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“Formal and codified policies on ethics will enable the Group to spread its ethical message faster within the Group.”

“Once you understand the complete freedom enjoyed by a business manager and his team on business issues, you will appreciate the need for good ethics and governance in such situations, where ownership and management are separated.”

“The Sanmar culture reflects the way our beliefs, our structures, and our systems are interlinked.”

 

“We want employees to use their brainpower fully for their work at Sanmar.”

 

“The Ombudsman will... investigate complaints of violation of the group’s ethical policies... He will ensure that there is no ‘retribution’ against ‘whistle-blowers’ when they voice violations.”
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Sanmar Group formalises ethics policies
Interview with B Natraj, Managing Director-Corporate
Three booklets that embody the Sanmar culture have recently been issued to Sanmar Group employees. These cover the group’s Ethics Policies, Management Philosophy and People Philosophy. The booklets come in a handy size and are essential reading for every employee with a view to internalising the precepts and practices that go to make the Sanmar way of doing things as a group. They formed the subject of presentations at the Group Annual Day observed at Chennai on December 23rd, 2002. (The occasion will be covered in detail in the next issue of Matrix). Given below are excerpts of an interview with B Natraj, Managing Director-Corporate, on the ethics policies of the group.
Why is it important for Sanmar to codify its policies on ethics now?
Sanmar has been following several ethical policies for over two decades now. These have been recorded in various documents and pronouncements over this time, and therefore not readily available in a handy form for consultation by the employees. The present effort to codify them is expected to resolve this problem.
Also, over the last year, Sanmar has been working with the Ethics Practice of KPMG to update and formalise its policies on ethics. This has involved discussions and workshops on ethics across various levels and locations of the Group. KPMG’s worldwide experience in ethical practice has given us valuable inputs in formalising and codifying our policies on ethics.
Finally, it is time now for us to make doubly sure that our values percolate to every level in the organisation, and are internalized by every employee. Formal and codified policies on ethics will enable the Group to spread its ethical message faster within the Group. The inclusion, in such a codified document, of specimen ethical dilemmas likely to confront employees from time to time, will facilitate resolving concerns, and provide the rationale for the recommended behaviour on the ethical issues.
What is the raison d’etre for prescribing policies on ethical behaviour?
In the global scenario today, more than ever before, it has become necessary for businesses to be conducted in an ethically correct manner, and vital for them to be seen by the world as ethical entities. The Sanmar Group has always prided itself on the high standard of its ethical policies—its respect for the laws of the land, of the intellectual property rights of the owners of the numerous technologies it uses, the drive for excellence to meet and exceed customer expectations, the need to be a good corporate citizen and to not despoil the environment, apart from the “squeaky clean” reputation it has enjoyed in the marketplace.
To Sanmar, policies on ethics have not been confined only to pronouncements on gifts (receiving and giving) and issues related to corruption. We have been equally concerned about nepotism, employees taking up professional or non professional assignments outside office hours, intellectual honesty in our decision making process, uniform treatment of its employees, fair compensation policies, integrity of its records, product literature etc. professional respect for others, transparency, avoiding conflict of interest situations in employees using company-product and service-providers, etc.
Good corporate governance and high ethical practices have been and continue to be an essential pre-requisite, increasingly, of attracting Foreign Direct Investment and forging Joint Venture relationships—Sanmar’s ethical practices have been a major USP in developing successful JVs.
Also, once you understand the complete freedom enjoyed by a business manager and his team on business issues, you will appreciate the need for good ethics and governance in such situations, where ownership and management are separated.
What are the elements of Sanmar’s policies on ethics?
We start with the Sanmar Vision statement that is: “Combining integrity with ethics, to ensure prosperity to all stakeholders on a continuous basis”.
The Sanmar Vision statement gives us certain guiding principles: prosperity to all stakeholders, integrity and excellence.
This enables us to set Sanmar Standards which, briefly, require us to enhance stakeholder value, follow fair business practices and foster the Sanmar culture.
From the Sanmar Standards, we derive General Business Principles (how we do things at Sanmar) and the Code of Conduct (what we do not do at Sanmar). In this manner, we ensure that the General Business Principles and the Code of Conduct have the authoritative backing of the Sanmar Standards, thus providing the ethical synergies for our behaviour in a particular manner.
How would you define the Sanmar culture?
The Sanmar culture reflects the way our beliefs, our structures, and our systems are interlinked. It is the way we behave as a company, in all our dealings, internal and external. It is carefully developed, and with constant practice, becomes our second nature, almost a reflex action. It is the sum of our shared beliefs and binds us as a Group. All of us at Sanmar internalise these beliefs and practise them constantly. It starts with our vision, explains the guiding principles and sets the Sanmar standards.
Are we carrying the adherence to ethical principles too far? Is it feasible to be ethical in a world with corrupted value systems?
It is eminently possible to be ethical, even in an environment known to be corrupt. It takes a strong will and firm belief in ethical values, and 100% adherence by all concerned, including management and employees, to such ethical values and principles.
It also requires formalisation and codification of these principles, so that everyone in the organisation practises it.
Please also remember that Sanmar managed to be an ethical organisation even before globalisation was embraced by our country in 1991. In the seventies and eighties, there were more controls and regulations than there are now—on foreign investment, on imports, on raising money in the capital markets, on starting new units or expanding existing ones (licences), on foreign exchange, exports, etc. If we were ethical then, the new liberalised regime since 1991, has made it even easier to continue such ethical behaviour.
How do our policies on ethics affect the way we treat our people?
We believe that we must treat all our people uniformly, without discrimination, that we pay an all cash compensation, leaving it to the individual employees to determine how they would like to spend their money. We are totally transparent in our dealings with our employees, and therefore, offer no flexible perquisites, no discretionary payments. In our evaluation process, each employee is rated based on his performance, potential and criticality to the organisation. We provide performing employees adequate opportunities to grow in the company, through our training and development programmes, through the planned career growth schemes that we offer high-potential, high-performing employees. Succession planning is made an integral part of each manager’s function. We assure a safe and hazard free working environment. We thus provide deserving employees with stable employment, a satisfying job and fair rewards.
Why do we need a Management Philosophy?
Management is about choosing one appropriate way from among a number of ways of doing things. We recognize that there are possibly many right ways of doing things. Our management philosophy selects the one right way in which we will do things from amongst several right ways. In this way, all Sanmar employees will respond in a common manner, on both external and internal issues. Also, we are trying to embody in the philosophy our best practices honed over several years of experience, viz., the need for a second informed view on any decision, avoiding multiple signatures and substituting it with one originator who collects and sets out other participants’ views, solving problems with logic and commonsense, recording assumptions clearly, etc. These practices have served the Sanmar Group well over the years, and we would like to formalize them now.
The Sanmar people policies frown on employees doing outside assignments in their own time. Isn’t what the employee does in his spare time his own business?
We believe that if an employee accepts outside work assignments, the extra commitments may affect his Sanmar responsibilities. We want employees to use their brainpower fully for their work at Sanmar. We make this policy known to all employees up front, and factor in this requirement in setting employee remuneration levels.
We distinguish between professional and non-professional outside commitments. While in both cases, the employee needs to get a prior clearance from the Group, in case of non-professional commitments such as sport, music, quizzes etc., etc., we normally permit them, subject only to the proviso that they do not affect the Group’s image negatively in any way. With regard to professional commitments such as teaching, examinerships, memberships in professional bodies and associations, etc., we give permission if it is believed that such activity will add value to the Group’s image. However, we do not permit the employee to benefit monetarily from such external professional activities, and insist that anything other than reimbursement of out of pocket expenses, token gifts, etc., should be donated by the employee to any charity of his choice. This is in line with our philosophy that employment with the Sanmar Group is a 24-hour one.
Please explain the role of the Ombudsman in the new scheme of things.
The section on ethical dilemmas provides general guidelines on how to handle such difficult situations, giving some common examples drawn from an employee’s everyday life at Sanmar. Nonetheless, and no matter how detailed an Ethics Manual, there will be occasions when employees will be faced with dilemmas where there are no black or white answers but only (shades of) grey areas.
To resolve issues calling for greater clarity, an Ombudsman’s office has been set up. When in doubt, the employee may refer to the Ombudsman to clarify his concerns. He will be the spokesman on ethical dilemmas.
The Ombudsman will also investigate complaints of violation of the group’s ethical policies. He will ensure that such grievances are looked into, and provide anonymity to the complainant, if requested. He will ensure that there is no ‘retribution’ against ‘whistle-blowers’ when they voice violations. However, adjudication of complaints investigated by the Ombudsman will be the responsibility of the Corporate Executive Committee (CEC).
He is thus expected to be the ‘touchstone’ for all employees on ethical issues, continuously monitoring the status on Integrity and Ethics at the Group.