Home >Opinion >Views >Traversing business ethics in a post Covid world

“Business Ethics" - is that a contradiction in terms? Particularly in a developing economy where we struggle to feed millions is ethics a “luxury good"? More so as we confront a confluence of crises – a raging pandemic and unprecedented contraction of the economy?

Actually, business ethics is a concept that makes eminent economic sense. Professor Amartya Sen in his canonical article on the subject has reminded us that businesses and ethics are not binary opposites but in fact, business ethics have economic benefits. Professor Sen quotes Adam Smith, believed to be the epitome of self-seeking capitalism lesser known but apposite statement “humanity, justice, generosity, and public spirit, are the most useful qualities to others". Professor Sen also reminds us businesses behaving ethically is particularly crucial in a developing country so that trust (which is central to all economic activity) may be engendered – in all stakeholders- consumers, partners governments, regulators, employees present and prospective, suppliers and the wider community.

To weather a crisis in particular, ethical behaviour and the values and purpose that undergrid it are fundamental- not just to exist but to endure; to survive as well as thrive. Building a new ecology of business founded on meaning will be the pathfinder for businesses through the haze of uncertainty.

Professor Colin Mayer has conceived the purpose of the corporation as not to produce profit along, but to “produce profitable solutions to the problems of people and planet, and in the process, produce profits". Mayer also identifies two other underpinnings required to reconceptualize business for the 21st century: trustworthiness and values. Trustworthiness is cultivated through strong corporate values of honesty and integrity and cultures of committing to the corporation’s purpose.

Corporations must therefore step up to provide solutions for the most challenging crisis facing us in recent memory. How companies behave and respond to the crisis will also be remembered. This can be in the form of re- orientation of their business purpose to provide solutions for the crisis-through, for example, automotive manufacturers in India that are able to switch to producing ventilators, alcohol manufacturers moving to manufacturing hand sanitisers; internationally, to fast food producers that are able to shift towards producing nutritional food that’s going to address the food shortages, luxury goods maker rearranging their production lines to produce supplies for the outbreak. “Pivot of Perish"- has a business as well as ethical dimension.

Ethical considerations and not just economic ones are at the core of several dilemmas facing businesses today.

Take the question of whether to start operations requiring a physical – this cannot simply be answered through a calculus of cost and benefit. This is not an elementary choice between lives and livelihoods, given as livelihoods require life and a good quality of life- more in a time of scarcity of medical and healthcare infrastructure. Health is a public good and the actions of each person impact the health of several others and businesses therefore struggle with the decision of opening up, the protocols to do so in a manner that balances human and financial health.

As they navigate the questions of survival businesses will navigate the thorny questions regarding redundancy and pay cuts. With regard to redundancy, in the economic calculations, businesses must build in the ethical dimensions- which have quantifiable long-term costs and benefits. Adam Grant, the Wharton pyschologist writing in the Economist reminds us that layoffs hurt productivity and innovation as businesses lose valuable skills and synergies. “Those who remain are distracted by survivor’s guilt, anxiety and searching for more secure jobs." Companies that slash jobs tend to perform worse than those that find alternatives such as pay cuts – they also erode trust in the long run. To maintain long-term trust and productivity, in any decision regarding redundancy and paycut, must be deliberative and participative to the extent possible and factor in fairness of process, transparency and compassion.

As we traverse and emerge from the crisis, we will increasingly rely on technology, which also bring with it multiple ethical trade-offs. By way of illustration, the use of contract tracing applications must trade off individual data privacy rights with those of public health. Ethical answers could lie in the design of such technology-both the goals and use of use of technology must be just; unintended effects should be pre-empted and addressed. Data minimisation, purpose limitation and eventual destruction of data- other than being built in the regulation of data must be included in the design of technology.

The use of technology can also compound existing inequalities- ensuring affordable and ubiquitous technology is a threshold ethical condition. For instance, moving education online assumes access to technology and high-speed data which may not always be the case. Policy changes as well as empathetic design are possible responses In the medium term- as AI makes human jobs redundant, which the pandemic will only accelerate, policy choices regarding robot tax and universal basic income will bring foundational debates to the fore.

Purpose, values and ethics need to be built into institutional design. Although these are existential considerations , they are also enduring ones, businesses must embed an insipiring meaning and purpose for the organisation. CEOs were starting to engage deeply in corporate purpose, multi-stakeholder capitalism, and sustainability prior to this crisis- the urgency of which has only been underscored by pandemic.

To build a lasting and resilient organisation, the starting point is to instill an inspiring purpose that captures the broader ambition of the business beyond profit (although data demonstrates that purpose and profit are instrinsically linked) and gives employees meaning in their daily work. As a 2019 BCG report presciently said “Purpose" should not be a comforting and self-congratulatory statement of what the company already does, however—that would be an impediment to progress. Rather, it should define the aspirational societal contribution of a company based on its unique attributes, and inspire awareness of the broader context and progress toward business and societal value. Armed with purpose, leaders can promote a culture of curiosity and courage to stretch their business models in new ways, into their surrounding economic, environmental, and societal ecosystems.".

(Cyril Shroff is Managing Partner at Cyril Amarchand Mangaldas. The author is speaking at a webinar here )

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