Session Agenda

• Meaning of Ethics
• Meaning of Core Values
• Difference between Ethics & Core Values
• How Core Values impact the employees
• How to identify the core values & its communication
• Some examples of Core Values of International & Indian Companies

 Meaning of Ethics

Ethics has a variety of meanings. Some of them are :

1. The term comes from the root words ‘ETHICOS’ (Greek) and ‘MORALIS’ (Latin) both meaning Character, habit or behavior.
2. Ethics is a set of inner guiding moral principles that a person or group uses to analyse and interpret a situation and then decide what is the ‘Right’ and appropriate way to behave.

• Ethics can be defined as the discipline dealing with moral duties and obligation and explaining what is good or not good for others and for us. 
• Ethics is the study of moral decisions that are made by us in the course of performance of our duties.
• Ethics is concerned with truth and justice, concerning a variety of aspects like the expectations of society, fair competition, public relations, social responsibilities and corporate behavior. 
• In this, Business Ethics comprises the principles and standards that guide behavior in the conduct of business. 
• Businesses must balance their desire to maximize profits against the needs of the stakeholders. Maintaining this balance often requires tradeoffs.

Example of Ethics (in Sports):

It had happened in January, 2013:

• Ivan Fernandez Anaya showed his character on a race track in Navarra, Spain, and in the process he wound up showing the world what true sportsmanship looks like and practically proved what ethics is.
• Ivan is a long-distance runner from Spain who competes in cross country and marathon races.
• Ivan was just about to finish a cross country race when he noticed Abel Mutai, a Kenyan athlete who’d been in the lead, began to slow down as he thought that approached the finish line. 
• Abel did not speak Spanish so he got confused by the signs and thought he had already won. Ivan saw what was happening in an instant and could have easily gone past his opponent to win the race himself. Instead, he slowed his own pace and pointed Abel towards the real finish line so he could win.
• “He was the rightful winner,” Ivan said later. “He created a gap that I couldn’t have closed if he hadn’t made a mistake. As soon as I saw he was stopping, I knew I wasn’t going to pass him.”
• Everyone who witnessed the race was rightfully impressed with Ivan’s actions! He didn’t hesitate to do the right thing, proving that being a good sport is still one of the most important aspects of sports. Later, a journalist asked Ivan why he didn’t take the opportunity to win the race and he laid out his reason for doing the right thing.
• “My dream is that someday we can have a kind of community life,” he answered simply. When pressed and reminded he was seconds away from winning the race himself, he told the journalist, “But what would be the merit of my victory? What would be the honor of that medal? What would my Mom think of that?”
• We’re sure Ivan’s mother is very proud of her son’s actions on the track that day! What a wonderful reminder that victory is sweetest when it’s earned.
• Business Ethics is a form of applied ethics.
• In a broad sense, ethics in business is simply the application of moral or ethical norms to business.
• Using these ethical standards, a person or a group of persons or an organization regulates their behavior to distinguish between what is right and what is wrong as perceived by others. 
• Therefore, Ethics is a set of principles or standards of human conduct that govern the behavior of individuals or organizations.
• Hence,  the businesses should earn profits without harming individuals or society as a whole. 

Sometimes, Ethics can be classified into: 

Virtue Ethics Theory is a branch of moral philosophy that emphasizes character, rather than rules or consequences, as the key element of ethical thinking. 

Relativism in Ethics: This is  the idea that some elements or aspects of experience or culture are relative. Killing animals for sport like the famous bullfighting of Spain could be right for one culture but can be wrong in another culture.

Ethics in Finance: The ethical issues in finance that companies and employees are confronted with include:

In accounting – window dressing, misleading financial analysis. 

• Related party transactions not carried out at arms length.
• Insider trading, securities fraud leading to manipulation of the financial markets. 
• Compensation paid to the Top Management.
• Bribery, Kickbacks, Overbilling of expenses, favoritism and nepotism. 

Ethics in Compliance: Compliance in any organization  is about adhering to rules and regulations. The compliance mostly is complied with out of the fear of being caught on the wrong side rather than a desire to be abiding by the law. This culture should be changed and an ethical climate should be brought in so that law is fuelled by a desire to abide by the laws. Organizations that value high ethics comply with the laws in letter and spirit. 

• The cost of non-compliance is always very high when compared to the cost of compliance. Non compliance costs can include things such as business disruption, productivity loss, revenue loss, penalties & fines leading to the suffering of Brand image and reputational risk for the organizations.   

What are Core Values?

• The Core Value concept goes well with an Organization or a public entity.
• The core values of an organization are those values we hold which form the foundation on which we perform work and conduct ourselves.  
• We have an entire universe of values, but some of them are so primary, so important to us that throughout the changes in society, government, politics, and technology they are STILL the core values we will abide by.  
• In an ever-changing world, core values are constant.  Core values are not descriptions of the work we do or the strategies we employ to accomplish our mission.  
• The values underlie our work, how we interact with each other, and which strategies we employ to fulfill our mission.  
• The core values are the basic elements of how we go about our work.  They are the practices we use (or should be using) every day in everything we do.
• Core values are the root beliefs that a person or organization operates from. They are the principal perspectives that guide a person or organization’s behavior with others.
• Mission statements of organizations are, theoretically, developed from core values and should act as business check points when new products are launched, or courses are offered.
• Core values are the basis upon which the members of a company make decisions, plan strategies, and interact with each other and their stakeholders. 
• A stakeholder is any person or organization that is impacted in some way by the company. Core values reflect what is important to the organization and its members.
• The core values of a company are intrinsic - they come from leaders inside of the company. Core values work the same way for a company as they do for a family. For example, one family may value hard work and saving money, and another family may value travel and exploration. 
• Even starting with the same resources, each family will make different decisions and plan different strategies based on its core values. Family core values affect strategy (how much of each paycheck is saved or spent) and practices (spend money on a money market account, a savings bond, or airline tickets).
• Core values are not necessarily dependent on the type of company or industry and may vary widely, even among organizations that do similar types of work. 
• For many companies, adherence to their core values is a goal.
• Some indicative Core Value practices are given below:
  • Governing personal relationships (creating a positive atmosphere)
  • Guiding the business processes.
  • Clarify who we are (probably to the new recruit)
  • Articulating what we stand for
  • Help explain why we do business the way we do. 
  • Guiding how to teach others.
  • Informing how the reward process in the entity works
  • Mentoring the employees/managers how to make decisions.
  • Giving a panoramic view of the organization. 
  • Essentials of maintaining tenets, that is, a principle, belief, or doctrine generally held to be true especially : one held in common by members of an organization, movement, or profession.

Difference between Ethics & Core Values

Core Differences Between Ethics and Values In Point Form 

1. Ethics is a set of morals for the specified group while values are a set of standards or principles that determine behavior.
2. Ethics are often professional while values are personal
3. Values are determined by family background, culture, religion, and community while ethics by different professions, organizations, and institutes.
4. Ethics vary according to profession while values according to individuals.
5. Ethics helps to tell what is right or wrong while values define priorities of life.
6. Ethics tend to be consistent while values vary from one person to another.
7. Examples of values are likes, dislikes, prejudice, perspectives, and judgment while ethics are honesty, integrity, punctuality, and loyalty.

Summary:

• The core difference between ethics and values is that ethics are a set of moral principles while values are a set of standard behaviors. 
• Besides that, ethics are commonly used in professions while values are personal or derived in an organization from the personal behavior of the top man or boss. 

How Core Values Impact the Employees?

• The most effective core values tell the world what your company believes in, set out your organization's priorities, and guide your current and future activities.
• An important way for HR to put core values to use is to make sure that the employees know and understand them. 
• When the core values inspire and guide how the team behaves, there are lots of benefits for employees as well as for the organization.
• The core values should be:
• Relevant and inspiring — employees need to understand how values relate to their roles and the company’s success, in order to avoid overly generic or broad-based words
• Communicated clearly to employees — not just through literature, but through training, reward programs, and other initiatives
• Embraced by managers — employees might reject core values as a double standard if they see their superiors ignoring or floating them. Managers should set an example in adopting the core values so that it percolates down to the employees. 
• Core values can improve employee performance
• When employees live the values that are most important to the entity’s business, performance can improve as a result. Employees who understand and believe in the core values can…
  • Have a clearer understanding of their own role
  • Know what the company is trying to achieve, and how they can contribute
  • Know the values and attitudes they need to adopt to perform at their best
  • Use the core values to guide their actions in new or difficult situations
• Core values can improve employee engagement
• Engagement is a measure of how committed, energetic, and focused employees are in their approach to work. Disengaged employees are likely to put in less effort and want to leave the organization. Engagement generally increases alongside job satisfaction and workplace morale.
• Effective core values can increase engagement by creating a workplace culture built on principles that employees believe in. Employees might therefore find more fulfillment in their work.
• Engagement benefits may be even greater where the employees are involved in defining the entity’s  core values, such as through consultation or surveys (employees participation in management).
• Attractive core values can lure top talent
• The core values of a company can also help it compete for the best talent, in three significant ways.
• Firstly, when potential employees find your core values inspiring, they’re more likely to apply for a position. This could give you a wider candidate pool to select from. Inspiring core values might include things like ‘innovative’, ‘humble’, or ‘creative’. For example getting a job in Tatas or in Infosys who always stand for respecting the core values.
• Secondly, when your workplace is known for a strong culture built on real values, word can travel fast. Your reputation as an employer could grow, meaning more people will want to work for you.
• And finally, core values don’t just help you recruit better-quality employees — they help you attract staff who are a better fit, too. When you include them in recruitment materials, such as job ads, you can attract people who already share your core values. These new hires are likely to fit well with your organizational culture.

Identifying Core Values

• Company values are the central, underlying philosophies that guide a business and its employees. These beliefs also influence the way a company interacts with partners, clients, and shareholders. A company’s culture must align with its core values in order to create a shared, enduring, and positive environment for all these parties.
• The benefits of defining and living with the core values are immense.
• The top factor of employee satisfaction is the culture and values of an organization, and over 75% of employees consider it “very important” to work for a company with defined core values. This translates to a better bottom line: companies with highly aligned cultures and innovation strategies see 30% higher enterprise value growth and 17% higher profit growth.
• A recent Harvard Business Review article by Dr. Natalie Baumgartner, Chief Workforce Scientist at Achievers, explores why culture needs to align with company values. 
• She cites a LinkedIn survey that suggests 26% of employees are ready to forego a fancy title (designation) and 65% would accept lower pay when they are getting a chance to work in a better organization than working with a poor workplace environment.
• How to define and live by your company values?
• Defining a company's values requires a close examination of your organization’s culture and vision. Think deeply about how to use your values to illustrate what your company hopes to achieve and represent. Consider these guidelines when establishing your company values:

1. Keep it short. Your values should be easy for your employees to memorize and epitomize (work an example). Rather than writing an essay, think about the real meaning of your values. Distill them down to words that the average person understands and can adhere to.

2. Stay specific. Writing in vague corporate jargon is confusing and dilutes the meaning behind your words. Values need to tie specifically to your company’s goals and mission. They should be relevant to the products or services your company offers as well as your company culture.

3. Address internal and external goals. A company’s decisions impact the employee experience, but they also impact the outside world. When you address the manner in which your company wants to interact with the outside world, it leaves employees feeling hopeful and inspires trust in your customers.

4. Make them unique. Using the same values as followed by other companies leaves your business looking ordinary. Think of what sets your organization apart from others and concentrate on bringing those aspects to light in your company values to attract the right customers and employees.

Communicating Core Values

Standard workforce communication tools 

• Here are some of the traditional ways that organizations share their values with the workforce. 
  • Email 
  • Intranet 
  • Company website 
  • All hands meetings/town halls 
  • Digital signage 
  • Printed posters/signs 
  • Mailers/newsletters 
  • Collaboration systems 

Companies with exceptional Core Values

3M: 3M is a global company with over 88,000 employees that produces innovative technologies to change the world for the better. The values they choose to live by reveal the deep appreciation they have for their investors, the environment, and their employees. 

Their guiding values include:

• Act with uncompromising honesty and integrity in everything we do.
• Satisfy our customers with innovative technology and superior quality, value and service.
• Provide our investors an attractive return through sustainable, global growth.
• Respect our social and physical environment around the world.
• Value and develop our employees’ diverse talents, initiative and leadership.
• Earn the admiration of all those associated with 3M worldwide.
• One way that 3M ensures these values stay constant as they grow is by investing in educational opportunities for potential future 3M employees. 
• 3M supports programs like WorldSkills, DonorsChoose.org, Frontline Sales Initiative, Young Scientist Challenge, and 3M Visiting Wizards.
• Each initiative hopes to inspire the next generation of scientists, innovators and inventors.
• While their values are exemplary, 3M had several challenges bringing their workforce together: a traveling sales team, a mix of unionized and non-unionized workers, and a wide range of employee ages, from young professionals to employees nearing retirement. 

Google: Everyone in the world has heard of Google. Such an influential business needs killer corporate values, and Google does not disappoint. They refer to their values as ten things we know to be true, which were originally written when Google was a few years old:

1. Focus on the user and all else will follow.
2. It’s best to do one thing really, really well.
3. Fast is better than slow.
4. Democracy on the web works.
5. You don’t need to be at your desk to need an answer.
6. You can make money without doing evil.
7. There’s always more information out there.
8. The need for information crosses all borders.
9. You can be serious without a suit and coat.
10. Great just isn’t good enough.

Google has a corresponding paragraph fully explaining each of these tenets in detail. It is evident that Google takes their values extremely seriously, and holds their employees to the highest standards. 

• Google also mentions that they revisit their values to ensure they are still in keeping with the company’s goals and mission, and they’ve done so multiple times since they were first written when Google was a few years old.

Kellogg’s is another quintessential (typical) American brand. Kellogg’s six core values represent the type of employees they want to attract, the businesses they want to work with, and the types of products that will fit consumers’ needs:

• Integrity
• Accountability
• Passion
• Humility
• Simplicity
• Results
  • With thousands of people employed across the globe, it was imperative to align employees around Kellogg’s vision. 
  • The Chief Human Resources Officer at Kellogg’s, describes how they did so:
  • “How do we align our employees around the vision at Kellogg’s? One of the biggest things around that is reinforcing behaviors and reinforcing success. And the best way to do that is a global [recognition] platform [. . .] because everyone can see how people are modeling the behaviors that help drive our success at Kellogg’s.”
  • Within four months of launching their recognition program with Achievers, Kellogg’s has seen over 80,000 employee recognitions sent. The platform made it easy for everyone to recognize colleagues who are modeling behavior that leads to success and reinforces Kellogg’s values.

Corporate Governance & Infosys

• Infosys launched its IPO in February 1993.
• The issue was not undersubscribed but barely subscribed with the support of the underwriters.
• The people at Infosys were always willing to share their wealth with the public at large. This was very new to the Indian context.
• They were also among the first ones to have wide and larger participation in employee stock option schemes. 
• Within 15 months of their listing, their company held three analyst meets, which was another first in the Indian market.
• As a trendsetter, Infosys started a live web interaction with shareholders  in Mumbai when the AGM was being  held in Bangalore. The company  won the hearts of shareholders as those who could not come to Bangalore were still  able to interact live.
• They always published very detailed annual reports with substantial disclosures and by this brought in high levels of transparency.
• Infosys was the first company to publish half-year results even when it was not mandatory.
• They repeated the same thing with quarterly results, and then followed it up with publishing audited results even for quarterly numbers.
• It took the company about 15 months to list on Nasdaq, but they took all the pains to do that to list right from 1999. In the process, Infosys also became the first Indian company to do that.
• The company's decision to fix a compulsory retirement age is also a very bold decision.
• Also unprecedented is their decision to have a board of directors constituting a large number of independent directors.
• Through the above steps they also started teaching about the culture and moral values of the company to the market through transparency.
• Unlike India‘s traditional family-owned companies, Murthy set up Infosys as an example of meritocracy.  No member of his family was involved either in the Board or in the executive function of the company in the growing phase of the company.
• While managing Infosys, he quickly realized that just selling software was not enough, he had to sell ‘Brand India’ abroad. 
• India then (1990s) was not known for quality.  If we look at Infosys’ history, they just did not sell the Infosys brand, but India as a brand globally. 
• Murthy realized the importance for an IT company to have a campus.  When a customer visits, it should show to the customer how the company delivers, trains people and how the ecosystem works. 
• Murthy also helped to pioneer the gender diversity initiative.  Women make up almost 33% of the workforce in the IT sector, which is a remarkable figure and is increasing. 
• Murthy also led the committee that developed corporate governance guidelines for the IT industry.
• The guidelines that emerged were far beyond the statutory requirements and in fact laid down best practices for all stakeholders, employers, employees, customers and vendors.  These guidelines have been useful to the new companies.  
• Murthy gave up his position much earlier than anybody else would have in his position. 
• Next founder Mr. Nilekani also gave up his position similar to Mr. Murthy.  He resigned and joined as head of UIDAI. Infact, he lost his identity to give identity to the entire India.