What do you understand by ‘moral integrity’ and ‘professional efficiency’ in the context of corporate governance in India? Illustrate with suitable examples.

The question “What do you understand by ‘moral integrity’ and ‘professional efficiency’ in the context of corporate governance in India? Illustrate with suitable examples." was asked in the Mains 2023 GS Paper 4. Let us look at the model answer to this question.

Answer: Corporate governance refers to the set of processes, customs, policies, laws, and institutions that govern a corporation, aiming to balance economic and social goals, as well as the interests of shareholders and stakeholders.

Moral Integrity in the context of corporate governance in India

Moral integrity involves consistently upholding moral principles, leading by example, and promoting a climate of trust and respect. It is an essential trait that distinguishes exceptional leaders and paves the way for organisational success and ethical development.

• Moral leadership abilities: Ethical leaders must establish a culture of trust, transparency, and ethical decision-making within organisations.
  Ex: A CEO promotes open-door policies for all employees to voice concerns.
• Culture of accountability: Individuals must promote a culture of accountability by being accountable for their actions, readily admit mistakes, and put others' needs ahead of their own.
  Ex: A manager takes responsibility for a project's failure and offers solutions.
• Trustworthiness: Building trust by being reliable, keeping commitments, and maintaining confidentiality when required.
  Ex: An accountant maintains the confidentiality of a client's financial information.
• Moral code of conduct: One must adhere to ethical conduct within organisations by demonstrating integrity in their actions and decision-making, and create a culture where honesty, fairness, and respect are valued.
  Ex: An employee reports an oversight instead of hiding it for personal gain.
• Fairness: Ensuring justice and equity for all people, considering diverse perspectives, and avoiding favouritism which fosters trust and collaboration.
  Ex: A hiring manager selects candidates based on merit, not personal connections.

Case Study: During Covid 19 pandemic Tata Group owned by Ratan Tata had not laid off their employees, while several Indian companies have retrenched staff due to lack of cash flow after the nationwide lockdown which was a knee-jerk reaction and manifests lack of empathy among the top leadership.

Professional efficiency’ in the context of corporate governance in India

Professional efficiency refers to the efficient use of resources by workers and organisations to achieve company goals and achieve quality while minimising resource usage. It is closely related to three dynamically interlacing components of professional performance: competency, standards, and practice.

• Leadership skills: Professional efficiency demands leaders who have the ability to guide the members towards the direction of achieving targets as projected.
  Ex: CEO rallies team to surpass annual sales target early.
• Avoiding harmful competition: In order to attain professional efficiency, each and every employee should cooperate with each other to avoid harmful competition.
  Ex: Teams collaborate on a project, pooling resources for success.
• Adherence to rules and regulations: One must follow all rules and regulations and company policies consistently to promote efficiency.
  Ex: HR ensures all staff undergo annual compliance training.
• Efficient risk-management: Risk management can enhance the environment for identifying and capitalising on opportunities to create value and protect established value.
  Ex: A finance team diversifies investments to minimize market volatility impacts.
• Expense management: Maintaining financial discipline, avoiding unnecessary expenses, constant saving and investment are needed to maintain professional efficiency.
  Ex: Operations cuts costs by renegotiating vendor contracts, boosts profit margin.
• Time management: Effective time management is crucial to maximising productivity and achieving goals, which boosts professional effectiveness.
  Ex: A project manager uses tools to track and allocate team hours efficiently.

Case Studies: Professional efficiency is shown by many corporate MNC's. In many of them one's Airtel(Delivering service at doorstep within 2hrs of complaint raised), another example is of Zomato Gold(Delivering food at doorstep in stipulated time or else they give refund of ₹100 if order goes late).

In corporate governance, professional efficiency and moral integrity both are important as well as interlinked. Both lead to ethical development of an organisation, which consequently lead to economic development.