R S Gurubhakti-Corporation

as an Ethical Environment
Group-6
Case Facts

RS Gurubhakti Personal life

RSG Marketing manager in TABTO

Turned around PILCA in 3 years

Marketing wizard in pharma industry

Case Facts
Setup GPL in 1985 with SR

One among top 10 in profitability and

top 40 in revenue

GPL went public in 1994

IDMA Excellence award & ISO 9002

Case Facts

Acquired by 2nd largest Indian

pharmaceutical company in 1997

RSG & SR became non-executive

directors of the acquiring company
Functional Competence and passion for quality of top
management are the necessary and sufficient
condition for market success.

Not necessarily
Quality for GPL was not a commitment but an
Obsession
Problem:
Could not bring the message down
Ignored unethical behavior of of senior executives
and employees which can bring problems to firms
as it did in case of GPL
Customers do not view organisation with respect
Reality matters not perception, in
the context of leadership style
Yes, reality matters
Perception is short term but reality prevails
in long term
People apply filters based on their
experience and form perception
Leaders does not get influenced by
perception of others instead tries to
understand it.
Example of RSG
Strong personal ethics of company promoters
automatically gets translated into strong
organizational ethics

RS Gurubhakti-
People oriented, involved everyone in decision making
stressed on quality, every one had the same food
forgave employees who contributed to the rumors
Middle Management
Egoistic
Money minded
Not satisfied with increments
Statement does not hold
Companies with homogeneous ethnic
representations are better and faster in ethical
decision making

RSG and SR belonged to same ethnic community

So did a good number of people
As organization grew, in spite of conscious efforts, it was
difficult to remain impartial
Even responsible employees showed unethical behavior
Same ethnicity might solve the issue, but difficult due to
globalization
Solution- Even distribution across different ethnic groups
Contrasting styles of founders
Very different styles of management among RSG and SR.
RSG, a specialist in marketing.
SR has rich industry experience and professional
qualification in finance.
RSG believed in delegation, empowerment and
professionalism.
SR followed personalized approach.
Did not work in GPLs case. Senior management had no idea
about major decisions taken by SR.
Did not even have an MIS.
Power of Ego
Huge success of company led to egoistic senior executives.
Ego serves only itself and makes us self absorbed and self
centred.
Made them think they are the reason behind companys
success.
Convinced them that any situation how big or small can be
faced easily.
This resulted in senior management becoming
unmanageable.
Ego when not fulfilled results in people becoming
counterproductive.
Strong company growth & strong managerial
compensation ensure sustenance of
competitive strength

Compensation structure at GPL better than industry

Everyone still expected a handsome annual
increment
Not possible to satisfy all the employees
GPL grew too rapidly but had only two full time
directors
There was no competent second line
Human development, systems, structure and style
could not keep pace with the growth
Forgiveness is a great virtue and
speaks of shrewd business sense
PILCA employees committed commercial espionage
SR wanted to hand them over to police but RSG
allowed them to leave after severe warning
RSGs business rivals were spreading some
rumours and some GPL employees also joined
SR wanted to sack these employees but RSG
intervene and gave the employees a warning and a
chance to mend their ways
Speedy Growth vs Ethics and Values

RSG tried to keep a check on the rise of unethical

practices in the company
Anxiety over fast progress brought about flexibility in
values and ethics, mainly while dealing with
stakeholders
He claims he had to be diplomatic and flexible with
respect to values to keep up the rapid growth
Demise of GPL: A result of rapid growth?

Claimed so by RSG himself but not entirely true

Inability to create a second line of management
Different rates of growth of human resources, systems
etc. compared to the growth of the firm
Change in aspirations: both RSG and SR were looking
for an exit from the corporate life
Changes in the economic landscape created new
challenges for firms of GPLs scale
RSG
Strengths
Good in dealing with people and marketing skills
Extremely hard working
Diplomatic in times (compromises in ethics)
Believes in Delegation

Weakness
Flexibility regarding ethics and values
S Rathnam
Strength
Quick decision maker
Strong functional skills
Strong response against rumours

Weakness
Not collaborative; Doesnt keep senior management in
loop
Management as a Profession
To gain public trust and legitimacy, management needs to become a
true profession in much the way medicine and law have.
True professions have codes, and the meaning and consequences
of those codes are taught as part of the formal education.
Why is a code necessary?
To forge an implicit social contract and trust between professional institutions
and society by ensuring that the managers will not only be competent to perform
the tasks entrusted to them, but that they will also conduct themselves with high
standards and great integrity.
To have a universally accepted set of professional values backed by a governing
body with a power to censure managers who deviate from the code.
Challenges
Some believe that enforcing educational standards and a code of ethics is
likely to choke entrepreneurial creativity, which might not be true. If the field
of medicine is any indication, a code may even stimulate creativity.
Lack of requirement to receive formal education to become managers.
Those who possess a management education are no more effective than those who dont.
Business school is simply an opportunity to develop a network of peers and alumni.
Lack of a broad consensus on the aims and social purpose of management.
There are two deeply divided schools of thought.
Management's aim should simply be to maximize shareholder wealth
Management's purpose is to balance the claims of all the firm's stakeholders.
Any code will have to steer a middle course in order to accommodate both
the value-creating impetus of the shareholder value concept and the
accountability inherent in the stakeholder approach.
Benefits
Creates strong emotional connect like pride, when one
acts in a manner that exemplifies the code, and shame
or guilt, when one acts in ways that transgress the code.
Creates a feeling of community and mutual obligation
that members have towards each other and towards the
profession.
Pushes the managers to rise above their own personal
biases, and work for a common value system.
 Collaborative Enterprises
A way of working that focuses on Knowledge
Sharing
Traditional Free Agent Collaborative
Industry Model Model Industry Model
Loyalty of Common goals. Self-interest Sense of shared
employees Strong values and purpose
culture.
Organizational Bureaucratic with Modular with Combination of
Structure excellent vertical horizontal vertical and
coordination coordination horizontal
Strengths Economies of Innovative and EOS and
scale flexible innovative
Weaknesses No innovation Organizational Hard to sustain
structure
Organizational efforts required to build a
Collaborative Enterprise
Defining and building a shared purpose
Cultivating an ethic of contribution
Developing processes that enable people to work together
Creating an infrastructure in which collaboration is valued

Criticisms of the Collaborative Approach

Long term investment with many short term competitive and
financial pressures
Employees have to relinquish autonomy in processes
Slowing down of decision making process
Thanks!!