Whenever I am asked to speak about ethics, I like to think beyond the usual metaphor of Humans as sheep who follow rules. After all aren't humans the ones that invented these rules in the first place? In the old days, people thought that RULES they practised were given by supernatural beings, some kind of "law of nature" that cannot be changed. Yet if laws were unchanging, set in stone, it would become difficult if not impossible to live by them.
Another view of rules is that they are based on the practices that we follow in life. Seen this way, rules will always be an imperfect abstraction based of the way we live life. Change in rules would be led by changes in practice. In his book, Creative Mythology, Joseph Campbell suggests a similar approach to mythology and ideology. Mythology is not a set of stories that happened
Once Upon a Time. They are being created afresh today by people who struggle to put their experiences and their beliefs into words. Campbell says that there have always been those who try to impose a Universal Mythology on us, through the use of power though we are led to believe we live in a free society. Yet, to accept a mythology that we do not experience is a false position. There is the world as we experience it and there may be a different way that we WANT to experience the world. The mistake is to mix up the two worlds and believe that the way we experience it now is they way we want to (or ought to) experience it.
What does all this have to do with organizations? Whenever we hear about the word "Beauraucratic Organizations" a smile comes across our face. It was a noble but quaint effort that Max Weber made to create an ideal organization. Yet, how much of our organizations are still bound by inflexible laws? How many of us realize that those employees who are unhappy with the rules, who strain against the leash, who challenge and question authority.... are the ones that really move organizations forward. They are those who have to pay the greatest price, since they take a disproportionate weight of moving the organization to the next level. And obviously they do not get much appreciation either. For an administrator, such an employee is a trouble maker. But then again if there were only administrators, we would never have change in organizations.
So what is my recommendation? Within your organization, create opportunities and mechanisms by which rules can be changed. Sometimes a person wants the rule changed because he doesn't see the bigger picture, only his point of view. But sometimes people oppose change because they forget the small picture. That growth happens through a dialectical process. Democracy is not the best system for society but its a good one. Democratic process is based on debate and challenge. Most organizations today can be described as Benevolent Dictatorships at best. I guess the debate about concentration of power, clear chain of command and the need to follow orders in the battle-field has not really been settled and Weber is still very relevant in the world today!
Changing the rules require responsibility, I set out to find who has responsibility in today's organizations. One day, when I was young a worker in our farm came to my dad and said that he wanted some money because his child was sick. My dad turned to the rules to ask if we had a contract that covers medical expenses, we didnt. But he changed the rules and provided him with the money he needed. When I was doing my Ph.D. my first child was born at the time I had an examination. Due to some complications, the mother and child were both in a criticial condition. They were thousands of kilometers away. I spoke to the Dean of academics at IIT and asked if there were rules that permit me to take this exam later. He said "I am now at home and its 10pm. I have no idea of the rule. But this is an emergency. You must go home. If there is no such rule, we will make such a rule." Today, much of the fondness I have to IIT is because of these five sentences uttered by a Dean when my world looked rather dark. (Thankfully, the medical emergency passed without any damage).
In a modern organization managers have limited powers to change rules. The Junior Manager has a Senior Manager who he is answerable to. Hence we must travel "upward" in search of the person who has the authority to change. The Senior Management might say that they are answerable to the CEO. The CEO, though he is the one arrested for transgressions in the firm, is himself an employee and is in turn answerable to a Board of Directors. The Chairman of the Board is an agent for the funds that he represents. Most of the capital of modern organizations are held by Financial Institutions. Once at dinner Mr. Muthuraman, CEO of Tata Steel, told me "Financial Institutions are not interested in my ethical conduct or how well we look after our people, often the question I am asked is how much money did you make in the last quarter. Financial Institutions are only interested in short term profit, not even annual. Their frame is ONE Quater."
Have we at last found the real owners?The ones responsible for the short term profiteering that modern firms are accused of? Financial Institutions do not own the money they manage. The money belongs to depositors. Ordinary small investors like you and I, who invest our money in pension funds and mutual funds. We are the REAL owners of the firms we are talking about. Yet how much responsibility do we take? How do we choose which fund to invest in? I hazard that most of us base our investments purely on the fund's performance (Return on Investment). Most of us don't even know the holding pattern of the fund we have invested in. Hence we finally arrive at the REAL reason for our poor ethical record. We, the common people, enjoy the privilages of ownership of the firms, but NOT the responibilities that come with it. It appears that modern capital structure is the REAL culprit. And moves like punishing CEO's are nothing but theatrics that aim to placate without curing the disease of modern society.
Labels: ethics, management, organization
