Sunday, March 8, 2009

Firms need to remain ethical ?

This is an excerpt from "The Star" newspaper here in Malaysia..

A company’s business ethics is the first casualty in an economic downturn, according to London-based Chartered Institute of Management Accountants (CIMA) president Glynn Lowth.

“Companies will try to cut corners, take short cuts or do anything just to achieve it (profits),” Lowth told StarBiz after the CIMA-IIM (Malaysian Institute of Integrity) Debate on Ethics 2009 here yesterday.

“I understand that going into tough times, it would seem better to take short cuts but in the long term, they would see that an ethical business would be a better business,” he said.

Lowth, who was one of the panellists at the debate, said there was evidence to suggest that companies would be more profitable if they conducted their businesses in an ethical manner.

“Customers and business partners notice their ethical practices and would want to deal with them more. There is a better payoff by being more ethical in business,” he said.

Quoting Montek S. Ahluwalia, the deputy chairman of India’s Planning Commission, he said: “Confidence grows at the rate that a coconut tree grows but falls at the rate that the coconut falls.”

Bushon pointed out that the element of ethics must be a top-down initiative for it to be effective. “The people at the top occupy a position of trust and they have a fiduciary duty to ensure that business is run in a proper manner.”

Hashim said company CEOs should be made accountable for decisions related to ethics as well as profits.

“Companies should consider remunerating their CEOs for ensuring good ethics just as how they are remunerated to ensure good profits,” he said.

My personal opinion is now that we see every country trying to put in a stimulus package for the betterment of the economy & helping the reputed names of their own countries to be able to stand on their feet, it will be again difficult to control this aspect of ethics.. during these tough times it will be very important for governments to give money to managements & firms which do really have potential to sustain thru the economic times & during good times be wise enough to return the monies to the government for the betterment of the society.

No comments: