Sunday, December 12, 2010

Ethics and CEOs

The Enron incident that took the US Corporate world by storm in the beginning of this century was an inflection point for the CEOs. It led to terms like Business Ethics, Corporate Citizenship, etc. catch the fancy of the CEOs (and the other CXOs) in no time.

The rush towards being ethical in business dealings with the entire corporate ecosystem became a mad-rush amongst the corporates especially the premier organizations (companies in the Fortune 500, Global 2000, and other similar list across the globe). The corporate ecosystem that includes clients, end-customers, suppliers, employees, government agencies, non-government organizations, etc. were brought into the scope of business ethics as the stakes were simply too high.

The subsequent conviction of the key officials of Enron is a point in case that CEOs and the 2nd level officers in corporates, the CXOs and VPs, are wholly responsible for such incidents.

Anyone who has worked in a formal corporate setting (a “Company”) would agree that the CEOs and senior officers hold absolute power over the other non-CXO employees. And if the CEOs and CXOs want and when they want they can just say “off with his head”. Lay-offs, downsizing, job cuts are a part of the corporate game that CEOs and other senior officers play everyday.

Protecting the company's revenues and margins is not really a goal of the CEOs and CXOs, it is their necessity. It is their necessity because they have to protect their salaries, bonus, stock options and retirement or severance benefits. And this necessity also makes them take ethics quite seriously as the stakes are simply too high.

All organizations who consider themselves be a part of the fraternity of premier and progressive organizations have a Business Ethics Policy in place now. These policies are almost the same across all these organizations. The similarities do not end here and extends even to having common titles such as VP Ethics etc.

Ethics is now a pet obsession for many CEOs and CXOs as they know the stakes are simply too high and with an intrusive and ever-alert media they could find themselves in a tight corner in no time. The stakes are simply too high... they have to protect their salaries, bonus, stock options and retirement or severance benefits.

Analyzing this whole issue from an abstract perspective would mean that we make or world a place where everyone is just, fair and honest. A person can't be genuinely honest in his professional life if he not honest in his personal life.

Business ethics can save the CEO but will not save the world. The great leader of the last century, Mahatma Gandhi, becomes absolutely relevant in this discussion. His preachings on simplicity, truth and honesty provide direction and methods to make this world an ethical place in a complete sense. After corporates are just one element of human civilization.

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