety was never compromised. Unbelievable, how can passengers be safe without any pilots at the helm?

1.     Double Standards in Evaluating Corporate Leaders

 The pilots were crucified for risking the lives of passengers. However, surprisingly the pilots of the corporate world do not suffer the same fate. The wizards and titans of the banking industry crash landed the world economy, but they didn’t lose their CXO seats.

Look from another lens. Did any senior in Supplier Company or the multinationals lose their job in the Bangladesh factory fire? In Foxconn, the Apple contractor, 11 employees committed suicide, four died in an accident and one collapsed after continuously working for 36 hours. However, Steve Jobs was rated as the second most popular leader by the CEOs in a survey conducted by Price Waterhouse Coopers. The first and third were Winston Churchill and Mahatma Gandhi respectively.

Now this is going to rattle my readers but let me say it. Steve Jobs was a great inventor, designer, strategist and marketer. However, when it came to people, his employees considered him rude and manipulative, and his competitors found him uncivil. Though Apple achieved great heights, he paid low salaries to the employees in the Apple stores, paid no dividends to the shareholders, pushed down suppliers to manufacture at lowest possible rate and didn’t believe in charity or corporate social responsibility. His behavior and actions weren’t people centric or humanity oriented. So my question is – do we consider him a great leader because he managed to put Apple on top? That makes him a great CEO, not necessarily a great leader.

2.     Misconceptions of Leadership

 The problem arises due to the definition of leadership. Read the dictionary meaning:

Leadership is “organizing a group of people to achieve a common goal”.

- We don’t focus on how the group of people were gathered; by inspiring them or arm-twisting them.

-  We don’t focus on the nobility of the goal; was it to exploit others or liberate them.

-  We don’t focus on the method adopted to achieve the goal; was it by breaking the rules or a journey of virtue.

In the present world we see leaders leaving dead bodies in their path, walking over people as if they were stones and sucking the life out of them. Great leaders create leaders not followers, they make others blossom like flowers.

Be it a corporate leader or political leader, we don’t wish to question the leadership methods. Our thinking is, how it matters to us, we have nothing to lose. We have everything to lose, and Martin-Niemöller-Foundation words at Hitler’s time still resonate:  

“First they came for the communists,
and I didn’t speak out because I wasn’t a communist.

Then they came for the socialists,
and I didn’t speak out because I wasn’t a socialist.

Then they came for the trade unionists,
and I didn’t speak out because I wasn’t a trade unionist.

Then they came for me,
and there was no one left to speak for me.”

Our own silence will kill us and the society we live in. When humanity is at stake, can we close our eyes and say nothing is at stake.

3.     Leadership Training

The Institute of Strategic Change reported that – “the stock price of ‘well-led‘ companies grew by over 900% over 10 years, compared with 74% for poorly led companies”. Warren Bennis in 1998 said – “The Truth is that no one factor makes a company admirable. But if you were forced to pick the one that makes the most difference, you’d pick leadership.” However, how many companies train on leadership or do a performance evaluation on leadership qualities?

Quite a few would be saying we do it. So let me clarify. In organizations bosses tell the juniors what to do and how to do it. They give rave reviews to the employee who completes the task as they had stated. They promote that employee and now he becomes a boss. At best, he will be a good manager, not a leader.

Corporate world determines success rate by title and salary.  Neither guarantees leadership skills. Employees aim to become a boss, not a leader. The terms are not synonyms.

According to Malcolm Gladwell,  all outliers practiced their talent for over 10,000 hours to achieve greatness.  In the corporate world, how many hours are dedicated by each employee to learn leadership? Learning leadership is a by-product of the main job, till CEO level. Then isn’t it surprising that we do not have many great leaders in the corporate world.

 Closing Thoughts

Maximum damage in the world was caused by people who got powerful positions without good leadership qualities, be it Hitler, Jeff Skilling, Bernie Madoff or Lance Armstrong. The biggest risks in the corporate world are leadership risks. It is the leaders who make the decisions, so unless we have a system of putting the right people in leadership positions we will continue to have these disasters. Hence, our job is to develop good leaders, select good leaders and continuously monitor the leaders.

 Wishing my readers a Happy Mother’s Day. Being parents is the toughest job in the world,. They are responsible for raising the next generation of leaders.

References:

1. Air India Pilots Story  
2. Deaths in Foxconn
3. Price Waterhouse Coopers report on best leaders

 

Human Rights Risk Management Process

The fire in a nine-story factory building in Bangladesh killed 400 people. More than 600 people remain unaccounted for. It housed five garment factories that supplied to international brands – J.C. Penny, The Children’s Place, Dress Barn, Primark, Wal-Mart etc. The workers were asked to come to work even when cracks appeared in the building the previous day.

Bangladesh is the second largest exporter of clothes and the workers get the lowest compensations. Just around USD 37-40 per month. The question arises why are the multinational organizations not following the UN Guiding Principles for Human Rights protection. The reason is simple; they want to show higher and higher profits to the investors.

In Delhi, in Munirka one will find numerous small factories full of workers making export garments. A friend of mine also ran one. I had bought a few shirts from her at cost price ranging from Rs 300-500 (USD 6-10). In one international visit, I found the same shirts selling in range of USD 15-30. The fivefold increase in price was because of the brand tag attached to the shirt.

The multinational buyers push the prices down and some supplier gives a rock bottom price. The others are forced to match that price to get the business. End result is that basic facilities are not provided to the workers and they work at really low wages. Unknown workers are paying with their lives in developing countries to satisfy the growth targets set by CEOs to earn their bonuses and keep investors happy.  It is the dark side of capitalism which organizations want to hide.

In most companies, human rights risk management is not a focus area. The 2013 Global Risk Management Survey conducted by RIMS identified seven risks related to human resources among the top fifty risks. Though worker injury and harassment were included there was no specific emphasis on human rights risk management.

The risk management team can conduct annually or bi-annually a human rights risk management assessment. It requires attention not only from human resources perspective but from operational, financial, legal and reputational risks perspective. Any breach can result in huge losses.

Here are some of the steps mentioned in the UN Guiding Principles on Human Rights and guide “Investing the Right Way” issued by Institute of Human Rights and Business.

1.     Review the Human Rights Policy Statement

Human rights risk management is emerging as an important issue, especially with multinationals entering emerging markets and developing countries. They are expected to protect and respect rights of workers, communities and society. Investors can play a crucial role by influencing companies to promote human rights relating to gender equality, child labor, rights of indigenous people, land acquisition, mineral processing etc.

Hence, companies need to publish Human Rights Policy Statement on their websites. The UN Guiding Principle 16 states –

 “As the basis for embedding their responsibility to respect human rights, business enterprises should express their commitment to meet this responsibility through a statement of policy that:

(a) Is approved at the most senior level of the business enterprise;

(b) Is informed by relevant internal and/or external expertise;

(c) Stipulates the enterprise’s human rights expectations of personnel, business partners and other parties directly linked to its operations, products or services;

(d) Is publicly available and communicated internally and externally to all personnel, business partners and other relevant parties;

(e) Is reflected in operational policies and procedures necessary to embed it throughout the business enterprise.”

As a first step risk managers need to check whether the organization has a human rights policy statement and the above mentioned steps have been adhered to.

2.     Human Rights Impact Assessment

The second aspect of UN Guiding Principles is for companies to establish human rights due diligence processes. Guiding Principle 17 states:

 “In order to identify, prevent, mitigate and account for how they address their adverse human rights impacts, business enterprises should carry out human rights due diligence. The process should include assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed. Human rights due diligence:

(a) Should cover adverse human rights impacts that the business enterprise may cause or contribute to through its own activities, or which may be directly linked to its operations, products or services by its business relationships;

(b) Will vary in complexity with the size of the business enterprise, the risk of severe human rights impacts, and the nature and context of its operations;

(c) Should be on going, recognizing that the human rights risks may change over time as the business enterprise’s operations and operating context evolves.”

Human rights risk management is complex and challenging. If ignored, they can increase political risks and deteriorate relationships of the organization with the government. For example, Tata Motors wished to establish Nano manufacturing plant in Singur, West Bengal. The government allocated agriculture land using 1894 land acquisition rule, meant for public improvement projects, to take over 997 acres farmland. The farmers protested with help of activists and the then opposition leader Mamta Banerjee. Tata Motors moved out of West Bengal and established the factory in Gujarat. Multinationals looking for large tracts of land to establish factories are facing similar challenges in India.

Another aspect to look into is that scrap, waste disposal, sewage, environment pollution etc. from factories can impact food, water and health of local communities.

Decision needs to be taken whether investments should be made in countries or states with poor human rights record. In India, the Naxalite area is extremely conflict prone and business operations can have severe human rights impact.

Risk managers should evaluate the strategy and operations of the company from human rights, environmental, social and governance factors. The companies can face operational risks (project delays or cancellation), legal and regulatory risks (lawsuits and fines) and reputational risks (negative press coverage and brand damage). The impact assessment should be done from investors, customers, employees, society and supplier perspective. Identify business owners for the risks and devise appropriate risk mitigation plans to address adverse impact.

3.   Grievance Mechanisms

UN Guiding Principles state that victims of corporate related human rights abuse should have access to judicial or non-judicial remedies. Companies should provide some remedies themselves and cooperate in the remediation process.

UN Guiding Principle 29 states –

“To make it possible for grievances to be addressed early and remediated directly, business enterprises should establish or participate in effective operational-level grievance mechanisms for individuals and communities who may be adversely impacted.”

However, this isn’t followed by the companies in true spirit. “A Vigieo analysis of human rights records of 1500 companies listed in North America, Europe and Asia revealed that, in the previous three years, almost one in five had faced at least one allegation that it had abused or failed to respect human rights.”

Ideally the investors in the company should ensure that grievance mechanisms exist and address human rights issues. The transparency and disclosure of the same in annual reports would highlight the financial, legal and reputational risks. However, the investors don’t seem to be bothered by it.

See the case of Apple. It reported  Gross Profit Margin – 42.5%, Net Profit Margin – 26.7%, Revenue Per Employee – $ 2,149,835 and Net Revenue Per Employee – $ 573,255. It has 43000 employees in US and 20,000 outside US. However, Apple contractors hire an additional 700,000 people to engineer, build and assemble iPads, iPhones and Apple’s other products.

An Apple supplier in Taiwan, Foxconn was recently in the news for its workers attempting suicide. As per reports “Workers are required to stand at fast-moving assembly lines for eight hours without a break and without talking. Workers, sharing sleeping accommodations with nine other workmates, often do not know each other’s names. They do not have much time to get to know each other. The basic starting pay of 900 RMB($130) a month – barely enough to live on – can be augmented to a more respectable 2,000RMB ($295) only by working 30 hours overtime a week.”

See the difference the company earns per employee and the payment made to the supplier’s employees. Apple shows profits at the expense of lives of Taiwanese workers.  The workers don’t have much of a grievance mechanism in China as the government stated that the suicides are within the normal suicide rate. Can Apple investors sacrifice some profit margin for safety and security of the contractual workers?

Another old example is the class action suit since 2001 on Wal-Mart Stores that involved 1.5 million current and former Wal-Mart female employees. It is the largest workplace bias case in US history.

 4.    Human Rights Reporting

 The biggest challenge is that most of the human rights abuses are not reported. The victims of human rights exploitation hold little power in comparison to the exploiters. They can hardly take up the might of powerful businesses when they are struggling to get basic food and shelter. Secondly, in the developing and emerging countries, corruption levels are generally high. Hence, media, law enforcement agencies etc. are bribed by the power players to silence the victims. However, with internet and social media, things are gradually changing. People have a voice and collectively they can fight.

UN Guiding Principle 21 lays out the requirement for companies to communicate human rights impact externally. It states -

 “In order to account for how they address their human rights impacts, business enterprises should be prepared to communicate this externally, particularly when concerns are raised by or on behalf of affected stakeholders. Business enterprises whose operations or operating contexts pose risks of severe human rights impacts should report formally on how they address them. In all instances, communications should:

(a) Be of a form and frequency that reflect an enterprise’s human rights impacts and that are accessible to its intended audiences;

(b) Provide information that is sufficient to evaluate the adequacy of an enterprise’s response to the particular human rights impact involved;

(c) In turn not pose risks to affected stakeholders, personnel or to legitimate requirements of commercial confidentiality.”

 As per the UN principles, the reports must cover appropriate qualitative and quantitative indicators, feedback from internal and external sources including affected stakeholders.

Risk managers can evaluate the reports and the reporting process to ensure that all risks are properly addressed. They should evaluate whether cautionary steps are taken and nothing is being done to exacerbate the situation. They should highlight severe or irreversible risks to the management to ensure appropriate decisions are taken.

Closing Thoughts

 Inequalities in income are the main cause of human rights abuse. The rich want to get richer at the expense of blood and sweat of the poor, and sometimes life. The diamond manufacturers and sellers took the right step to publish that they do not source blood diamonds. Since 2003, the Kimberley Process Certification Scheme (KPCS), supported by national and international legislation, has sought to certify the legitimate origin of uncut diamonds. Trade organizations – International Diamond Manufacturers Association (IDMA) and the World Federation of Diamond Bourses (WFDB) – representing virtually all significant processors and traders – have established a regimen of self-regulation.

Other industries, be it technology, electronics or textile manufacturers,  need to come out with similar steps to stop human rights abuse. The risk managers have a vital role to play in it. If we do not do anything, we are cheating this and the next generation of their right to live happily.

References:

1.  Investing the Right Way – A Guide for Investors on Business and Human Rights – By Institute of Human Rights and Business
2. Singur farmland-  Tata Motors conflict
3. Apple financial ratios
4. Foxconn Case Study
5. Diamond industry sales clauses
6. 2013 RIMS Global Risk Management Survey

 

Happy Woman’s Day – Wishing More Power to Women

Whatever a woman wears shocks some man on this earth. A bikini-clad woman will most probably shock Indian urban male sensibilities, a burqha-clad woman will shock a French man, and a woman wearing a ghoonghat would shock an American. Still people judge a woman by what she wears. In patriarchal societies, character and sexuality of a woman is the same thing. Chastity, virtue and good character of a woman are prime importance. Men do honor killings in its name. What purpose do they serve? If women are not supposed to have sex with men, then is society promoting gay behavior?

In India, a country that was progressive in before Christ era, the situation has deteriorated with each passing century. India is the 4^th unsafe place for women in the world. Times of India reported that in Bangalore, 64% women feel unsafe to commute at nighttime. In rural India, situation of women is worse. They do not even have an education. Women face physical, emotional and psychological abuse every day.

1.      Virginity & Sexuality

The propaganda is that Hindu mythology books –Ramayana and Mahabharata – define the ideal woman. It is convenient; Sita the female protagonist in Ramayana is the ideal woman. Mahabharata depicts characters that are more realistic. For example, Draupadi, the heroine of Mahabharata had five husbands. In present day, men definitely can’t accept polyandry. Her mother-in-law, Kunti, gave birth to a son, Karan, before marriage. Her three sons after marriage were from different fathers as her husband was impotent. Draupadi was publicly disrobed and it is the men who are projected in negative light. The book shows both Kunti and Draupadi in positive light.

Presently, in Indian society looks down on women having sex with different men or having a child before marriage. Mahabharata was depicting a time period of 10^th century BC, and we call ourselves broad minded.

2.      Marriage and Dowry

One of the most negative customs in Indian society is that of dowry. As a good girl of Indian society should have an arranged marriage, her parents have to pay a big fat dowry to get a bridegroom. A woman is supposed to let her parents choose her husband.

In ancient India, the concept of Swaimwar existed. The parents of the girl would organize a Swaimwar, inviting eligible men for the marriage of their daughter. The daughter could run tests on the men, and choose her own husband. Even kings had to take rejection gracefully when they attended a Swaimwar.  It was the woman’s choice, and neither the parents nor the participants could change the decision.

Rape was punishable in some cases with death and in all situations; a woman’s consent was required for sex. For sex or marriage, a woman did not need her parent’s permission and could independently decide.

Women received “Stridhan” (wealth of a woman) at the time of marriage. This money and property was given to her by her and her husband’s relatives to use in case of emergency and/or on death of her husband. Even her husband was not entitled to use the money generally.

However, now the girl’s parents are pressured to give money to the bridegroom’s parents, and the girl doesn’t get any of it. In some cases, in rural India, if a girl chooses a lover or husband, she is killed to retain family honour. Rate of female infanticide is high because parents don’t wish to have liability of a girl. Tragically, the olden concepts have been twisted to fulfill power and greed.

3.      Widowhood, Divorce and Re-marriage   

Widowed and divorced women are socially excluded, as they are considered unlucky. Both are a social stigma. Hence, remarriage of divorced or widowed women is difficult.

It is incredible, that Kautilya’s Arthshastra defines the conditions of divorce, desertion and widowhood. He also mentions the period of separation and remarriage for divorced and widowed women. Islam and Sikhism accepted divorce and remarriage since inception.

The social custom of sending widowed and deserted women to temples to live a life of abstinence was more of an economic need than religious requirement. Even Sati (wife burning herself on her husband’s pyre) was a way to save money, in the name of chastity and virtue. Widowed and deserted women then would not require significant monetary support if it is propagated that they should not live a life of luxury.

Again here, the social customs were twisted to suit monetary ends. The tragic part is that these are done in the name of religious mandate. Hence, few would challenge the customs openly. We need to change the mind-sets to succeed in a global environment. India can’t succeed when 50% of its population is tied up in such draconian customs. Let us focus on independence and liberation of women in this century.

Closing Thoughts

Well, one can only argue with men up to a point. So I thought let me be open-minded and consider their perspective. Maybe one can decide a character of a person by the clothes they wear. I need a little bit of help form my readers. Could you look at the following pictures, and tell me which man has the best character. I am not blind yet, so I could figure out who looks the sexiest, but drastically failed at assessing character.

Wishing a Very Happy Woman’s Day to all my readers.

Two Ethics Questions to Mr David Cameron

David Cameron recently visited India with a huge trade delegation to improve the bilateral relationships. Of course, with India’s growing power, world’s senior politicians and business heads are now coming to India every week. However, what made Mr Cameron’s visit remarkable were his two comments he made in respect to British colonial rule.

Though I generally keep away from commenting on political aspects, the hypocritical stance was just too amazing to ignore. Indians sometimes see this behaviour from whites in India. For instance, a British man recently said to me – “All Indians are slaves, we British are superior.” I have no idea on superiority or inferiority of any human race but Indians are definitely not slaves. Obviously, the deluded old chap lived in a different world. Point to note is, Roman traders introduced the concept of slaves to India, and Mughal rulers practiced slavery in India for the first time.

The British rule was an attempt of minority ruling the majority. That is only possible by fear and terror. While Indian rulers believed in servant leadership. British ruled the population in a significantly inhumane autocratic leadership style that Indians did not have much experience in dealing. That resulted in quite a few atrocities and it brings me back to Mr Cameron’s comments.

1.      Jallianwala Bagh Massacre

David Cameron, the British Prime Minister, visited Amritsar’s Jallianwala Bagh and laid a wreath at the memorial. Cameron considered the massacre “deeply shameful event in British history” but did not apologise for it. Before this, Queen Elizabeth had paid a visit to the same memorial in 1997 and laid a wreath. One is not sure what the British leaders are attempting to convey by these gestures.

Here is the historical perspective. On April 13, 1919, British troops opened fire on unarmed civilians, including women and children who were celebrating the Sikh festival Baisakhi at Jallianwala Bagh. The British estimated 379 dead and approximately 1100 wounded. Indian National Congress estimated 1000 dead and 1500 wounded.

The order was given by Brigadier-General Reginald E.H. Dyer. He was forced to retire from army, however was celebrated as a British hero. His actions were so twisted that when an Englishwoman, Miss Marcella Sherwood reported she had been molested on the streets of Amritsar, he issued an order requiring all Indians (men) using that street to crawl its length on their hands and knees. General Dyer said that – “Some Indians crawl face downwards in front of their gods. I wanted them to know that a British woman is as sacred as a Hindu god and therefore they have to crawl in front of her, too.” He was never punished for any of his actions nor was tried in court.

Under British rule, Indians suffered numerous inhumane acts. From the present day British leaders’ perspective, I would say that they cannot undo the past. Indians definitely are not waiting for an apology. However, using the gesture for political mileage, most probably to get Indian votes in Britain in the next election is a little bit too much to swallow.

The other aspects I find hypocritical are the double standards maintained. When Germans killed Jews, it was an inhumane act – “crime against humanity”. The Nazis were tried in Numerban trial and hanged for their war crimes during Second World War. Even until date, a list is maintained of the missing Nazi’s. American President Mr Franklin D. Roosevelt  and British Prime Minister Mr Winston Churchill, both were involved in the decision.

I absolutely agree that Hitler’s rule was atrocious. I have one observation – If atrocities are done on Americans and British it is a crime against humanity. If they do atrocities on people of other countries, then those people do not even deserve an apology.

How does one justify this stance on ethical standards?

2.      The Kohinoor Diamond

India requested David Cameron to return its Kohinoor Diamond and he responded – “I certainly don’t believe in ‘returnism’, as it were. I don’t think that’s sensible.”

Kohinoor diamond was discovered in Karnataka mines and the first mention is in 13^th century. It is one of the most well known diamonds in the world. Presently, it is set the in the British crown of Queen Elizabeth and is displayed in Tower of London.

The British acquired the diamond from India in 1850. Raja Ranjit Singh of Punjab owned the diamond and in his will bestowed it to Jagannath Puri temple. However, on his death in 1839 British administrators did not execute his will. In March 1849, British formally proclaimed Punjab as part of British Empire in India.  In terms of the treaty they mentioned that the “gem shall be surrendered to Queen of England”.  Lord Dalhousie treated it as spoil of war. He made the 13-year-old conquered prince Dulip Singh, to travel to England to present the diamond to the Queen.

India was a rich country when British arrived in the 17-century AD. They took away precious jewels from the kingdoms they captured. Most of them cannot be directly identified; however, Kohinoor is part of Indian heritage.

My question is – Is it ethical for a country to keep other countries national treasures? What if the roles were reversed? What would the world expect from India then?

Closing Thoughts

India is catching up with the developed countries and now ranks 9^th in the world in respect to Gross Domestic Product. Indians are confident of doing better in the 21^st century. Hence, they are not looking for rehashing history, as it can never be changed. Indian religions teach forgiveness as the greatest virtue. However, it does not mean Indians have forgotten the past and are gullible enough to be taken for a ride. Now as more world leaders visit India to take advantage of the large consumer market, they need to do far better. A new world order is establishing and India is in a position to choose the best partners.

References:

1. List of Most Wanted Nazi War Criminals according to the Simon Wiesenthal Center
2. Nuremberg Trials
3. Kohinoor Diamond
4. Britain GDP

Accounting and Auditing in Ancient India

Professionals want to know the origin of their profession, the work done in olden times and the level of knowledge. I thought of sharing with you the history of Indian accounting and auditing profession. I discovered in Kautilya’s Arthshastra that it existed in ancient India in 4^th century BC. Therefore, my guess is that it would have originated at least a few centuries earlier.  The accounting principles and standards used in the present century are similar to those that existed in the 4^th century BC. This nugget of information may have surprised you.

Broadly, Kautilya’s Arthshastra covers accounting principles and standards, role and responsibilities of accountants and auditors, the methodology of accounting, auditing and fraud risk management, and the role of ethics in managing financial activities. Let me share some of the concepts with you in the next couple of posts.

1.     Maintenance of Accounts

The accounting financial year was fixed to July-June period and with a full process for closure of accounts and audit of the same. It covered the method of consolidating the accounts from various departments of the government to assess the net income and loss. The accountants were required to furnish the completed annual accounts to the head office mid-July. Delay and/or failure to do so attracted financial penalties.

 2.  Classification of Receipts

 Kautilya states that “receipts may be (1) current, (2) last balance, and (3) accidental (anyajátah= received from external source).” In it, he differentiates between cash receipts and debtors, current and accrued income, income from other sources, windfall gains, and recovery of bad debts. He recognized the concept of risk and suggested different rate of interests for loans. Foreign trade loan attracted the highest interest, as the returns were uncertain.

3. Classification of Expenditure

Expenditure classification was similar to receipts classification and included the differentiation between capital expenditure and revenue expenses. Kautilya described it as – “Expenditure is of two kinds—daily expenditure and profitable expenditure.” The difference between income and expenditure was termed as “net balance”. He insisted on making long-term investments in construction and other works as these would generate profits over a period. It also entailed keeping track of work in progress.

4. Role and responsibility of accountants

A hierarchical organization structure of senior to junior accountants existed within the king’s treasury function. The accountants maintained books of accounts on an annual basis according to prescribed standards. The same were furnished for audit at year-end. Kautilya suggested good salaries to accountants and auditors as high income would keep them ethical. Accountants would be more prone to commit fraud if they earned very little.

5.     Segregation of Roles of Treasury and Auditor

The fascinating part of Kautilya’s approach was that he recognized conflict of interest between finance and auditing functions. He categorically stated that the head of finance and head of audit should independently and separately report to the king. He recognized the possibility of collision between the two. In India, in the government the Comptroller General of Audit and Ministry of Finance are two separate functions. However, in the corporate world still in quite a few companies chief audit executive are reporting to chief financial officer rather than the chief executive officer.

6.     Building an Ethical Culture

Kautilya believed character reflected personal values of individual and ethical values learning must commence from childhood. Even as an adult ethical conduct was as important as professional skills. He proposed measures to build ethical climate in the kingdom. However, he was practical and recognized the potential of corruption. In accounting, he talked about misstating financial statements due to abuse of power and fraudulent reporting. He devised a system of reward and punishment to ensure compliance to rules and regulations.

7.     Verification and Auditing of Accounts

The concept of continuous monitoring, periodical auditing, verification and vouching existed in ancient times. Checks were done daily and periodically (five nights, pakshás, months, four-months, and the year). The attributes used in the present day for verifying income and payment vouchers were also used in earlier times. Interestingly, each department had spies to provide information and report wrongdoing to the seniors. There was a full process for discovering fraudulent transactions and punishing accountants for misstating financial statements. I shall cover that in the next post.

Closing Thoughts

Kautilya prescribed the accounting theory that included bookkeeping, preparation of financial statements, auditing and fraud risk management. He considered accounting as an integral part of economics. Various kingdoms in India used his work until the 15^th century AD i.e. before the colonial rule. I am not aware whether similar level of knowledge existed in other parts of the world before the Christian era. If you do have information, please share it with me. It will be an enthralling journey into the past.

References:

Kautilya’s Arthshastra 

Employee Selection and Background Screening in Ancient India

Would it be fair to assume most of us believe that employee selection and background screening processes were formed in the 20^th century? Do you think soft skill evaluation of employees is the latest management mantra? Will it come as a surprise that in India these were formed in 4^th Century BC?

Kautilya’s Arthshastra, written in 4^th  century BC, lays down rigorous process for selection and background screening for ministers, priests and government employees. It is more extensive than that employed in the present-day corporate world. I am doing a comparison of the two below. After reading, tell me whether we have progressed or deteriorated in 25 centuries.

1.      Selection Process

Let us first see the qualities senior level people require according to Kautilya:

“Native, born of high family, influential, well trained in arts, possessed of foresight, wise, of strong memory, bold, eloquent, skilful, intelligent, possessed of enthusiasm, dignity, and endurance, pure in character, affable, firm in loyal devotion, endowed with excellent conduct, strength, health and bravery, free from procrastination and fickle mindedness, affectionate, and free from such qualities as excite hatred and enmity–these are the qualifications of a ministerial officer (amátyasampat).”

If you look at them, he covers intelligence, professional capability, personal character, strategic thinking, emotional intelligence, social and business connections, soft skills and physical fitness. In the 21^st century words and terminologies are different, but attributes are the same. Hence, not much change.

2. Background Verification Process

Now I am giving a table below comparing the two period’s process of background verification. For detailed methodology of the current period refer to my article – Pre-employment Background Verification.

Doesn’t it make you think? Over 25 centuries, the basic concept and process of selection and background verification has remained more or less the same. However, Kautilya’s selection process doesn’t stop here. He mentions a few additional processes and I am amazed at the insight.

3. Detailed Character Verification

In the Arthshastra, Kautilya asks to ascertain the character of employees by offering temptations and instigating them against the king. Senior level ministers and priests should attempt to lure the employee to test him for four allurements- religious, monetary, love and fear. He suggests creating situations to test whether the employee will defy the king for the sake of religion, money, sex or under threat. Then he states, that whosoever is lured by a certain aspect, should not be in-charge of it. For example, if someone fails the test of monetary allurement, he should not be responsible for managing finance. The tests were conducted to ensure that people in critical positions were incorruptible.

In present times, we select senior managers on various aspects but their loyalty and character aren’t as thoroughly checked as in the ancient times. In my view, quite a significant number will fail Kautilya’s tests for “purity of character”. How many CEOs check whether their direct reports will betray them for bribes and rewards?

Closing thoughts

In India, around 25% candidates submit false or inaccurate resumes. The background screening processes aren’t fully established in most of the organizations. With high risks of hiring terrorists, hackers and fraudsters the organizations are susceptible to financial, legal and reputation risks. Isn’t it surprising that even after 25 centuries the process and procedures aren’t fully implemented.

We now say we are living in a fast changing world. So, do you think background-screening processes will become efficient in this century, if they haven’t changed in 25 centuries?

Indian Attitude Towards Time – A Strength In Future

We Indians jokingly refer arriving late for a meeting as arriving ISD (Indian Standard Time). However, if you, my reader, are an Indian, you would have heard a question from a western colleague – “Why are Indians late for meetings?” If you are a westerner, you desperately want to know the answer to bring your stress down and figure out whether the Indians actually want to do business with you. However, whether you are an Indian or a westerner, have you ever thought of Indian attitude to time as a strength in the future chaotic world?

Let me delve into a little bit of detail before I answer that. The attitude towards time divides people into two cultures – monochronic people and polychronic people. According to Wikipedia the definitions are:

Monochronic – A monochronic time system, people do things one at a time and segment time into precise, small units. Under this system, time is scheduled, arranged and managed.

Polychronic – In polychronic time system, people do several things simultaneously, and take a more fluid approach to scheduling time.

Indians follow the polychronic time system whereas most of the western countries believe in monochronic time systems. The general perception is that people following monochronic time system are better organized. Hence, monochronic system is superior.

1. Attributes of the two cultures

Below is a table of attributes the people of two cultures show with the current business buzzwords and applicability to Indians. Check it out and tell me whether Indians attitude towards time is going to be strength in future?

No	Monochronic People	Polychronic People	Buzzwords	Applicability to Indians
1	Do one thing at a time	Do many things at once	Single task v/s Multitasking	Multitasking
2	Concentrate on the job	Can be easily distracted and manage interruptions well	Single task v/s Multitasking	Multitasking
3	Take time commitments seriously	Consider an objective to be achieved, if possible	Task oriented v/s goal oriented	Goal oriented
4	Are low context and need information	Are high context and already have information	Direct orders V/s Subtle communication	Subtle communication
5	Are committed to the job	Are committed to people and human relationships	Task oriented v/s people oriented,	People oriented
6	Adhere religiously to plans	Change plans often and easily	Predicted & scheduled v/s Chaotic & complex(Fixed project schedules v/s Flexible planning)	Chaotic & complex
7	Are concerned about not disturbing others; follow rules of privacy and consideration	Are more concerned with those who are closely related than privacy	Individual V/s social communities(Privacy and security v/s social networks and internet)	Social communities
8	Show great respect for private property; seldom borrow or lend	Borrow and lend things often and easily	Ownership v/s credit lending	Credit lending
9	Emphasize promptness	Base promptness on the relationship	Time v/s relationship	Relationship
10	Are accustomed to short-term relationships	Have strong tendency to build lifetime relationships	Transactional relationships v/s Long-term relationships	Long-tern relationship

2. Link with current management trends

Now let us discuss the latest management mantras:

a)    Impact of  technology

Advancement in technology and telecommunications has globally connected the world with little segregation possible in work and home life. Managers do multiple tasks now and Gen Y are mentally geared to do so from childhood.

Advantage – India: Indians traditionally do multiple tasks and have a huge population of Gen Y.

b)    Effect of  globalization

Globalization and outsourcing has ensured that managers are not physically available on site to monitor tasks. Secondly, work-life balance is encouraging more people to work from home. Hence, success depends on delivering results and not on completing tasks.

Advantage – India: Indians do not have mindset for process adherence and adopt flexible approaches to achieve targets.

3)    Influence of social networking

In the age of social networking, communication is taking center stage.  Senior managers face the challenge of communicating with a global workforce of different cultures.

Advantage - India: Indian communication style is subtle, layered and non-aggressive.

4)    Demands due to complexity of business 

The space of change in the world has increased due to technology and globalization. The business environment has become complex and chaotic. The long-term planning is not possible because parameters change in a short time.

Advantage – India: Indians managers are used to dealing with adversity and chaos. They are comfortable working delivering results with minimum infrastructure and support.

5)    Finding meaning in relationships

The western organizations have realized that in the long run transactional relationships result in dysfunctional organization culture and reduce customer loyalty.

Advantage – India: Indians believe in long-term relationships even in business. They conduct business after establishing trust and respect in the relationship.

Closing thoughts

I do not know whether I am on the right track. Nevertheless, in my opinion we definitely need to relook, as the risks are high. For instance, presently the western organizations are developing their organization structure, processes and framework according to monochronic thinking. On the other hand, as the business environment requires polychronic behaviour, there is going to be clash in the system. Employees will be confused and unnecessary conflicts will occur. That results only in one thing – lower profits and higher risks.

In Indian organizations, we need to be clear that we do not adopt behavior patterns and change the culture according to our perceptions. We need data and analysis to assess the culture that will be suitable in future. It is possible, that a polychronic culture is better.

The Indian Management Model

I am asking my readers - Have you heard about the Indian Management Model. If not, then why not? India has a rich history of baniyas (business community) who excelled in trade. India controlled one-third to one-fourth of the world wealth in the classical period (1AD to 1279 AD). So why do we not have Indian management principles?

Indian business schools and colleges teach management concepts formulated by Peter Drucker and Fredrick Taylor. Granted America had a dramatic and glorious history of business growth. However, presently the media headlines proclaim just one thing – American business environment sucks! Indians have made great strides in adopting the American money market principles but shouldn’t we stop and redefine them.

Indians managers may think it is not possible, but Bollywood has taught us it is possible. Yeah, Bollywood has chosen the best of both worlds. Aamir Khan’s Lagaan reached the Oscars with dirty dhoti clad Indians singing, dancing, and playing cricket. Even Danny Boyle’s Slumdog Millionaire had a song and dance sequence. Bollywood movies contain high-octane emotional drama, no-brainer jokes, head over heels in love stories, superman fight sequences, songs and dances. Bollywood adopted the Hollywood technology, marketing and financing strategy, and retained the cultural core of Indian cinema. It presented itself to the world in various award functions without attempting to incorporate Hollywood sensibilities and tastes. It is now so popular that even US dance reality shows have with Ballad and Hip Hop, Bollywood dance form.

We need to do the same with Indian management rather than blindly adopting western best practices. Below are some of my rather radical thoughts on how we can do it. Read it and tell me what you think.

1.     Holistic Business

The stupendous success of American capitalism in 20^th century resulted in making the money market model popular. India initially after independence followed socialistic model but after liberalization in 1990s is foraying into hard-core capitalism.

Now, after witnessing the pitfalls American business concept is undergoing change. More and more people are questioning the basic premise that business is for profit alone. People are propagating that business has responsibility to all its stakeholders – investors, customers, employees, suppliers and society. It cannot profit while harming the society.

From ancient times, India propagated the concepts of holistic business. The stories in Indian history repeat the same message. A businessman is required to conduct business ethically and responsibly and has to give back to the society.  Unlike the west, Indian philosophy focuses on balanced life and not the concept that more is better.

Hence, while the west was struggling with high CEO salaries, until recently, India was not having this problem. The Indian CEOs salary increases have occurred in the last 6-7 years. While the western public is protesting against these high salaries, Indians are acquiring the bad habit. The Indian business leaders need to look what they are copying from the western world under the guise of management nuggets, best practices and benchmarks.

2.     Non-violent Competition

Once a friend remarked – “You quote Mahatma Gandhi and profess to be a follower of non-violence principles, but you are always fighting”.

I responded – “When was Gandhi ji not fighting? He fought the British Empire for half his life. He just did it non-violently. He based his fight on humane principles and values.”

We need to introduce the concept of non-violent competition in the business world. The financial crises in the west showed that cut throat completion, aka dog eat dog world results in organizations with dysfunctional cultures. The banking regulators’ reports prove it.

Indian principles of non-violence (ahimsa) state – “do not harm anyone”. It does not say – “do not excel”. Indian business leaders must focus on achieving great heights based on knowledge, ideas, innovation and strategy. They must not focus on running down their competitors through industrial espionage, illegal acts or negative publicity.

The same applies to Indian employees. Excel on merit and not by creating misfortunes for your colleagues.

One thought to keep is – Non-violence and success aren’t two mutually exclusive terms.

3.     Teach Ethics Through Indian Philosophy

When I started blogging, an American blogger gave me feedback on one of my articles – Buddhism in Corporate Life. He said that in US they don’t mix religion with business ethics. Though I understood his point, I couldn’t see how Indians could adopt it. In India, religion is entwined with Indian philosophy in every aspect of life. The values and attitudes of a country’s population define its culture.  We cannot segregate business ethics from the whole piece and teach it in isolation.

The pujas, fasts and festivals of various religions of Indian sub-continent would account for 300 days in a year. There is a moral story behind the folk tales of numerous gods and goddesses. The western world is now talking about “storytelling” to give messages and sell concepts. The Indian mythology did just that. Then why not use it to educate on business ethics?

Let me put it another way. How many Indians would know the Utilitarian Approach of Jeremy Bentham and John Stuart Mill or the Rights Approach of Immanuel Kant? My guess is less than 5%.

Now how many Indians have heard of the Hindu philosophy of Karma? My guess is more than 70%.

Which ethics philosophy would be easier to sell to Indians? The one they are familiar with, and connect at emotional and psychological level.

Unfortunately, in India political parties create a ruckus whenever Indian concepts are included in the school course syllabus stating it is favouring some religious group. They don’t object to the introduction of western concepts. We need to stop being apologetic about Indian heritage and proudly learn from it.

4.     Inclusive Workforce

The term “Diversity Management” sends one clear message – “You were not welcome and we are doing you a favour by inviting you”. It applies to women, LGBT group and minorities.

In the last few years, LGBT rights have taken centre stage in the western world. Let me touch a bit of Indian history.  The British in 1862, introduced section 377 of Indian Penal Code prohibiting homosexual activity as British soldiers had sex in the ships travelling to India.

Before British rule, Indians accepted homosexuality without aversion. Homosexuals were not considered inferior or abnormal. In Hinduism context, every person has a masculine and feminine side and the percentages vary in each human. No one is completely male or female. Hence, some pictures depict gods in the conjoined half-male half-female form.

My guess after reading the Da Vinci code is that Christianity propagated the concept of women being inferior to men. Before the Moghul rule in India, Indian women enjoyed equal rights. Hindus pray to their gods along with their soul mates – Ram- Sita, Krishna- Radha, and Shiv-Parvati. Goddesses Durga, Lakshmi and Saraswati represent power, wealth and knowledge. Ramayana and Mahabharata, depict king Ravan and Dhuryodhan respectively, as evil for sexually harassing women.

Before the misrepresentation of caste system in India, a community was defined according to the nature of work they were doing. And not on basis of religious inferiority or superiority.

Hence, in India we need to go back to 1 AD to understand the concepts of inclusive society to develop standards for inclusive workforce.

5.     Social Communities and Soft Skills

The American social concept is that an individual’s needs are superior over family and society needs. However, the Indian concept propagates superiority of family and society needs over personal needs. With nuclear families in the last twenty years, Indian society is transitioning towards American concept, thinking it is better.

Though if you read the latest American management mantras, they talk about:

a)  Building relationships – Transactional relations do not work in the long run, hence the use and discard policy is losing ground. Indians work with business partners after building a relationship of trust and respect.

b) Collaboration and teamwork – Being able to work with teams is a key strength. Employees are rewarded for collaboration. Individual star performers no longer enjoy the prestige of the last decade. Indians work well in groups as they have numerous members in family to cater to and learn in childhood to meet different stakeholder interests.

c)   Service leadership – Arrogance, over-confidence and extravert behavior in leaders is rewarded in America. However, now service leadership or level 5 leaders are valued. Indian leaders, be it Gandhi or Nehru, were known for their humility and service leadership. 

Closing Thoughts

Indian civilization is one of the most ancient civilizations in the world with a very rich history. The Vedas, Arthshastras and various philosophical texts provide a vast reservoir of knowledge on life, business and society. Even Steve Jobs and Beatles got that. Indians needs to go back in time to understand those principles. While the west offers a lot of knowledge, it has been tested only for a century or so and fatal flaws are showing.

Adopting the western principles blindly is not the solution. One of the biggest risks is when a company copies or adopts something without evaluating the feasibility. It holds true for management models also. Choose the best of both worlds and devise a new management model suitable to India.