Tackling corruption at workplace
What are the best anti-corruption practices a management can lay down for a company?
India’s rank in the Global Corruption Index has improved to 85 this year from 94 last year. What are the best anti-corruption practices a management can lay down for a company? We ask the experts
Introduce best practices today
Abinash Panda, associate professor, IIM-Kashipur
Corrupt practices and unethical behaviour affect credibility,” says Abinash Panda. “Such behaviour can lead to a business losing its customers.”
He cites the best practices followed by Wipro Ltd and Tata Power Co. Ltd—both have made it to this year’s list of the World’s Most Ethical (WME) companies. “Each of these companies goes beyond making statements about doing business ‘ethically’ and translate those words into action,” Panda says. WME companies not only promote ethical business standards and practices internally, they exceed the minimum legal compliance requirements and shape future industry standards by introducing best practices today.
“Moreover, ethically driven organizations make more profit in the long run compared to other organizations” he points out. A study conducted by Richard Ivey School of Business found that consumers generally pay a premium for ethically produced goods. But they’ll punish an unethically made product even more harshly, by buying it only at a steep discount.
“Organizational practices of ethically oriented organizations tend to emphasize on corporate citizenship and responsibility, which includes sustainability, citizenship and social responsibility, besides supply-chain engagement and oversight,” says Panda.
Each of these organizations boasts a culture that encourages and achieves ethical conduct and a commitment to compliance with the law. “Corporate governance comprising oversight, governance principles and risk management must be stressed by the top management,” says Panda.
Create robust ethics, governance
Sandeep Dhupia, partner and head of forensic services, KPMG India
Ethics cannot be purchased off the shelf,” says Sandeep Dhupia. “Companies that create robust ethics and governance frameworks, both in letter and spirit, get more respect by markets at large.”
“Progressive managements are taking anti-corruption and ethics frameworks seriously,” he says. A company may have a corruption hotline, but if it doesn’t ring or few people know about it, it serves no purpose. Similarly, the chief executive may talk of ethics, but if employees are told “to do what it takes”, ethics can be compromised, he adds.
The new Companies Act and amendments to clause 49 of the listing agreement have made the role of independent directors and auditors more onerous and led to a change in the dynamics within boards. Dhupia says this may have helped improve India’s ranking.
Mergers and acquisitions are also forcing companies to employ better anti-corruption practices. Many overseas companies demand anti-bribery and corruption diligence, says Dhupia. “This is a result of far more stringent enforcement of anti-corruption legislations such as the FCPA (Foreign Corrupt Practices Act) and UK Bribery Act in their countries,” he adds.
Dhupia says beyond implementing anti-corruption practices, organizations must also evolve them. “Employees need to be periodically tested on their knowledge on anti-corruption practices and undergo periodic training,” he says. The true test will be implementation of anti-corruption practices in true sprit versus an approach that merely ticks the box, adds Dhupia.
Send out the right message
Dhruv Agarwala, co-founder, Proptiger.com
All organizations including start-ups must codify their policies, says Dhruv Agarwala. However, codification is the easier part. “One can hire human resources (HR) experts, lawyers and make policies, but sending out the right message down the line that what is written is what the management sticks to, is more important,” he adds.
Managements can’t afford to ignore when employees cross the line. “Companies should follow a zero-tolerance policy,” says Agarwala. If there are breaches, action should follow. Not taking action sends out a message that the management is not serious about the policies, he adds.
Companies should also look at incorporating HR practices such as mock tests which help employees understand the policies better, he says. “People might be unsure about what to do; hence creating mock situations can help the employees understand what is wrong and what is right,” he adds.
The management must be involved in the creation of these policies. “External consultants might not have a deep understanding of the nuances of the business or the industry the organization operates in and they might have a cookie-cutter approach to your problems,” notes Agarwala.
If the management is not involved in the formulation of these policies, then what it actually wants won’t get translated into reality, he adds. It is alright for founders to manage things informally when start-ups are small, says Agarwala. But when they start becoming bigger, say more than 50 people, the management should start looking at codifying policies. Investors too look at such policies during their due diligence process, he adds.
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First Published:9 Dec 2014, 05:40 PM IST
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