Ethics and style in business

By Mubarak Sooltangos 

We often say that business is ruthless and this is what gives to this trade a bad connotation, especially by those whose weakness is exploited by the holders of capital. When there is a race for growth and expansion, for market share gains, for sales and profits, the appropriate term to be used is aggressiveness. This is an accepted and even commendable state of mind because markets are always evolving, and stagnation is synonymous with moving backwards. It is when aggressiveness makes an alliance with greed and the temptation to be outside good governance that ruthlessness comes in, running.

Indeed, business people driven by the dark side of capitalism can be ruthless in their greed to win advantages at all costs. These include appropriating by illegal means the rights of others, poaching business from the weak who depend on their activity for their living, illegal spying on competitors, corrupting people and slave driving and under paying staff. Ruthless slave driving of staff sometimes leads to extreme consequences like suicide, and there are examples of this scourge in even very advanced countries to illustrate it.

Business carries no taboo

Business is an occupation as noble as any other and the fact that business people usually earn considerable money is not always the result of exploitation of people, but of risk taking, hard work and smart management. Everybody will realise that mortgaging one’s house to raise finance to set up a business of which the future is uncertain represents considerable risk as compared to those of a salaried person enjoying job security, guaranteed pay at the end of the month and yearly salary increases to cope with inflation and the legitimate desire to improve his standard of living. Hence earning more money beyond others by a business entrepreneur is neither indecent nor immoral. On top of this, business has the added virtue of creating jobs and favouring national economy growth.

Ethics and company loyalty

If business is done with style and ethics, it can produce tremendous satisfaction and pride for having succeeded beyond the common man. There is also a sense of accomplishment, both for business owners and staff in being part of a winning organization which has image in the sight of the other businesses of the same sector of activity and of the public. These are motivating factors often more intense and more lasting than money.

In such organizations, the owners know that they can rely on the concern and dedication of their staff and the collaboration of their business partners in difficult times. Dedication to a cause or an organization explains the loyalty of Japanese workers and the longevity of their employment, which is sometimes for life in a single company. Human relations occupy a prominent place in business dealings with outside partners in Japanese business culture. From experience I can say that ending relations with a business partner is, in Japan, an extreme measure which must be dictated by exceptional reasons.

Poaching business

Poaching a business from a competitor is a common occurrence. It causes resentment and loss of revenue and profits, but we can live with this without a guilty conscience if the business is taken from a big operator without breaking its back. In my long career, I have never alienated a business from a weaker player who earns his livelihood from it and guarantees the employment of his staff. Such cases cause misery which can never be counterbalanced by any feeling of pleasure in having secured an additional line of business or a new product.

Viewed from a capitalistic perspective, it is easy for a big company to poach a business from a smaller one by buying more and promising more to the supplier, but this temptation should be resisted. Comparatively, buying a smaller company to expand one’s business is perfectly moral if the seller is given his worth and not exploited for any weakness which he or his business may be suffering from. Such acquisition must be made at arms’ length, in a win-win deal.

Enlisting business partners

The most important element in the conclusion of a deal with a business counterpart tends to be the price, but it should not be the sole driving factor, though being very important. There are other considerations in enlisting a new business partner, these being trust, reliability, accessibility and mutual help in case of occasional difficulties. Viewed as a package, non-financial considerations often outweigh money matters. It is not in the interest of any company to drive a reliable partner, be it a customer or a supplier, out of business by excessive bargaining and imposing its financial muscles.

There is no special merit in concluding a first deal but there is considerable satisfaction in concluding successive deals durably with the same business partner, with both parties making money on a sustained business. If price is the only driving element, life becomes a permanent battle to make deals for the lowest possible consideration and business relations remain impersonal.

Keeping all stakeholders happy

There are different classes of people or organizations involved in a business. These are called stakeholders and each of them is intimately connected with the life of the business and has his own aspirations and motivations. Artful business done with a style is about caring for these aspirations and being smart enough to avoid conflicts between them. The main stakeholders are, in my order of priority, staff, customers, suppliers, shareholders and the community. I place employees on top of the list because they work for their livelihood and spend their whole day at work, whereas the dependence on the business and the time allotted by other stakeholders are often less important.

However important a customer is, our dignity is more important.

Business which aims only at creating shareholder value is one sided and will never unite all the stakeholders in reaching a common goal. The necessity of caring for the community is often overlooked. I believe it is the social and patriotic duty of any big company to look after the geographical environment in which it operates, with special regard to uplifting the environment, providing leisure facilities and creating employment for people living in its vicinity, otherwise it will be considered as an intruder.

Providing customer service

Customers are at the heart of any business, and any business person should understand that customers spend their money and they expect to get good value for money, namely products or services which will not disappoint them in terms of usefulness or performance level. With their money in their pockets, they have a choice of suppliers for each of their needs and will appreciate an “extra mile” from a supplier. If the latter has nothing to give in terms of product fundamentals which will differentiate one brand from the other, there is always the possibility of providing a better customer service, for example personal attention, ambiance at the sales outlet or efficient after sales service. In marketing terms, customer service is a competitive edge as valuable as intrinsic product qualities and the customer who feels he has been given due attention and respect will turn into a loyal customer.

There can be still more important considerations which override giving good customer service. One of my sales managers came back to the office from a customer visit and was clearly dejected. In fact, he had just had a traumatic experience with an important customer who had literally abused him in the most disrespectful terms, and he asked me how he should manage this problem. I replied to him thus: “The customer is king, and we must go out of our way to please him. But every king is supposed to have a composure and a civilized behaviour. He has failed in this. Tell him to pack up with his business and to only come back when he is prepared to behave. We are business people, not beggars”.

However important a customer is, our dignity is more important and is not on sale for whatever consideration. As a CEO, I had stood by a subordinate manager and upheld his dignity. I leave you to appreciate the effect that this support has had on his morale and his future loyalty and dedication towards the company.

Of course, I took alternative measures not to lose the customer, namely that I delegated another sales person lower in the hierarchy to be his interface. Who has won and who has lost in this bargain? You will easily find out if you reflect on it with an open and caring mind.

Family life

Most businessmen work very long hours with the understandable objective of making money. When they are not doing physical work at their office, they are in business dinners or on overseas trips. When they are asked why they spend so much time at work and what is their final objective in earning more and more money, the majority will say that they work for the future benefit of their children. This is most of the time a lie. They work with the selfish objective of either furthering their professional career, if they are employed CEOs, or making more money if they are business owners.

More than our money, our children need our time and need to be close to their parents to talk about their achievements, their problems and their aspirations. They need to be listened to, in their youth and not when they turn thirty. At this stage of their life, they would have formulated their own dreams and working towards their accomplishment. They would have little time to put aside for their now retired father.

Executives must never be allowed to engage in side businesses of their own.

Businessmen who flush their children in their youth with visible signs of wealth like designer clothing, sports cars or overseas holidays are only buying peace of mind and appeasing their guilty conscience, but none of them will admit it. The misfortunes of their children when they are mediocre at school or indulge in drugs are negative facets of their lives which go unnoticed by parents involved up to the neck only in business and are sometimes irreversible if nor addressed in time. With mediocre results in high school, they will not be admitted to good universities which their affluent fathers are ready to pay for. So, money doesn’t buy all, at the end of the day.

However deeply I have been involved in business and enjoyed the pleasure that success brings, I have always placed my family at the top of my priorities. If I must choose between the family and the needs of business, my decision is already taken.

Side business

Executives must never be allowed to engage in side businesses of their own. Whether these businesses are in conflict or not with the interests of the company which employs them is academic. Even if there is no clash of interest, the executive will divert his attention and effective working time to looking after his side business.

He will use company assets, communication equipment, computers, transport logistics and sometimes human resources for his own benefit. He will try to be a supplier or a customer of his employer company and will be unable to do so on terms which are the most profitable to his employer. He will use his position and influence as an executive of a big company to obtain personal bank finance. In a bad scenario, his own company may turn into a defaulting borrower with his bank while his employer company is a privileged customer of the same bank. How will he manage this dual position with the same lender?

The list of potential conflicts of interest is endless, but the main problem is that of divided loyalty, when his employer is paying him not only for his physical work but for his ability to think outside his usual office hours and to bring business to him.

Corruption in business

This is a subject which is talked about freely but never written down because proving that such a practice exists and giving examples are impossible.

Let us talk about bribes first. In my mind there are two sorts of bribes. One is paid to have undue business advantage and to acquire the rights of others. This is a dirty practice and it exists because of the co-existence and consent of both bribe takers and bribe givers. It is completely immoral and needs no more comment.

The second type of bribe is better called “ransom money” and it is asked as a bribe from somebody to literally buy his own legal and legitimate rights, like having an operating permit, for example. I have never had the obligation of giving way to such practice and I believe this decision rests on the shoulders of the person whose rights are stolen. At the end of the day every businessman must keep his trade going, and this is on which he relies to pay his staff and his overheads, and must take his own decision, in the light of the situation in which he is.

Commissions and kick back

Doing profitable business with a style, a heart and utmost honesty is possible.

Commissions on purchases or acquisitions made by business executives on behalf of their companies have become so common worldwide that it is almost considered as a corollary to business, namely opportunism rather than dishonesty. There is the perception that this is a third world syndrome. This is not true, the main difference being that in the advanced world, commission is taken on important transactions on a selective basis by important persons, and therefore it goes undetected. In the third world this is done on a larger number of transactions, as a way of life, irrespective of the amount, and by people at all rungs of the ladder of the hierarchy, which makes it a very much generalized practice with greater visibility.

“Under the table” commission taken by high-ranking managers in business starts with company purchases, and then seeps into investments in equipment and land and buildings made by the company. As a further step, the person concerned will only favour suppliers of goods and services who are prepared to pay a commission. Next the rate of commission will increase.

Taking commission is a disease which spreads easily and there can be no limit to it. As time progresses, the corrupt person has less and less loyalty to his company and works for himself. He becomes ruthless and will even be prepared to stop dealing with genuine business partners, however good, who do not make under the table payments. He will become impersonal to the extent of not caring whether such behaviour with the company’s business partners causes loss of jobs in their enterprises.

Such behaviour cannot remain hidden for a long time and will reveal itself through the irrational purchase decisions of the manager involved and his external signs of wealth. From there on, nobody can stop this practice from contaminating people in lower levels in the hierarchy. I have painted a doom scenario, but this is unfortunately the true but hidden reality of business in our era.

In the whole of my professional life, I have never taken or paid a single cent of bribe or commission. The person who would pretend that I have handled dirty money is yet to be born. Yet I have been highly successful in business with a long positive track record and I can affirm that doing profitable business with a style, a heart and utmost honesty is possible.

This is the message of hope I want to convey to young business people, doing business either on their own or as a paid executive. Business done with honesty and yet with good profitability gives intellectual and moral satisfaction beyond what money can give. For a CEO, an ethical business career will, after his retirement, enrich his memory with the satisfaction of having led a useful life, not only for himself, but also for the benefit of others.