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Consulting|Technology|International business

Corporate ethics!

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Another very important facet of the corporate world of today is the much neglected theme of ‘corporate ethics’.

It is often not given the importance it should be in corporate boardrooms or in company affairs but just to give an idea on what it means, let us look at corporate America’s recent brushes with a violation of this and see the after effects from one of the most capitalist economies of this 21st century.

Enron – an accounting scandal, leading to destruction of evidence, shredding of important documents whilst keeping shareholders completely in the dark with artificially bloated stock prices and false earnings.

The result: The largest corporate crime of the present day era, the company bankrupt, thousands losing their savings  and the story is still being talked about as an example of what not to do during ‘corporate/business integrity/ethics violation’ classes.

I personally remember watching live CNBC America coverage of the stock markets way back in 2001 Feb when Enron stock was trading at about highs of $30+ whereabouts and remember how it plumetted to abyssmal levels in the next few days/months to a few cents and was finally delisted from the NYSE and forced to declare bankruptcy – thousands of workers lost their life savings in this scandal – one of the biggest to shake corporate America.

I saw a movie recently on this very scandal called “The crooked E The Unshredded Truth About Enron” and it was really well made – must say. The story revolves round a young hot shot executive who gets used to the high life and the soaring stock prices, the infamous ‘shredding of evidence by Enron” and is soon brought back to reality!

The then big-5 accounting company, Arthur Anderson http://en.wikipedia.org/wiki/Arthur_Andersen was forced to downsize its workforce, lost almost all its major clients for its involvement in the Enron saga.

From the big-5 it has now became the big-4 accounting firms – http://en.wikipedia.org/wiki/Accounting#The_.22Big_Four.22_accountancy_firms

The latest to rock the corporate world though not on the same lines but in the way corporate America acted on this one is the resignation of Patricia Dunn – the former Chairman and CEO of Hewlett Packard (NYSE: HP).

She was accused that under her leadership of HP, private investigators had spied into the company’s Directors’ lives to trace a boardroom leak. She was forced to resign.

We come across almost every CEO today talk of “Shareholder value”, “Customer satisfaction” etc.

None of above value systems/satisfaction measures can be brought about without 100% integrity/ethics/transparency in the conduct of the organization and the individuals running those organizations.

The Enron debacle is a lesson to learn from for many years to come.

We had a session conducted by one Mr. Parthasarathy Banerjee during our MIB on importance of corporate ethics.

I come from a company – TCS – where corporate ethics is written in the form of a rule book adhered to called the famous “TATA code of conduct”. I believe the TATA’s are a respected business family in India for the last 100+ years and their code of conduct is something to cheer for!

Companies – large or small – should conduct themselves in a proper way if they are to succeed and maintain their competitive advantage in today’s hyper competitive world economies with skills imbibed into their cultures such as ‘integrity’, ‘ethics’ and ‘transparency’.

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Written by Naveen Athresh

November 16, 2006 at 10:08 pm

Posted in Business Ethics

One Response

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  1. Testing if the comments system works.

    Naveen

    November 18, 2006 at 5:29 pm


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