(Published in Chartered Accountant, Journal of the Institute of Chartered Accountant of India, November, 2008)
Key Perspectives: Towards Self-Governance; The Emerging Corporate Scenario; Shaping the Self-governing Consciousness; Creating the Right Environment; Self-transforming Leadership; Building a Sustainable Community
Corporate Governance has become one of the buzz-words in corporate and management circles. The corporate world as a whole is in the process of acquiring a moral conscience. The new and emerging concepts in management like corporate governance, business ethics and corporate social responsibility are some of the expressions through which this emerging ethical instinct in the corporate world is trying to express or embody itself in the corporate life. However effective implementation of an ethical ideal or concept requires two factor: creating an ethical consciousness and promoting ethical conduct and behaviour. But for the outer conduct and behaviour to be authentic, sincere and effective, it has to be a spontaneous expression of a corresponding inner state of consciousness. This article examines the concept and practice of corporate governance in an integral, holistic and consciousness perspective. By the word “integral” we mean both the inner and outer dimensions of the phenomenon under study. By the word “holistic” we mean what is now called as “systemic” perspective which views corporate governance as a subset and in the context of the larger corporate environment. By the word “consciousness-perspective” we mean an emphasis on the inner change of consciousness.
In our integral perspective, the ideal of corporate governance is to create a corporate consciousness which leads to self-governance. But a corporate manager or a government administrator may say “O, I am tired of such philosophical sermons and rhetoric, tell me how to do it”. This is a legitimate demand of the pragmatic mind provided it is not a demand for immediate results. For implementing or implanting ideas with ethical overtones requires a long persistent and sincere inner and outer discipline. However, the idealists must respect the legitimate demands of he pragmatic mind and must indicate a plan of implementation.
Conversion of an ideal or a concept into reality requires three tasks. The first is to have a clear perception of the ideal, which means to have a clear vision of what would be the condition of the corporate world when the ideal is fully actualized. Second is an equally clear perception of he actual facts and the present evolutionary condition of the corporate world, or in other words the gap between the ideal and the reality. The third is a plan of action by which individually and collectively we can advance consciously towards the ideal.
The ideal of corporate governance is to create a corporate consciousness and environment in which those who display genuine ethical, social and ecological responsibility, not merely in Director’s speech or annual reports but in concrete actions, prosper, progress and become leaders and decision-makers of the corporate world. Conversely those who are obstinately unethical are either weeded out or feel the consequences of their action. And others who are hovering between the two are given the opportunity and feel the pressure to take a decisive step in the ethical path. In other words, a corporate environment governed by the law of ethical Darwinism by which ethically fittest survive and prosper, the ethically ambivalent are reformed and the ethically unfit or delinquent become extinct. (1) By the term “ethically fittest” we mean those who have fully internalized the ethical consciousness and do not need the threat of law to be ethical. A biographer of JRD Tata relates an interesting and illustrative episode. Tata was questioning an executive who was trying to save tax returns to government. The executive justified his action by saying it is not illegal. But JRD asked “Not illegal, yes, But is it right?” (2) We can see here the difference in the mind-set between the legally ethical and the intrinsically ethical.
The Emerging Corporate Scenario
The second task is to have a clear perception of the present facts and condition of he corporate world. The new and emerging ethical tendencies like business ethics, corporate social responsibility and environmental sustainability have to be encouraged, strengthened and given a deeper, broader and a more intrinsic orientation. But at present most of these ethical impulses are not intrinsic but the result of external circumstances and environmental pressures like customer demand, social or green activism. As the well-known founder of Infosys, Narayana Moorthy points out: “Investors, customers, employees and vendors have all become discerning and are demanding greater transparency and fairness in all dealings”. (3)
However, there is perhaps a small but growing number of executive, entrepreneurs and leaders in the corporate world who are living in or understood the need of an intrinsic ethical consciousness. For example, when Pramod Bhasin, President and CEO of Genpact was asked: “How do leaders face up to scenarios where there could be a clash between values and pragmatism, especially in the light of intense competitive pressures”, he replied “The choice is easy if you really understand that integrity is non-negotiable”. (4) This answer comes from a mind, which has understood the intrinsic need of ethics transcending the legal or utilitarian motives. But the question put to Bhasin indicates the predominant temperament of the corporate mind, which is utilitarian, pragmatic. So most of he ethical motive emerging in business is also utilitarian, pragmatic based overtly or covertly on short-term or long-term self-interest.
“To be pragmatic is legitimate in business. But to take the next higher step in evolution the corporate world has to move up towards a higher level of pragmatism based on the Indian concept of Dharma. In this Indian perception when all the movements and activities of our inner and outer being, individually and collectively, is in harmony with the laws of universal Nature, then it leads to inner moral and spiritual development as well as outer material, economic and social efficiency, prosperity and progress. This is because when we are in total attunement with the laws of Nature we are in tune with the creative energies and rhythms of Nature, which is bound to bring its material results. The modern science of ecology reveals the dharma of the physical dimensions of universal Nature. The ethical and spiritual values discovered by the ancient spiritual traditions of the world reveals the ecology of the moral, psychological and spiritual dimensions of Nature. The principle and practices of Corporate Governance must be based on an enlightened understanding of the integral ecology of Nature in all the dimensions¾physical, moral, psychological and spiritual.”
And the inner source of ethics is spirituality. The ethical motive or impulse becomes fully, entirely and perfectly conscious, enlightened intrinsic and spontaneous only in the spiritual consciousness. So ultimately ethics must blossom towards spirituality. Here comes the importance of some of a new trend in business and management, which augurs well for the higher evolution of business. It is the recognition of spirituality and the potentiality of spirituality for enhancing the quality of corporate life. For example, Academy of Management in US, a leading and prestigious association of management scholars in America has formed a “Spiritual Group” and launched a magazine called Journal of Management, Spirituality and Religion, focusing on the emerging spiritual aspiration in business. The prestigious Harvard Business School organized a conference on Leadership, Values and Spirituality in the spring of 2002. Similarly Indian Institute of Management, Calcutta has formed an institution, Management Centre of Human Value, based on the spiritual teachings of Sri Aurobindo, Swami Vivekananda and Rabindranath Tagore. The concept of spirituality at work is now openly and extensively discussed in management literature. Two management researchers from Cohenhegan Business School, Denmark, Peter Pruzan and Kriesten Pruzan have edited an interesting book “Leading with Wisdom: Spiritual based Leadership in Business” which is compilation of the views and experiences of 31 top corporate leaders from 15 countries who have based their leadership on spiritual and ethical values.
The true meaning of spirituality might not have been fully understood or grasped in most of these new trends of thought in business. What is called as “Spirituality” in many of these movement falls within the domain of mental and ethical aspirations. However, higher mental and ethical motives and aspirations are an indispensable preparation for spiritual development. So, the spiritual groups and institutions all over the world have to actively support, encourage and enlighten these higher evolutionary trends in business by bringing greater clarity and depth to the meaning and significance of spirituality. (5) And every individual or group in the corporate world with a moral or spiritual aspiration and who are in the decision-making positions have to carefully watch and study these higher trends in business.
We have discussed so far only the positive trends in the corporate world. There are also many negative trends like for example the numerous scams and frauds of the Enron-kind. Here comes the role of Law. We must keep in mind individuals and groups are in various levels of inner development. Not all of us, individually or collectively, are in the higher stages of ethical and spiritual development where the ethical consciousness has become intrinsic to our nature. Most of us need an external compulsion to remain ethical and the yoke of law to goad us towards our ethical awakening. This need of Law acquires a special significance in the domain of ecological and environmental responsibility. Though the progressive sections of the corporate world are becoming increasingly conscious of their ecological responsibility, still large sections of the corporate world, like for example leather industries, are still insensitive to their environmental dharmas. So in our present critical and precarious ecological condition of our planet, factors related to the ecological well-being of earth have to be strictly enforced under the yoke of Law and all violators have to be firmly dealt with.
We have traversed from the ideal to facts. Let us now examine how to progress from the present facts to the ideal or in other word, to use a management jargon, the strategic plan. In our consciousness perspective the plan of implementation would be based on two strategic principles: first is to create the ethical consciousness through Education and the second is to build an outer enviornment favourable to this consciousness and its self-expression in the outer life.
Shaping the Self-governing Consciousness
Education is the path to a lasting inner change. However mere mental or information-oriented education of the kind given in most of the present systems of education can only bring about a superficial change. At the best, it can bring about a change in intellectual orientation or attitude, which is helpful, but not enough for a lasting inner change. This deeper change can be achieved only by a psychological process and discipline. The main psychological factors which have to be developed and internalized to create an enduring ethical consciousness in the individual and the community are as follows:
- self-knowledge, self-control and self-mastery.
- calm, peace and tranquity
- ethical, emotional and aesthetic intelligence, which has an intuitive sensitivity to higher values like truth, beauty, goodness, harmony, unity.
- faculties and qualities of Will and the Vital force like firmness, persistence, strength, courage, enthusiasm, energy, which are essential for manifesting these values in work, life and action.
- kindness, compassion and generosity.
- integrity, which means in a psychological perspective harmonious integration of thought, feeling, will and action around a higher ideal.
In other words, calm, clarity and understanding in the mind, kindness, compassion and generosity in the heart, firmness, strength and self-mastery in the will, courage, energy and force in the vitality, aspiration for truth, beauty, and goodness in the soul, and an integrated personality, these are the contours of a fully developed self-governing consciousness, what is called as “Strength of Character.”
The inner discipline for developing this consciousness is a triune process. The first step is to have a clearly perceived self-transcending ideal in the moral, aesthetic or spiritual domain around which the whole being can be integrated. The other aspect of he discipline is a dual process of Aspiration-Rejection. Aspiration means a constant and persistent focusing of all the energies of our consciousness, thought, feeling and will on the ideal. The other aspect of aspiration is a conscious and deliberate cultivation of thoughts, emotions, qualities and virtues and capacities which are in harmony with the ideal or which builds the strength of character. The third aspect of the discipline is rejection, a catharsis, throwing off of all thoughts, feelings, and impulses which are contrary or hostile to the ideal or which pushes us towards unethical action like for example greed, selfishness or vengefulness. We have included calm and self-knowledge as part of the discipline, because someone who is calm and peaceful with an alert and vigilant self –awareness of his thoughts, feelings, impulses and motives is less likely to fall into unethical behaviour than the one who is agitated, restless and unconscious.
However this is only one of the paths. There are also other paths. For example there are paths which doesn’t require an ideal. In this path, we simply observe with a vigilant, alert, and detached inner sensitivity our inner movements and try to feel concretely their inner consequences, like for example what are the thought, feeling, sensations or impulse which bring light, peace, joy, harmony, understanding or compassion and conversely the other movements which darken the mind and leads to the opposite. When this discipline is pursued in the right way, it leads to a spontaneous catharsis of negative movement and an equally spontaneous flowering of positive virtues.
This is the psychological discipline for building a balanced, self-governing consciousness which has to become an integral part of the corporate education and training programmes for the management student, practicing executive, corporate leaders and also other workers in the lower levels of the corporate hierarchy.
Creating the Right Environment
The consciousness approach, which we are discussing cannot be exclusively internal because the outer environment has an influences and impact on the consciousness. We have to create an outer environment favourable to the growth of the self-governing consciousness and felicitates its self-expression in the outer life. The outer environment includes the material, organizational, social and political environment made of buildings and space, laws and rules, policies, procedures, incentive and practices and many other factors related to the management of the outer life.
The material environment should evoke gentle, pleasant, harmonious sensations in people, which is conducive to ethical and aesthetic development. In the organizational level, there must be active encouragement to ethical, aesthetic or spiritual innovation and excellence. The present motivational strategies in the corporate world encourage only techno-economic innovation and excellence. But for the higher evolution of the corporate world, there must be equal encouragement to what we may call as “value-innovation and excellence” in the mental, ethical, aesthetic and spiritual domain or in other words, there must be quality circles for promoting higher values. Workers and employees must be encouraged to offer suggestions on how to make the collective organism more true, beautiful, harmonious, compassionate, creative, progressive. In this task, the house-magazine and the intranet of the organization can be of great help in disseminating higher values in the organization through dialogue, discussion and creative participation. For example, the house-journal of the organization may publish articles, which help in widening the intellectual, ethical and spiritual horizons of the mind. Similarly professional magazines, apart from technical and specialized knowledge related to the specific professional discipline, should also contain a few articles, which help in the mental, moral and spiritual growth of people or the professional activity. For a professional is first of all an evolving human being, and only secondarily an engineer, accountant or a manager.
At the governmental level, there must be more incentives for organizations, which display genuine ethical, social and ecological responsibility. The government has to create a political environment in which organizations, which are governed by higher values acquire a competitive edge over those which are unethical, insensitive, irresponsible.
Governance is the function of leadership. Most of the modern management thinking on leadership is about outer governance or “organizational transformation”. But as the Indian thought repeatedly emphasized self-government, Swarajya is the foundation for governing the outer world, Samrajya. Similarly self-transformation is the basis for outer transformation. Someone who cannot govern himself cannot govern others. And someone who is governing himself with higher values can evoke, inspire and induce a similar aspiration and effort in others.
This principle applies equally to organizational change and transformation. Whatever difficulty faced by the leaders in his outer life is a reflection of the difficulty within him. If he is able to discover and mend the inner source of the difficulty within him then the outer difficulty sooner, or later tends to resolve itself. As the Mother of Sri Aurobindo Ashram points out: “whatever the external circumstances, they are without exception, the objective projection of what is inside yourself. When in your work you find something giving trouble outside, look within and you will find in yourself the corresponding difficulty. Change yourself and the circumstance will change”. (6)
In the same manner, whatever change the leader wants to bring out in his organization, if he is able to achieve this change within him or makes a sincere effort towards it, then it becomes easier to enforce the change in the organization. Interestingly this concept of self-transforming leadership is beginning to be recongnised in modern management. Two eminent management thinkers, Richard Boyatzis and Annie Mckee in their book on “Resonant Leadership” published by the Harvard Business School Press, state: “People who think they can be truly great leaders without personal transformation are fooling themselves. You cannot inspire others and create the resonant relationship that ignite greatness in your families, organizations or communities without feeling inspired yourself and working to be the best person you can be.” (7) And in the foreward to this book, the eminent psychologist and the inventor of the concept of emotional intelligence, Daniel Goleman states “For leaders, the first task in management has nothing to do with leading others, the step one poses the challenge of knowing and managing oneself. That includes connecting with deep values that guide us, imbibing our actions with meaning.” (8)
Building a Sustainable Community
There is one more important function of self-governing leadership. It is to create a self-governing and sustainable community. For an organization, in whatever domain it functions, economic, social, cultural or religious, is a social organism, a human community. And the foundational principles of a self-governing, sustainable community are given for all times by the thinkers of French revolution: Liberty, Equality and Fraternity. So one of the major function of leadership is to create a community in which there is a conscious and continuous effort towards a progressive manifestation of liberty, equality and fraternity not only in the outer life, but more importantly in the consciousness of people. Such a community in which people are empowered with a concrete sense of inner equality and fraternity, expressing itself in a harmonious, equitable and progressive outer life, is a more or less self-governing community, which requires minimum of external laws and rules. (9)
References and Notes:
- According to Darwin’s theory of evolution, Nature works out her evolution through a process of natural selection by which the fittest species survive and the unfit become extinct.
- R.M. Lala, The Business Ethics of JRD Tata, The Hindu, 29th July, 2004.
- George Skaria, The well-governed corporation, Business Today, Nov.21, 1997, pp.25.
- Pramod Bhasin, The Power of Principles, ISB insight, Indian School of Business Magazine, pp.18
- For a detailed discussion of the subject the readers may refer to the article: “The Meeting of Business and Spirituality: Its Evolutionary Significance” by M.S. Srinivasan, in Journal of Human Values, vol.9: 1, (2003)
- The Mother, Collected Works, vol.13, 165-66.
- Richard Boyatzis and Annie Mckee, Resonant Leadership, Harvard Business School Press, pp.201
- ibid, Foreward by Daniel Goleman.
- For a more detailed discussion of this subject the readers may refer to the article “Corporate Governance: An Integral Vision” by M.S. Srinivasan, in Executive Chartered Secretary, April, 2008.