Building ethical assets

Topics IL&FS | YES Bank | ICICI Bank

After reading the words above, the reader might wonder what I have been sniffing. After IL&FS, Yes Bank, ICICI Bank, CG Power, business ethics and values? But please, please read on. 

There is no denying the monumental ethical blunders by companies, but it only confirms that more effort is required, perhaps from a different source: the line boss. You must influence managers during their “professional childhood when their ethical brain is plastic”.

Competitive advantage, which was based on physical assets throughout the industrial revolution, shifted to intellectual assets during the information revolution. In my view, future competitive advantage will shift to ethical assets amidst the AI revolution, which is far more demanding of data transparency. I think that the future could likely belong to strongly ethical companies. Mentoring bosses, management teaching and company trainers must engage with this proposition.

I sometimes think about how my grandchildren will remember me when they have grown up—probably like I remember my grandparents, which is not much! Brain researchers inform us that human memory up to the age of three is virtually nil. From age three to eight, children remember the emotion, but not the facts, of their experiences. Regrettably, all those joyful hours that I spend with my grandchildren in the park, teaching them chess, playing cricket, and taking them to school will not be remembered by them at all; just like I don’t recall my grandparents doing so.

However, my grandchildren will remember affection, hugs, kisses and stories that made their eyes wide. Until the age of eight, through emotions and stories, kids learn values and what is right and wrong. The plastic brain of children registers and recalls emotions from very early life but recalls facts and knowledge only from the age of eight. The four principles that every grandparent intuitively deploys are (i) encourage kids by spending emotional time; (ii) impart learning osmotically through story telling; (iii) correct behavioural aberrations early and (iv) immerse into multiple interactive experiences.  

During my career, I have learnt that similar principles influence young business professionals about ethics. Ethics is not just about morality, but about sharing, caring and respect. They must be influenced during B-school years and the early years of the career, what I call ‘professional childhood’. The ethical brain is plastic and malleable at that stage. Here are five disproportionately value-enhancing experiences that I know.
  • SPJIMR’s Abhyudaya: Every MBA student compulsorily mentors disadvantaged children as a part of the MBA course. As students they perhaps do not appreciate it, but later, they treasure the experience.
  • Rural development projects: Hindustan Unilever (HUL) pioneered the idea that every trainee should spend eight weeks, living with a family in a village. Every trainee goes through the experience and leaders honed at HUL are all alumni of HUL’s mandatory rural development stint. 
  • TAS social service projects: During my Tata career, I was deeply involved in introducing eight weeks of social service for every TAS trainee. They probably did not enjoy the experience, but later, each one would recall how enriching it was.
  • Sustainability in TBEM: It is not just about honesty and integrity, it is also about respect for fellow beings and the environment. Sustainability was introduced into the Tata Business Excellence Model assessment process in mid-2000s. 
  • Tone at the top: Children are sensitive observers of elders’ behaviour with respect to truth-telling and injustice. Likewise, young managers judge their seniors’ behavior rather than their talk. In Tata, the lesson on ethics was salutary when Tata blew the whistle on itself in the face of the unfortunate Tata Finance episode. 

In short, lessons on ethics, defined as broader than just integrity, can be imparted even though it is difficult to teach. It is done by deploying the same principles that work in a family.

I feel that lack of ethics and morality is distributed in the same proportion among business as in media, politics, judiciary, administration, religion and NGOs. Business leaders also increasingly realise that reputation matters to employees and customers, who tend to respond to good ethics with loyalty and engagement. Anyway, who wants his grandchildren to carry the burden that their grandfather was unethical?

“The end result of kindness is that it draws people to you,” said the late Anita Roddick.   

The writer is an author and corporate advisor. He is distinguished professor of IIT Kharagpur. He was a director at Tata Sons and a vice-chairman at Hindustan Unilever | Email:

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