Unethical Practices in Indian

Ethics can be defined as going beyond what is legal and doing what is right, even when no
one is looking! So when we talk about unethical behavior in business, we are talking about
actions that don't conform to the acceptable standards of business operations . . . doing what
is right in every situation. In some cases it may be an individual within a business who is
unethical in the course of his or her job, and other times we are talking about corporate
culture, where the whole business is corrupt from the top down, with disastrous results for
society. It is important to realize that what is unethical may not always be illegal (though
sometimes it is both). There are many instances where businesses act within the law, but their
actions hurt society and are generally considered to be unethical.
In a market economy, the customer is supposed to be the king who determines what to
produce, how to produce and by whom to produce. The economic wheel moves around his
whims and fancies. Businesses which disregard the wishes of their customers fade away into
oblivion, says management books. Yet, customers across all regions of India are taken for a
ride by unethical business practices.
At a time when businesses are trying hard to retain their customer base from losing it to
competition, it makes sense to ponder how poor treatment of customers affects them or does
it affect them at all? Otherwise, what is the rationale behind the ever-growing number of
consumer complaints against suppliers of goods and services, from builders, brokers of
financial products, retailers and travel agents to telecom service providers?
What do you say of a vendor who dilly-dallies in taking back a defective product, or refusesto
refund for services not rendered, or a pharmaceutical company that introduces a drug without
fully complying with guidelines of clinical trials? What are the implications of doing business
without business ethics? Is it only a cost to the customers at the receiving end?
Maybe yes in the short run, but over a longer period, it hurts businesses in an increasingly
globalised commercial environment, where customers across regions are connected through
ever expanding social media. Besides, during slowdown, unsatisfied customers dump
unethical businesses first and add to their miseries.
Breakdown of Trust
Business thrives on (good) reputation. Treating ones client unfairly strikes at the root of
ones reputation. Deterioration in reputation leads to decline in the number of clients a
business organisation has, with adverse implications for its top and bottomlines. Yet, bad
treatment of customers continues. The best example is tourism.
In 2011, India received only 6.5 million foreign tourists as compared to 57 million in China,
according to World Bank. Forget China, India could not match even a smaller country,
Malaysia (25 million). Given our diverse geographies and rich cultural heritage, this figure is
shamefully low by any standard.
From airport to taxis, hotels, shops and tour guides all try to fleece innocent tourists (more
so if they are foreigners) in a country that claims to practice atithi devo bhava (a guest is
likeGod). It has tarnished Indias image as a favoured tourist destination. Growing sexual
assaults against women tourists worsen the already bad situation.
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Financial services are another sector that cannot afford to lose its customer trust. Yet, frauds
(the latest example is NSEL fiasco) are becoming a regular feature. Trust deficit will impede
the future growth of the sector.
According to the latest Annual Report of the RBI, only a fourth of the household savings
went into financial channels in 2012-13. Of that, a mere 3 per cent flowed into equity and
mutual funds, while 57 per cent went into the low risk fixed deposits, primarily because most
people dont trust Indias financial markets that are prone to frauds and scams.
The story of housing sector is no different. Raising prices in a period of slackening demand to
retain investor interest, default on features or delivery time and unhindered use of black
money in the purchase and sale of properties is driving middle class home buyers out of the
market.
Besides, exploitation of hapless customers may prompt tougher regulation from government
such as the proposed housing regulator with stringent penalties for defaulting builders. That
will add to the cost of doing business, force a hike in prices and ultimately lead to erosion of
sales and profits.
It is not only customers, who are at the receiving end. Businesses treat other businesses badly.
Not making timely payment or refusing to pay ones vendors on flimsy grounds is a common
occurrence.
Cultural Factors
Max Weber in his magnum opus Protestant Ethic and the Spirit of Capitalism showed that
values determined social action and culture shaped economic development.
Discipline, pursuit of wealth and abiding by contracts led to growth of capitalism in the west.
In India too, Marwaris, Gujaratis in North and West and Chettiars in South could succeed
initially because of cultural orientation towards hard work and entrepreneurship.
Is moral degeneration in an increasingly consumerist society like ours responsible for
ignoring its cultural best practices with implications for doing business environment?
Perhaps, but what about Indias record on contract enforcement?
As shown in the table, below, India is above only Timor when it comes to enforcing
contracts.
The problem lies in our poor contract consciousness as a society. How many of us ever read
the apartment buyers contract when booking an apartment, or read the disclaimer given at
the end of the application form for opening up a Demat account? Slower judicial decisions
leads to de facto ineffective enforcement of tort laws.
Compensations are often delayed or low when compared to the extent of injuries as well as
the time and money spent in fighting cases. That discourages the aggrieved parties from
resorting to legal proceedings. At the same time, it ensures de facto immunity to the
defaulting parties.
The Way forward
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In a welfare-oriented democratic polity like ours, the government cannot remain a mere
spectator. A system of online filing of complaints will improve complaint registration and
empower unorganised customers against unethical business practices.
Further, India needs tough regulators for high complaint sectors, like real estate and travel
and tourism. Tightening tort laws and providing for class action suits will dent fraudulent
business practices.
However, tough regulation alone will not be enough. Attitudinal changes are needed if one
wants value for ones money. Aggrieved customers must raise their voice against deficiency
in services at all forums, starting from social media to consumer courts.
Above all, businesses must realise that the key to sustained growth in top and bottom line is
ethical business practice. They can ignore it at their own peril in an intensely competitive
business environment.
Exploiting Workers
Some businesses choose to increase the profits for the owners at the expense of their workers.
Some of the ways that they do this are arguably unethical, and some are blatantly illegal.
They may pay their workers low wages, encouraging them to subsidize their income with
food stamps and welfare at the taxpayers' expense. Or they may manufacture their goods
overseas in countries that don't have labor laws that protect their workers, including allowing
forced labor for children as young as five years old. Some companies have been found guilty
of violating the wage and labor laws in the United States, forcing hourly workers to work off
the clock or risk losing their job or firing workers who complain about violations of the wage
laws.
Tax Loopholes
Some businesses exploit tax loopholes to avoid paying taxes in the United States, while
raking in billions in profits. You might wonder why we don't close those loopholes and put an
end to it, but the businesses make political contributions to politicians who work to keep
them, so the companies can legally dodge the taxes.
Over-Billing
Another unethical practice is deliberately over-billing the customers. Companies bill for more
than the agreed upon price, and even go so far as to charge for products and services they
never provided. They also double bill for their services in the hopes that customers won't
notice.
Dumping Toxins
Manufacturing businesses may compromise our health by dumping hazardous waste into the
water supply or by releasing toxins in the air far beyond what is allowed by law.
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Unnecessary Medical Procedures

People don't always think of their doctor or dentist as a 'business,' but money does change
hands for services provided, and the medical and dental professions aren't exempt from
unethical business practices, such as performing procedures that were entirely unnecessary or
prescribing the most expensive treatment for a patient, when a better treatment is available at
a lower cost. In rare cases, there have been doctors who charged for expensive chemotherapy
drugs that were never given to the cancer patients, and even a recent case where a doctor told
his healthy patients they had cancer so he could collect payments for treatment from
Medicare.
Deliberate Deception
Deliberate deception in the workplace includes taking credit for work done by someone else,
calling in sick in order to go to the beach, sabotaging the work of another person and, in
sales, misrepresenting the product or service to get the sale. There are other examples of
deliberate deception, but these show how damaging deception can be by using a person's trust
to undermine his rights and security. In a workplace environment, this results in conflict and
retaliation. In a sales function, it can result in lawsuits from deceived customers.
Failure to Honor Commitments
Your boss promises you an extra day off if you rush out an important project by a certain
date. You work late hours and finish the project before the deadline. Ready for your day off,
you mention it to your boss who responds "No, we have too much work to do." Your boss
engaged in unethical behavior that has virtually guaranteed your future distrust and
unwillingness to extend yourself to assist in department emergencies. In addition, you are
likely to complain to your co-workers, causing them to distrust the promises of the boss and
be unwilling to cooperate with his requests.
Unlawful Conduct
Padding an expense account with non-business expenses, raiding the supply cabinet to take
home pens and notebooks and passing around unregistered or counterfeit software are
examples of unlawful conduct in the workplace. The person who steals from the company by
padding her expense account or taking supplies for personal use risks losing her job. If a
company decides to overlook such theft on the basis of maintaining employee morale by not
firing a popular employee, other employees will also steal so they can feel they are getting
the same deal as their co-worker. Passing around counterfeit software, if discovered by the
manufacturer, can cost the company through lawsuits and fines.
Disregard of Company Policy
An employer is understandably concerned about avoiding lawsuits and angry customers
because those things negatively affect profitability. Most employers clearly state company
policies against deception, coercion and illegal activities. They also strive to convey an image
of trustworthiness to their customers and employees. Corporate trustworthiness helps retain
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customers and valued employees, and the loss of either also negatively affects company
profitability. To disregard company policy is unethical because it has the potential to harm the
company and other employees.
Financial Misconduct
Examples of financial misconduct include price-fixing, or an illegal agreement between
industry competitors to "fix" the price of a product at an artificially inflated level; physicians
who refuse to treat non-insured patients, or perform unnecessary procedures to make more
money; tax evasion; tax fraud; and "cooking the books" to make the company look more
profitable than it is. Other possibilities include paying unjustifiable salaries and bonuses to
top officials regardless of work performance -- sometimes in spite of it -- and chasing shortterm profit by placing investor's money in questionable investments.
Misrepresentation
Corporate misrepresentation can take many forms. It can be as simple as a salesman who lies
about his company's products, or it can be false or misleading advertising. Misrepresentation
can involve a coverup of illegal workplace conditions or transactions; falsified data in a
shareholder report; lying to a union about corporate profits; or hiding or denying safety
problems with a product. Other examples include corporate board members with conflict of
interests, doctors who push the most expensive drugs rather than the most effective ones, and
brokers who recommend stocks that they own in an effort to drive up the price.