Int. J. Indian Culture and Business Management, Vol. 3, No. 5, 2010
An integrated framework for values-based management – Eternal guidelines from Indian ethos N. Sivakumar* Department of Commerce, Sri Sathya Sai University, Brindavan Campus, Kadugodi, Bangalore 560 067, India E-mail:
[email protected] *Corresponding author
U.S. Rao School of Business Management, Accounting and Finance, Sri Sathya Sai University, Prasanthinilayam Campus, Prasanthinilayam 515 134, India E-mail:
[email protected] Abstract: The practice of values-based management requires an integrated framework. The foundation for values-based management is the philosophy or vision of the organisation. Further, the leadership of the firm must adhere to values and the corporate culture must promote ethical behaviour. Values-based management also involves developing welfare-oriented policies towards various stakeholders which aid in values-based decision making. Indian ethos has provided detailed guidelines for all these aspects of values-based management. This paper delineates these guidelines. The scriptures studied include Kautilya’s Arthashastra, Manusmriti, Valmiki Ramayana, Viduraniti and Shanthi Parva of Mahabharatha and literature on economic organisations and educational institutions in ancient India. This paper also integrates the guidelines into a framework for effective values-based management. Keywords: values-based management; business ethics; Indian ethos and management. Reference to this paper should be made as follows: Sivakumar, N. and Rao, U.S. (2010) ‘An integrated framework for values-based management – Eternal guidelines from Indian ethos’, Int. J. Indian Culture and Business Management, Vol. 3, No. 5, pp.503–524. Biographical notes: N. Sivakumar has done his MBA and completed his PhD on the topic, ‘Value-Based Management – Historical Roots in India and Current Practices’ from Sri Sathya Sai Institute of Higher Learning (currently Sri Sathya Sai University), Prasanthinilayam, India. Currently, he is a Senior Lecturer, Department of Commerce, Sri Sathya Sai University, Brindavan Campus, Bangalore, India. He has published over 60 papers in International and National Journals and presented papers in International and National Conferences.
Copyright © 2010 Inderscience Enterprises Ltd.
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N. Sivakumar and U.S. Rao U.S. Rao received his PhD from IIT, Mumbai. Currently, he is a Professor in the School of Business Management, Accounting and Finance and the Principal at Sri Sathya Sai University, Prasanthinilayam Campus, Prasanthinilayam, India. He has several years of work experience both in industry and academia. He has published over 100 papers in International and National Journals and presented papers in International and National Conferences. This paper is a modified version of the paper presented under the title ‘An Integrated Framework for Values-Based Management – Guidelines from Indian Ethos’ at the Sixth AIMS International Conference on Management, Organised by AIMS International and Indian Business Academy, Greater Noida, India, 28–31 December 2008, and included in the proceedings of the conference.
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Introduction
Traditionally, firms have been judged on how well they serve stockholders. But in the 21st century – a new era of ecological limits, corporate ethics crises and rising social expectations – this traditional focus offers too narrow a definition of success. Firms rely upon healthy relations with many stakeholders. That means not only creating healthy returns for shareholders, but also emphasising good jobs for employees, a clean environment, responsible relations with the community and reliable products for consumers (Kelly, 2006). Global society issues are putting increasing pressure on both small and large organisations to communicate ethically at all levels (Dresp-Langley, 2009). The need of the day is ethical governance. Ethical governance refers to the processes and procedures and culture and values that ensure high standards of behaviour (idea.gov.uk, 2008). Ethical governance certifies the nature and respective duties of a corporation in terms of ethical action and governance (icharter.org, 2008). There has been a call to integrate ethics in management education to ensure that future managers are able to rise to the needs of the society (Walck, 2009). However, the headlines of the recent years have portrayed a sad story of corporate ethics: WorldCom, Anderson, Merrill Lynch, Enron, Martha Stewart, Global Crossing, Qwest Communications, Tyco International, Adelphia Communications, Merck, Computer Associates, Parmalat, Putnam, Boeing, Rite Aid, Xerox, ASEA Brown Boveri, Kmart, Swiss Air and so on (Arjoon, 2005). Even at the top management level, the concern for ethics has been just cursory (Hoffman and Rowe, 2007). According to Velthouse and Kandogan (2007) ethics is still considered one of the least important skills necessary in a managers’ daily work. Due to the huge public outcry against corporate unethical behaviour, corporates are today better appreciating the importance of business ethics (Cellini, 2007). Sivakumar and Rao (2009) have shown the necessity of building moral corporate cultures for the purpose of promoting values-based management. Sarwono and Armstrong (2001) have recommended special ethics training for corporates. Verschoor (2006) has indicated that establishing an ethical corporate culture is necessary for the attraction, retention and improved productivity of employees. Gichure (2008) has stated that social responsibility refers to contributing to the quality of life and to the welfare of society. This is based on the much wider and overarching doctrine of justice and the common good. The management of a business must take lead in the establishment of policies that take care of
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the aspects of social responsibility and ethics. Thus, values-based management is becoming an imperative in today’s business environment. It is interesting to note that while the world is still finding ways to promote ethical behaviour, Indian ethos provided clear guidelines to promote values-based management several centuries earlier. The purpose of this paper is to delineate these guidelines. After providing a brief literature review, this paper explains the various aspects of values-based management and then describes the guidelines given in Indian scriptures.
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Literature review
Values-based management aims to provide consistency of the corporate mission (business philosophy), the corporate strategy (courses of action to achieve corporate mission and purpose), corporate governance (who determines the corporate mission and regulates the activities of the corporation), the corporate culture, corporate communication, organisation of the corporation, decision processes and systems, performance management processes and systems, and reward processes and systems with the corporate purpose and values a corporation wants to achieve (valuebasedmanagement.net, 2008). This section defines values-based management and delineates the various aspects of values-based management. It also reviews the important studies on the various aspects of values-based management. Values-based management refers to managing institutions, organisations and business corporates on the basis of human values (Sivakumar, 1995). The field of values-based management has been defined as, ‘the study of the role of values in organisation behaviour and decision making’ (Natale, 1991). Goodpaster (1985) has used the concept of moral fractals to integrate the field of values-based management. The author shows that the concept can lead to differentiation of ethical attributes at different scales of individual, organisation and the system itself. The concept of moral fractals according to the author shows the inextricable linkage of the individual, organisation and the system and helps to make sense of partial similarities as well as tendencies towards congruence from one level to another. The author describes the need for individual value orientation, organisational culture development and overall policy building and implementation for the successful practice of values-based management. Natale (1991) has explained five components of values-based management. Firstly, it would be necessary to define the concept of a person in the sense demanded by morality. This leads to the development of a corporate or organisation philosophy essentially describing the raison d’etre of business organisations. The second principle would involve claiming the concept of person defined as a moral principle. In a sense, this involves the development of values-based leadership who would set an example for the practice of values-based management in organisations, through their own conduct. The third aspect involves creating/inferring rules, which govern behaviour. This involves the building of a corporate culture, which provides the basic norms of behaviour in an organisation. The fourth principle is the development of empathy. This involves the capacity to understand what another person is feeling. This principle thus discusses the relationship between the organisation and its stakeholders. The fifth and final principle according to the author is the facticity of each case dealt by executives. This involves the
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taking of decisions for various ethical issues faced by the executive in such a way that the philosophy of the organisation is fulfilled. Thus, values-based decision making becomes the fifth component of values-based management. Nightingale (1994) defines corporate vision as “a statement of ambition that defines success and establishes the ground rules by which success will be achieved for a particular company or institution; the articulation of management’s intent regarding the future of the organisation, expressed in aspirational terms”. According to Pozzi (2000), there has been a serious effort to rehumanise the work place in the current times. The shift in focus to business vision, values, character and ethics has been the first step in rehumanising the workplace. A new set of values is emerging in the business world, which includes diversity, participatory management approaches, systemic and holistic models, a focus on process, business ethics, social responsibility and care for the environment. Chakraborty (2001) has discussed corporate philosophy in terms of deeper Indian psycho–philosophical insights into human existence. According to the author, there is a necessity to move from ‘capinomics’ (capitalist economics) towards ‘spirinomics’ (spiritualised economics). This is possible through a duty-focused, common good-oriented concept of lokasangraha. This would inspire the ascent of corporate character to the plane of corporate trusteeship. Corporations would then emerge as agents of sane ‘spirinomics’ (spiritualised economics), instead of reckless capinomics. Sauser (2005) has studied values-based leadership by analysing what might happen if business leaders across the globe viewed their work as a sacred calling in a religious sense. According to the author, this would help business leaders to answer their call to business in the truest sense and help in the practice of values-based management. Dixon and Dogan (2003) state that the epistemological and ontological predispositions of directors have become important philosophical issues in corporate governance. Pruzan and Mikkelsen (2007) have studied how institutions and corporate can be led with wisdom. Using interviews with several executives the authors show business leaders can indeed serve a large range of stakeholders through values-based leadership. Muniapan and Dass (2009) have shown an Indian leadership perspective from literature works of Poet Kannadasan. Using hermeneutics, the authors show that Kannadasan recommends a leadership approach which focuses on exploring the inner world of the self. This means the leadership of the self first before any other type of leadership. According to the authors this approach is also consistent with the teachings of the ancient Indian and other ancient East Asian philosophies such as Confucianism and Taoism. Muniapan (2007) explored the transformational leadership style demonstrated by Sri Rama in Valmiki Ramayana. The author explains the transformational leadership style demonstrated by Sri Rama, which consists of four dimensions (4 Is), namely, inspirational motivation, idealised influence, intellectual stimulation and individualised consideration. Cellini (2007) states than an ethical culture implies that corporate ethics must guide not just individual conduct but also organisational behaviour. This should ultimately lead to complying with financial rules and regulations, and transparency in transactions with all stakeholders. Gangopadhyay (2005) has shown the importance of Indian ethos in developing ethical corporate governance structures. According to the author, the cultural crisis of today is because of a purely left-brain oriented education and training. This has lead to an intense imbalance between the two modes of consciousness namely right and left brain. The need of the day is ethical integration, which is the central essence of Indian ethos. Scriptures like the Bhagawad Gita provide guidelines for this ethical integration. Sivakumar and Rao (2009) have studied the guidelines available in Indian ethos to build
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ethical corporate cultures. Basing their discussion on an analysis of a wide range of Indian scriptures related to management and administration the authors have shown that Indian ethos is highly relevant in providing guidelines regarding various aspects of building ethical organisation cultures. Freeman defines stakeholder as “Any group or individual who can affect or is affected by the achievement of the organization’s objective” (Freeman, 1984). Freeman and Gilbert (1988) summarise the philosophy of stakeholder ethic, “the basic premise of the stakeholder ethic is the respect for the individual. If managers start with the principle of ‘Respect for Persons’, then those individuals with whom they interact will get respect. It means seeing individual customers and employees as whole and complete, functioning persons, capable of making choices, listening to reason, enjoying the work they do, feeling happy, sad, angry and joyous, and trying to find meaning in their lives. By making connection between values, ethical principles and basic business logic, corporations can become human institutions that they need to be, serving human purposes rather than subverting them.”
Srivastava (1985) has dealt with the oriental concept of social responsibility. While the occidental concept of social responsibility is based on enlightened self-interest, the oriental concept is spiritual in nature. With this awareness, the manager ceases to be the exploiter of nature and all the activities of management would be done with the motive of service to society. Chatterjee (2009) provides an overview of the roots of human resource assumptions from a historical perspective and considers their relevance to the contemporary contexts of global competitiveness. The author has developed a cross-verging conceptual model to understand the dynamics of embedded socio-cultural forces and the emerging global challenges to human resources development. Sivakumar (2008) has shown how even in the modern times Indian business has been an example in promoting stakeholder welfare by studying the case of Jamsetji Tata. Lewis (1985) and Carroll (1990) have studied the perceptions of managers regarding the ethical principles used by them in decision making. The managers agreed that the most widely used principle of decision making is the golden rule wherein the decision maker takes decisions keeping in view the other parties who are to be affected by the decision. The surveys by the authors have also showed that managers agree on the point that the decisions taken should not be purely motivated by selfish gains or selfish actions. Fombrun and Foss (2004) have examined principal responses from big business to promote ethical decision making namely the infusion of ethical principles in corporate cultures, the appointment of ‘Chief Ethics Officers’, and the adoption of strict ethical guidelines and codes of conduct. The research has found that corporate ethics has become an indelible feature of stakeholder engagement – not just as a set of principles but also as a process affecting decision making at all levels. Section 2 has delineated the various aspects of values-based management. The first aspect of values-based management is the development of a corporate philosophy and vision, which promotes all round stakeholder welfare. This vision must be supported by values-based leadership, which is the second aspect of values-based management. It is also important to build a corporate culture, which promotes ethical behaviour. Policies, which promote the welfare of various categories of stakeholder, is the fourth aspect of values-based management. Finally, it is necessary to aid values-based decision making. These five aspects provide an integrated framework for values-based management. The following sections explain the guidelines given by Indian ethos regarding these aspects.
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The scriptures studied include Kautilya’s Arthashastra, Manusmriti, Valmiki Ramayana, Viduraniti and Shanthi Parva of Mahabharatha and literature on economic organisations and educational institutions in ancient India.
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Corporate philosophy
Great organisations’ according to Senge (1990) “have a larger sense of purpose that transcends providing for the needs of the shareholders and employees. They seek to contribute to the world in some unique way, to add a distinctive source of value”. The first component of values-based management is the development of a broad-based vision which promotes overall social welfare. The Indian scriptures have described the vision to be developed by institutions by showing the basic duties of the state, the king, officials and organisations. Kangle (1965) explains the organisation vision enjoined in the Arthashastra as “the duty of the ruler in Arthashastra is expressed in terms of Yoga-Kshema (welfare). This implies something more than the mere protection of person and property; in fact Yoga-Kshema implies the idea of welfare, well being, including the idea of happiness, prosperity and so on.”
This philosophy is amplified in the following statements: 1
Raja Hitakaro Nrinam – The King is the benefactor of people (Valmiki Ramayana).
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In the happiness of the subjects lies the happiness of the King. What is dear to the King is not beneficial to him, but what is dear to the subjects is beneficial to him. Therefore, being ever active, the King should carry out the management of social welfare (Kautilya Arthashastra).
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‘Grama shreni ganascha sanketah samayakriya; vada kale tu sa karya dharma karye thathaiva cha’ – An organisation of merchants comes into existence by an agreement among the merchants to perform acts of service (Brihaspati Dharmasutra – Literature on economic organisations).
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High officers should protect the people from all evil minded and deceitful people (Shanthi Parva of Mahabharata).
In the context of modern corporates, Badaracco and Ellsworth (1989) state that ‘if a company’s purpose is defined in terms of the wider economic and social benefits of its products and services, the contribution of the people in the organisation towards fulfilling that purpose can bring increased meaning to their work’. In the words of Ratan Tata (CII, 1996), the Chairman of Tata Steel in India: “I do believe that we in the group have held a view and held a sense of purpose that our companies are not in existence just to run our business and to make profit and that we are responsible and good corporate citizens over and above our normal operations. By that, I mean that we play a part in the community and we shoulder community responsibility as part of social responsibility of our nation. And these responsibilities are not to be confused with employee welfare, but they go beyond our own employees and in fact concentrate on the contribution to the community and to the nation.”
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Excel Industries, a speciality chemicals company has defined its mission as, “we dedicate ourselves to make humble contributions to the country, industry, rural society and our company through technology, innovation and through individual and collective endeavour. Satisfaction of our shareholders, customers, our own people, suppliers, institutions, investors, society and community is paramount to us. We will make wholehearted efforts for the fulfilment of this objective through our interactions and interdependence with them. We have a responsibility towards industry and community. Rural community is the heart of India. We will be friends and contributors to wellbeing of both the industrial and rural community. Not only through our products and services, but also through our knowledge and expertise, we will be of assistance to community and industry. We will work and contribute, learn and grow together in the spirit of Saha Viryam (unity and balance).” (excelind.co.in, 2009)
By defining the corporate philosophy in terms of improving the social welfare, a business firm provides a worthy purpose to the life of the members. A welfare oriented philosophy can help in enriching the members of an organisation and giving a sense of fulfilment to their lives. This in turn can provide a firm foundation for values-based management.
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Values-based leadership
Schwartz et al. (2005) state that the ethical role of leaders in an organisation is critical. The tone at the top that leaders set by example and action is central to the overall ethical environment of their firms. Values-based management must be supported by valuesbased leadership who are committed to the company’s vision and philosophy. For valuesbased leadership to be effective it is necessary to define the values a leader must possess. Further, the role of the leader in inspiring others in the practice of values and the close relationship he cultivates with the stakeholders is also important. Indian ethos provides several guidelines related to values-based leadership. These can be studied as follows:
4.1 Leadership values Indian scriptures provide several guidelines regarding the values that leaders must cultivate. These include: 1
The King should be ever active to carry out the management of social well being which will in turn lead to spiritual well being and happiness (Kautilya Arthashastra).
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There is nothing, which contributes so much to success as truth. The King who is devoted to truth finds spiritual happiness (Shanthi Parva).
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The leader of the merchant guild should be pure in body and mind and free from avarice. They should be acquainted with the rules of morality and should do what is in the welfare of the society and the organisation (Yagnavalkya Smriti).
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Teachers and trainers should possess sacred learning and must be devout in following law (Apastamba Dharmasutra).
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It is interesting to note that Indian ethos prescribed cultivation of moral and ethical values by leaders. McMaster (1992) has commented about the values of a business leader as follows: “the good leader is a person of integrity. Leaders who have integrity always maintain high standards of conduct and performance both for themselves and for others. They accept their duties and responsibilities willingly. Good leaders never take special privileges or abuse their position. Good leaders are always equitable and just, for these attributes are essential part of their integrity.”
4.2 Leadership by example Leaders must be role models in the practice of values. Indian ethos states: 1
If the King regards righteousness, it becomes regarded everywhere. Whatever acts and things are liked by the kings they are liked by his subjects (Shanthi Parva).
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When the King is active the servants become active following his example. If he is remiss they too become remiss along with him (Kautilya Arthashastra).
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A businessman must be a person of character and integrity with self-control. By controlling himself he is expected to be an example to others in the organisation (Brihaspati Smriti).
Badaracco and Ellsworth (1989) have stated that “a leader’s behaviour sets a company’s moral tone and reinforces its purposes. Thus, how a leader acts is crucial to ensuring that decisions promote and defend values. A leader’s pattern of action on issues, both big and small, will determine the extent to which others believe that a company truly stands for key values and to the extent their leader personifies these values. When subordinates see a leader’s conviction reflected in things that they value this enhances the respect and admiration for him. Leaders should go to great lengths to avoid appearing inconsistent or acting in ways that communicate insincerity – the death knell of institutionalised values. When managers do pay a price for their commitment to integrity, to their long-term strategic vision, high ethical standards and abiding company values – they have comfort of knowing that they have clearly set an example and a precedent that will reinforce the tangibles throughout the organisation.”
4.3 Relationship between leaders and stakeholders Leaders must show concern for stakeholders. Indian scriptures prescribe that: 1
The King should always bear himself towards his subjects as a mother towards the child in her womb. As the mother, disregarding those objects that are most cherished by her, seeks the good of her child alone, even so, without doubt the King should conduct himself towards his subjects. The King who is righteous should always behave in such a manner as to avoid what is dear to him, for the sake of doing that which would benefit his people (Shanthi Parva).
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The virtuous King is never indifferent to even the minutest suffering of all creatures (Viduraniti).
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Merchants must have special concern for their customers and employees (a description by Marcopolo about Indian merchants (Verma, 1972).
Reidenbach and Robin (1991) have described that the relationship between the leader and his organisation with the customers, suppliers and dealers, local community and society should be such that of the relationship between the members of a family. Enlightened corporations treat stakeholders as a part of an extended corporate family.
4.4 Leadership and spiritual fulfilment Indian scriptures state that the ultimate goal of leadership is spiritual fulfilment. Batten (1989) in this context has asserted that ‘the final goal of leadership is to achieve the abundance of human spirit’. According to Indian scriptures: 1
That King who has accomplished all his duties becomes happy in the approbation of his own conscience (Shanthi Parva).
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The King who observes all his duties attains infinite bliss and spiritual merit (Kautilya Arthashastra).
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If a King chiefly practices virtues he obtains bliss, clothed with the very elements of the soul (Manusmriti).
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The virtuous businessman (Vaisya) who does his duties sincerely and scrupulously will attain everlasting happiness (Kautilya Arthashastra).
Heider (1986) calls spiritually fulfilled leaders as enlightened leaders and states that ‘enlightened leadership is service, not selfishness. This type of leader grows more and lasts longer by placing the well being of all above the well being of self alone’. Such leaders see their leadership positions as opportunities to serve others. Indian ethos thus lays great emphasis on values-based leadership. Leadership plays a catalytic role in the values-based management framework.
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Corporate culture
The next aspect of values-based management is the building of a culture, which promotes ethical behaviour. Organisation culture is defined as ‘the commonly used and relatively stable beliefs, attitudes and values that exist within an organisation’ (Pascale, 1985). Building ethical cultures involves several steps like defining the values of members of the organisation, selecting appropriate personnel, rewarding ethical behaviour and checks on unethical behaviour (Sivakumar and Rao, 2009). Indian ethos has given specific guidelines regarding each of these aspects.
5.1 Defining the values of members Hartman and Mathys (1999) have pointed out that a set of core values must be agreed upon in order to provide direction to the organisation and to its decision makers. These values must be identified to the work force so that the ethical culture becomes an integral part of the entire organisation. Indian ethos gives several guidelines in this regard:
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Values, which are essential in government officials, are wisdom, honesty, loyalty, skill, bravery, righteousness, gratitude, contentment and perseverance (Manusmriti).
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The values required of the members of a guild are honesty, hard work, diligence, nobility and practical ability (Smriti Chandrika – an ancient Indian law text).
The following description of the virtues of eight ministers in the court of King Dasaratha as described in the Valmiki Ramayana gives an overall picture of the values to be embodied in organisational members: “The ministers were all glorious and of pure mind and conduct. Further they were humble, intelligent, had fully controlled their senses, were affluent, high souled, well versed in the use of weapons, possessed unbending prowess and vigilance, and were true to their word. They were majestic, forgiving and far famed. They spoke with a smile playing on their lips and would never tell a lie even in anger or for the sake of sense enjoyment. They had been tried in the matter of loyalty and meted out punishment even to their own sons, strictly according to the law, when occasion demanded.”
Emphasising the importance of ethical values in organisation members, Reidenbach and Robin (1989) have described that, “organizational values if not controlled by sufficiently strong ethical value systems can have deleterious effects in the organization. When profits and efficiency dominate the culture without the balancing effects of ethical core values, strategic planning and other behaviours will be directed principally by economic values.”
Verschoor (2006) has described the core values needed to build an ethical culture in the form of three R’s namely respect, responsibility and results. Thus, defining the core values forms the bedrock of building ethical organisation cultures.
5.2 Selection of appropriate personnel Williams et al. (1989) have stated that “recruitment and selection can have a significant cultural impact at all levels in the organization. If managers are trying to foster a particular type of culture in the organization generally, it is sensible to ensure that this message is communicated to those contemplating to join the company. It is after all, likely to be easier to recruit the right people in the first place than to change their attitudes later.”
The guidelines from Indian ethos in this regard include: 1
A King should select a counsellor or minister who respects wise people, who himself in endowed with learning and knowledge of moral scriptures, who is virtuous, who has a pleasing personality, who is sweet spoken and lastly and most importantly who has a good and pure heart (Viduraniti).
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People who are unrighteous, lazy, bashful, avaricious and immature should not be selected for posts for managing the partnership or a guild (Brihaspati Smriti).
Hartman and Mathys (1999) emphasise that the only way to perpetuate an ethical culture is to recruit and to hire individuals who can share its values and beliefs. This would
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ensure that later attention to values integration will not be necessary. It is interesting to note that Indian ethos gave guidelines about this important aspect several centuries ago.
5.3 Rewarding ethical behaviour To encourage ethical behaviour it is necessary to reward members who act ethically. Koh and Boo (2001) explain that organisational leaders can favourably influence organisational outcomes by engaging in, supporting and rewarding ethical behaviour. The Indian scriptures studied discuss this aspect in detail. 1
The superintendent who carries out the work as ordered or better should receive a high position and honour (Arthashastra).
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Only virtuous members must be made close confidantes of the king. The able members of staff must be delegated with special assignments (Valmiki Ramayana).
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Based on their character teachers and professors should be given titles like ‘Bahushruta’ (professor) or ‘Jagad Guru’ (chancellor) (Jataka tales).
Reidenbach and Robin (1989) have prescribed that, “top management must take an active role in demonstrating the importance of ethical behaviour and in rewarding instances in which an individual may have had to sacrifice economic performance for the sake of other ethical concerns. If an employee brings to his superior’s attention an action that has ethical consequences for the department of the organization, that behaviour should be rewarded. To do so, is to increase the probability that such an occurrence will take place in the future. Not to do so is to inculcate an attitude that the ethical conduct of the employees is not important at best, and at worse to instil the notion that it does not matter how things are done in the company.”
5.4 Checks on unethical behaviour To institutionalise values-based management it is also necessary to put checks on unethical behaviour. Singer (1992) in this regard points out that “if a company does not severely sanction ethical transgressions, word spreads that the boss is not really interested in ethical behaviour. This could then encourage all kinds of shady dealings”. The guidelines from Indian scriptures regarding this aspect are: 1
Continuous inspection over the administrators heading the different departments has to be carried out. Any unethical practice noticed has to be punished through fines, confiscation of property and imprisonment (Shanthi Parva).
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A loyal minister has to be appointed by the king to visit all offices and carry out periodic inspection. In case any unethical behaviour is found, the king must confiscate the property of the unethical officers and traders and in case of extreme violations of law the offenders must be banished from the kingdom (Manusmriti).
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Those who cause dissensions among the members of a business association shall undergo punishment of a specially severe kind, because they would prove to be extremely dangerous like an epidemic disease, if they were allowed to go free (Narada Smriti).
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Hoffman and Rowe (2007) point out that when a company seeks to create and sustain an ethical organisational culture, it is critical to promote the universal expectation that no one in the company, no matter how senior, is above the law or the requirement to behave ethically. Reidenbach and Robin (1989) opine that, “individuals who transgress company ethical value systems for the sake of market share must be punished. The punishment should be strong enough to send a potent message that ethics is a principal consideration in any decision made in the organization.”
5.5 Building ethical cultures through a spiritual foundation Indian scriptures finally point out that ethical behaviour has to be motivated intrinsically. This according to Indian scriptures may be achieved by showing that ethical conduct facilitates the attainment of spiritual goals of life while unethical behaviour does not help in the attainment of these super ordinate goals. 1
The minister without the excellences of good conduct and endowed with bad behaviour is spiritually ruined (Arthashastra).
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An administrator by the practice of dharma (righteousness) attains spiritual bliss (Viduraniti).
Sauser (2005) has shown that ethical behaviour can be easily promoted among managers when they view their work as a religious calling. Such a realisation would provide the intrinsic motivation to promote ethical behaviour. Indian ethos also shows the intrinsic motivation that can be embedded in the culture of organisations to encourage ethical values and behaviour. This was considered as the most potent motivator to practice morality. This is also a very unique contribution of Indian scriptures towards building an organisation culture which promotes ethical behaviour. Thus, building ethical corporate cultures is an important aspect of values-based management. Indian ethos provides several prescriptions to build such corporate cultures.
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Stakeholder policies
The next aspect of values-based management is to develop policies which promote stakeholder welfare. According to J.R.D. Tata, the doyen of Indian Industry “industrial enterprise whether in the private or public sector can do much within their means to improve the conditions of life of the surrounding population, relieve distress where it exists, help find work for the unemployed and extend a helping hand to those who need it.” (Tata, 1992)
Indian scriptures have shown the various policies and programmes developed by the ancient kingdoms which promote social welfare. These are described below:
6.1 Community development works The Arthashastra states that the king should cause villages to be settled, make lands to be cultivated, cause irrigation works to be built, and set going work on mines, factories, forests and trade routes.
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6.2 Consumer welfare The Arthashastra also prescribes that the controller of customs should cut out goods that are harmful to the people and that are worthless. He should make goods that are highly beneficial duty free.
6.3 Public safety The Shanthi Parva points out that, “high officers should protect the people from all persons of murderous disposition, all men of wicked deeds, all who rob the wealth of others and all who are full of deceit”.
6.4 Public justice The Manusmriti shows that the king should ensure that justice is given to people in various aspects like litigation and boundary disputes.
6.5 Corporate social responsibility Even business organisations had to perform their social responsibility. The Brihaspati Smriti enjoins merchant guilds for the construction of a house of assembly, of a shed for accommodating travellers with water facilities, a temple, a pool or a garden. These guilds also had to provide relief to the helpless and poor people. The Smriti also states that “the profit of the guild shall be bestowed on the mentally deranged, the aged, the blind, to women or children, to those afflicted by disease or such other deserving people”. Most importantly, Indian ethos points out the way stakeholders must be viewed and treated. While Valmiki Ramayana and Manusmriti explain the relationship of an organisation with its stakeholders in terms of an extended family, other scriptures go beyond and explain that the relationship must be in spiritual terms where stakeholders are viewed as the spiritual SELF defined as Atman or Brahman. This view can provide the most stable basis for relationship between an organisation and its stakeholders. Indian scriptures describe this relationship as follows: 1
“He who recognises the Self in all things and the universe in the Self does not give his heart to unrighteousness” (Manusmriti).
2
“That person who regards all creatures to be like his own Self obtains great happiness” (Shanti Parva).
3
“The Self is one without a second and that is what one has to comprehend” (Viduraniti).
4
“That person who recognises all creatures to be in the Atman and who recognises the Atman in every created being attains supreme bliss” (Apastamba Sutra).
Chakraborty (1991) in this regard has explained the corporate lessons that must be learnt. Therefore the individual employee must be respected, not because of his individuality, but because of the transcendent, the divine is enshrined in him. Further cooperation and trust should be the basis of all transactions because the inner being (self) in all is one and the same. Thus, deception and deprivation of others is deception and deprivation of
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oneself. Finally, the customer has to be viewed as the divine come upon the organisation in human garb, and thus should be served lovingly with respect. Thus, it can be seen that guidelines from Indian ethos can take business practices to a totally new level of service and social responsibility.
7
Values-based decision making
The final component of values-based management is decision making based on values. To ensure that the corporate philosophy is achieved, it has to be fulfilled through daily activities and decisions. Thus, when the decisions taken by the executives of an organisation are influenced by values, they can help in realising the vision of the organisation. It is due to this reason that Indian scriptures gave a lot of importance to this aspect of values-based decision making. To ensure values-based decision making Indian scriptures have given several guidelines.
7.1 Decision making authority Indian ethos has prescribed that decision making authority must be with righteous people. Thus, the Brihaspati Smriti declares that “only men who are honest, acquainted with moral codes, self controlled, noble and skilled in business have the authority to take decisions in guilds”. Further, the Shanthi Parva states that “one who is wise, pure, intelligent and learned and righteous in all his acts, who is truthful in speech, modest, mild, conversant with policy and requirements of time, who is courageous, noble, loyal and who hates wickedness and wicked men deserves to be consulted by the king.”
7.2 Conscience satisfaction To promote values-based decision making, Indian ethos enjoins that the conscience must be satisfied. This provided a spiritual basis for decision making. In this regard, the Viduraniti states that “right and wrong has to judged by the conscience. Only such acts sanctioned by it are meritorious”. The Manusmriti describes, “Satisfaction of the conscience is the basis of the sacred law governing action. When the performance of an act gladdens the heart, a person may perform the act with diligence. While choosing an course of action, one should satisfy one’s own soul, the supreme witness of men. Those acts are good which a person would desire to perform with his whole heart and at which his soul rejoices.”
Chakraborty (1985) has delineated the important factors that have to be taken into account to ensure that the decision taken is based on the dictates of fundamental discrimination. These are: 1
the self interest or the self orientation of the manager should not hinder a clear perception of the essential problem and its affect on others
2
the backward and forward integration linkages of the decisions are grasped as much as possible, both in space and time
3
the decision taken leaves the manager in a state of healthy mental quest and repose
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4
the decision taken creates more of unity and harmony in the situation than what is prevailing
5
the decision arrived at involves the manager more in ‘giving’ of himself to the task than merely in a calculus of receiving.
Thus, values-based decision making is the final aspect thus providing a complete structure for the practice of values-based management.
8
An integrated framework for values-based management
The aspects of values-based management explained in the previous sections are interdependent and impact each other. Thus, these aspects together form an integrated framework. These components of values-based management are related to each other through a nested approach. The corporate philosophy of an organisation forms the basis of the other components of leadership, corporate culture, stakeholder policies and decision making. This is because corporate philosophy provides the basic purpose of an organisation, which the leaders and members of the organisation should strive to attain, through the development and implementation of appropriate stakeholder policies. Leadership, which is the second component influences along with the corporate philosophy, the building of a culture, which promotes ethics, development of stakeholder policies and values-based decision making. As leaders provide the basic example and inspiration for the other members in the organisation, they have an important role to play in the building of the corporate culture and development of policies. Thirdly, the corporate culture affects stakeholder policies and decision making, by forming the basis of the generally accepted behaviour in the organisation. Finally, stake holder policies influence the way decisions are taken on the basis of values. These interrelationships between the various aspects forms the basis of the development of the integrated framework for values-based management. According to Sankar (1991), the various aspects of a system can be described through the analysis of the following: a
the basis of a aspect
b
the process to be followed to achieve the end of the aspect
c
the characteristics of the aspect
d
the final outcome of the aspect.
The basis of an aspect deals with the foundation of the aspect. It essentially represents the philosophy, which forms the basis of the aspect. The process details the various steps to be taken to achieve the final end of the aspect. The characteristics of an aspect represent the dominant features of an aspect and the final outcome of an aspect represents the goal that has to be achieved in that particular aspect. Based on this classification, the different components of values-based management have been described below.
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8.1 Corporate philosophy which aims at promoting overall social welfare The basis of this aspect is the personal philosophy of the founder of the organisation. When the founders personal philosophy is defined in spiritual terms of achieving self realisation, then the philosophy of the organisation he founds would be defined in terms of promoting social welfare as this philosophy can help the leader to attain the spiritual goals of life. The process of the formulation of the corporate philosophy involves the founder taking active steps to define his personal philosophy and on that basis the corporate philosophy. The most important characteristics of this philosophy is its emphasis on the promotion of overall social welfare and facilitating the spiritual evolution of the founder and the members of the organisation. The final outcome of this component is a statement of the corporate philosophy which is communicated to the members of the organisation, so as to provide a direction to the members in their day to day work situation.
8.2 Values-based leadership The basis of this component is the corporate philosophy of the organisation itself. From the corporate philosophy arise the basic values to be cultivated by the leaders of the organisation. The process of developing values-based leadership includes the ways to promote the cultivation of values in the leader. This involves the understanding of the extrinsic and intrinsic factors of motivation to cultivate and practice values, and the training and sustaining of the practice of values in the leader. The characteristics of the values-based leadership are the personality of the leader consisting of the values actually cultivated by the leader. The final outcome of this component is the emergence of an integrated personality in the leader, who inspires others through his own example and develops close reciprocal relationships with the stakeholders. Thus, this leader leads others in the organisation through his example and empathises with the stakeholders based on the intimate relationships he is striving to cultivate with the other members.
8.3 Corporate culture which promotes ethical behaviour The basis of this component is the corporate philosophy of promoting overall social welfare and the leader’s inspiration to be committed to the practice of ethics in business. While the corporate philosophy helps in defining the core values of the business, the leaders provide a personal example towards the following of the various values in the organisation. The process of building the culture involves the steps of selecting appropriate personnel, the rewarding of ethical behaviour, checks on unethical behaviour, training the members in the values of the organisation and inspiring the members to practice ethics through intrinsic motivation. The characteristics of the culture would be the values, which the members would have cultivated, and their strict adherence to it, thus leading to a culture, which promotes ethical behaviour. The final outcome of this culture would be the ethical practices exhibited by all the members of the organisation as a whole.
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8.4 Stake holder policies which are socially responsible The basis of socially responsible stake holder policies are the corporate philosophy which aims at promoting overall social welfare, the leaders who are committed to promote stake holder interests and the corporate culture which promotes ethical behaviour among the members of the organisation. The process of developing the policies involves the definition of the relationship between the organisation and the stakeholders and the developing of appropriate policies based on this relationship. The characteristics of these policies are their social orientation, and their emphasis on promoting the interests of the stakeholders. The final outcome of these policies is the actions of the organisation based on the implementation of these policies and through the influence of policies on decisions of the organisation.
8.5 Values-based decision making The basis of this component is the corporate philosophy, the inspiration and commitment of leadership to values, the culture of the organisation which defines the core values of the organisation and the stake holder polices aimed at promoting their interests. The process of values-based decision making involves deciding on the executives who can be given the authority to take decisions, defining the objectives of the problem solving in consonance with the organisation philosophy, collecting relevant information, developing alternatives in consonance with the policies of the organisation to tackle the problem situation, evaluating the options to ensure that the alternatives satisfy the dictates of fundamental discrimination, selecting the alternative which best satisfies the conscience and implementing the alternative. The characteristics of the decisions taken would be its strong basis in values and aimed at promoting the overall welfare of the society. The final outcome of values-based decision making would the achievement and fulfilment of the corporate philosophy of overall social welfare along with the achievement of excellence in the activities of the business. Feedback from each of the inner components flow outside so as to perfect the framework. Thus, values-based decision making helps in perfecting stakeholder policies, together they improve the corporate culture which joins to give feedback to the leadership which finally leads to perfecting the corporate philosophy itself. The practice of values-based management through the integration of the component leads to the fulfilment of the corporate philosophy, leading to the promotion of the overall welfare of the society. Along with the promotion of the welfare of the society, the practice of values-based management will lead to the achievement of excellence in the activities of the organisation, through the striving for perfection and duty orientation in the organisation. Thus, the practice of values-based management would help in the overall success of the corporation over the long run. Finally, the practice of values-based management would help in the spiritual fulfilment and evolution of the leaders and the members of the organisation, through the service of the society and commitment to the practice of ethics and morality in business. The complete integrated framework has been shown in Figure 1.
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N. Sivakumar and U.S. Rao Integrated framework for values-based management
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Implications and conclusion
The integrated framework presented in this paper provides several directions for future management. These include:
9.1 Social orientation According to Indian ethos organisations and management must have a social orientation. This means that the values-based management must promote social welfare or loka kshema.
9.2 Integration Management requires the integration of several aspects starting from philosophy and ending in decision making to be effective. The current trend of seeing management as different functional specialisations needs a careful reconsideration.
9.3 Spiritual orientation Management must also have a spiritual outlook according to Indian ethos. Only when management has such an orientation, it can become complete. It is important to note that every aspect of the values-based management discussed has ultimately a spiritual inner core and foundation.
9.4 Importance of ethos It is important to note that Indian ethos has several centuries ago given a proper framework for management. It is necessary to understand and appreciate these lessons for the future of management to be socially useful. This paper has attempted to detail an integrated framework for values-based management. This paper has explained the various aspects of values-based management and the guidelines given in Indian ethos for each of these guidelines. These aspects of values-based management have also been integrated into a complete framework. The implementation of this framework will help institutions, business firms and organisations fulfil their most primary purpose as enjoined by Indian ethos namely, Samastha Loka Sukhino Bhavanthu (Let all the creation be happy).
Dedication The authors dedicate this paper at the feet of Bhagawan Sri Sathya Sai Baba, The Revered Chancellor of Sri Sathya Sai University, Prasanthinilayam, Andhra Pradesh, India.
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Acknowledgement The authors thank the anonymous reviewers of IJICBM for their constructive suggestions to revise and improve the article.
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