CIB Conference, Panchgani India (Feb 09, 2018) - By: EH Ong

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Business Growth & Ethics

Introduction

I am often challenged both internally and externally by business associates, friends who often expressed doubts that the business results that have propelled the company growth is free of fraud and are conducted in strict compliance to company core values on ethics.

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 I can understand where these comments are coming from since the popular belief is there is no free lunch in this world. The culture that one should be grateful towards a party who has facilitated a business success is also deeply ingrained in many societies. Adding to these is the perceived ineffectiveness of many institutional processes essential to drive business successes, such as banking, regulatory bodies, or simple decision process to get things done at some customers’ organizations.

This popular belief or self-fulfilling prophecy is in itself the root cause of many corrupted practices in the world today. It is an inertia for change, and perpetuate the belief that business growth and benefits can be attained without the need to invest in good governance practices. Short-term survival needs often out weight longer-term sustainable goals and aspiration. Only the association of such self-fulfilling prophecy with some well broadcasted (thanks to the robust media technology)failed business models linked to illicit trades, get rich quick schemes, coupled with the publicity on punitive consequences of such business practices raised occasional reminder on the importance of conducting businesses ethically.

What was done to strengthen business ethics?

Our experience showed that building personal belief and value system, supporting it with a robust operating discipline and process, creating awareness on the importance of good business practices, setting expectations and providing training to mould the right behaviours are essential building blocks to strengthen business ethics. Employees, especially those in the frontline that interact with customers, business partners, suppliers need to have full alignment of these building blocks within themselves as illustrated in Figure 1 (Appendix) in order to discharge their duties effectively and consistent with the expectations of company ethical core values. This alignment builds compliance and motivates advocacy of positive values at the personal level. It builds pride and meaning for a corporate culture. It cultivates a strong sense of ownership and responsibility. It drives business success.

I remember how disappointed in the early days of my country leadership responsibility in Malaysia when I witnessed senior business and plant operating leaders paying lip services to ritual corporate charts designed to promote good business ethics during town hall and meetings. It was often delivered in a hollow, shallow manner with no pride, personal conviction and meaning, in contrast to what I have experienced when serving overseas on international assignments at the head office and more established regional office. The biggest disconnect is the failure to appreciate the values of these ritualistic charts in terms of how they could enhance the effectiveness of one’s responsibility, e.g. in enhancing the value proposition of a sales proposal, or an internal organizational improvement project. The emphasis is on compliance rather than advocacy of beliefs and values.

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It took me two years to bring the organization back on track. Frequent audits to clear up the unhealthy practices, efforts such as leveraging the learning from these cases to instil awareness and developing new skills and management systems, linking the rituals and values to the rich history of the company achievements help every level of the organization to relate to the principles of good business ethics advocated by the company. Such clarity provides a strong framework for business decision, simplified complexities and enhancing agility and effectiveness to serve the customers and align with internal stakeholders. For example, a new government instrumentalities engagement colour charts pre-approved by internal control have vastly improved the business engagement process and participation at government-linked companies. It provides the necessary guidelines on entertainments, gift policy, trade terms and business collaborative events which otherwise would not have been possible due to the long internal clearance and approval process.

Sales organization quickly realized that relationship can be enhanced and lubricated by championing positive values and strong principles. Positive energy always resonates. The inclusion of ethics checklist in all business proposition has also helped to select the right growth partners, optimizing customer portfolios, productivity and supporting long-term growth.

Distributors are also happier and motivated due to the enhanced transparency in sales channel management process that includes whistleblowing hotlines/mailbox.

The behavioural shift in ethics advocacy and brothers/sisters keeper mindset and taking pride in championing positive ethical values in addition to self-compliance was evident after two years. Employees are handling “Temptations”….be it pressure or opportunities, better through enhancing rationalization skills, as illustrated in Figure 2 (Appendix). Employees no longer treat the auditors as adversaries. They welcome the auditing process as it often comes with Board of Directors rewards for good ethical performance. Positive energy envelopes activities that once were unwelcome.

Employees are also demonstrating ethical leadership by volunteering discussions on potential areas that might have a conflict of interest with the management and auditors. “Disclosure” has become a positive word versus the negative/fear perception in the past.  Employees are also taking ethical leadership through CSR programs at schools and the communities that we served. More gifts sent to personal homes were disclosed and returned with proper documentation, recalcitrant vendors were blacklisted. The company also suffered less downtime as a result of ethics pause communication associated with violations. Resources were optimized to focus on business growth.

We attributed the positive behavioural shift partly to our ability to inculcate the right values through simple, repetitive rituals that have been incorporated into the company daily operating and business management process. These rituals, together with symbols around the office to promote good values and rejecting taboos, provides ready tools and guidelines supporting good business practices, helping employees to cope with ethical challenges on an on-time basis and at ease. It is an essential and integral part of the company’s weekly core value contacts communication, coming directly from the country leader, and attract resonance from the rank and file. It quickly becomes a habit.

How do you sustain the gain?

No shortcut, subscribe to Malcolm Gladwell’s “Tipping Point” principles to keep up the momentum. The 17% employees who are fully converted will always have to do better to promote the cause than the 20% detractors so that the 63% masses will continue to skew favourably to the positive values.  Ritualistic cycles based on the Christie Alignment Model in Figure 1 (Appendix) will have to be robust to cultivate beliefs and habits based on good values, supported by practical work processes and skills.

Make it fun, simple and creative. Have simple battle cry like “I know, I can, I will” to remind, motivate and build accountability and personal responsibility towards positive business values. Use the power of new media to support the habit building process. Reward good habits, weed out the bad ones, promote transparency and trust…setting new trend and expectations consistent with situational requirements.

It starts with the boss. It takes years to rebuild….do not drop the ball!