An evening with Peri Maheshwer

Introduction

On Oct 8, we had the 25th webinar in the ICFAI wiseviews webinar series, featuring Mr. Peri Maheshwer, the CEO of Careers 360. As the company’s website mentions, Careers 360 integrates millions of student and institutional data points to make sophisticated recommendations and predictions that will help students to explore their interests and pursue careers aligned with their abilities.

Incidentally, October 8 marked the 10th death anniversary of our founder, Mr. N.J Yasaswy. His vision continues to guide us. On October 8, we also held our annual convocation presided over by our Chancellor, the former RBI Governor, C Rangarajan. The chief guest was Prof D.P Singh, Chairman, UGC.

Mr. Maheshwer is a CA, ICWA, ACS by qualification. Before starting Careers 360, he worked with SBI Capital markets and the Outlook group. Careers 360 was the result of a deep understanding of student aspirations and Mr. Maheshwer’s realization that our so-called demographic dividend could easily turn into a nightmare if students are not equipped with the right knowledge and skills.

Ethics is not an option

Mr. Maheshwer began his talk emphasizing that ethics is not an option or a favor but a need. It is true that ethics cannot be viewed in terms of black and white. What is unethical for someone may be ethical for someone else. Moreover, despite holding strong beliefs and values, we all have an urge to survive, which sometimes leads to some compromises. But all of us do draw a line (Lakshman Rekha as we call it in India) which helps us to decide where we are going to stop. For some, the Lakshman Rekha is close to their chest. For others, it could be far away. In some situations, the Lakshman Rekha is easier to define. Thus, a schoolteacher should not be offering after school tuition to her class. Similarly, a career counsellor cannot be an agent for an education provider. An equity research analyst should not be a trader. Indeed, these kinds of unethical activities are being increasingly considered illegal in many countries.

Standing up for ethics

Mr. Maheshwer started off with an example. One university started bullying the Careers 360 team and threatened to file a case and close down the company if a higher rank was not given. To deal with the situation, Mr. Maheshwer himself decided to take part in a call with the university’s promoters. He explained that the data had been collected from government sources and the rank allotted was fair. If the party felt it could close down Careers 360, he could also go to the government regulators and explain the situation to them. That might even lead to lower rankings for the university in other surveys such as NIRF. Mr Maheshwer’s bold stand made an impact and the party had to back down.

It is tempting to make small compromises. But over time, these can lead to larger compromises. Compromises cannot be completely avoided as we live in a world of give and take. But we should know where to draw the line. In case of Careers 360, it may be ok to oblige someone with an interview or coverage. But pushing up a university’s ranking in exchange for a favor is unethical.

Ethics is actually a broad term and stands for many things: responsibility, compassion, going to the help of someone who is being bullied and supporting a “clean” vendor.

During the Q&A session, Mr Maheshwer mentioned that we should not look at doing the right thing as a virtue. Indeed, for Mr Maheshwer, it is a matter of grave concern that these days, doing the right thing is being looked at as a virtue. We must “normalize” the right way of doing business.

Being ethical in the digital economy

The digital economy has increased the degree of transparency. Through our actions, we are leaving behind digital footprints everywhere and our actions are visible and subject to scrutiny. Traceability has increased. Even five minutes of wrong behavior can undo years of hard work which would have built the company’s reputation.

Ethics in personal and professional life

Ideally, there should not be a gap between ethical standards in our personal and professional life. Ethics is like our DNA and what is applicable in our personal life is also applicable to our professional life. The key point to note is that we all have a moral compass that enables us to distinguish between what is right and what is wrong. For example, there is a difference between convincing and lying. We also know how to resolve moral dilemmas. For example, if an ad is full of lies, Mr Maheshwer will not carry it. There is no point trying to rationalize that other ads may also be carrying lies. What is more important is that when we see an ad telling a lie, we must not carry it.

Illegal vs Unethical

We avoid illegal activities so that we are not caught by the law. But when we are being ethical, we do what we feel is right, even when no one is observing us. Illegal activities in general will also be unethical. But all unethical activities are not illegal. However, unethical activities tend to become illegal (as society takes note of them) over time. So, it is important to appreciate the distinction between the right to do something and the right thing to do.

Some examples
Satyam

The IT services company, Satyam started inflating its profits. In the process, it also inflated its fixed deposits with banks. Soon, the company’s wrongdoing was exposed. Not only the chairman, Mr Ramalinga Raju but also the auditors and the accountants had to go behind bars. This example should teach us that even if we play a small role in the wrongdoing, we can also get caught and be punished.

BR Shetty

Another example is BR Shetty who built a large healthcare business in Dubai. Before the group collapsed, it had enrolled 2000 + doctors and employed more than 20,000 workers. The company began to hide its liabilities in an SPV (Special Purpose Vehicle). When the Equity Research firm, Muddy Waters announced that it would soon publish a report on a company hiding its liabilities (without actually naming Shetty), and that banks were not even aware of this, all hell broke loose. The banks immediately started disclosing their exposure to BR Shetty, whose empire quickly collapsed. Later, it became evident that Shetty’s CEO and CFO had also resorted to unethical actions and taken loans to further their own personal interests. In short, when wrong signals come from the top, it is an encouragement to people below to take part in unethical activities. Conversely, if people at lower levels are behaving unethically with impunity, it means the disease is spreading from the top.

Unitech

In the case of the real estate company, Unitech, the children followed their father in pursuing unethical acts. Many land deals were questionable. The whole family is now behind bars. This shows that when we do unethical things, we are also misleading our children.

Ethics makes good business sense

Mr Maheshwar gave a positive spin by pointing out that when a company is ethical, it will benefit in many ways. The value of the enterprise, customer loyalty and employee stickiness will go up. Such ethical practices will also drive up the P/E ratio. During the real estate slump, the companies which have survived are the ones following ethical practices. The companies built to last are the ones following ethical practices.

On the other hand, without ethics, companies will find it difficult to survive in the long run (20-25 years+). Most large corporations which have got into trouble in recent years (DFHL, Videocon, Essar, Yes Bank, Bhushan Steels , Gitanjali, Sujana Industries, to name a few ) have done so more because of unethical practices than business reasons. When the news of unethical practices spreads, no white knight will step in to save the company. Customers will start to desert, and bankers will become unwilling to provide further support. Things will start falling like a pack of cards.

In a globalized business environment, strategy, and ethics cannot be separated. Amazon has been charged with unethical practices (including paying bribes) in India. One university which got a top rank using unethical means got into serious trouble and was not in the top 300 later.

Brand ambassadors too should be ethical. Otherwise, the sales of the products they endorse will drop and they may also end up losing their lucrative contracts. David Warner and the Australian cricket team, following the ball tampering episode, are good examples. (In India, the same thing happened to Hardik Pandiya and K Rahul, though on a smaller scale.)

Q&A
On maximizing profits

It is true that companies must earn profits. But they must do so ethically. Cutting corners, using jugaad or fooling vulnerable customers are not the right ways to increase profits. Maximization of profits should not happen at the expense of stakeholders. We must also draw a distinction between profitability and profiteering. Profitability is the essence of business but maximizing margins at the expense of everything else is not desirable. If we compromise on quality or the inputs used to make the product, sales will fall over time.

On the role of the environment

We should not blame the environment for our wrong actions. We must evaluate the environment carefully before taking a business decision. It is best to avoid some things such as recruiting from wrong organizations or selling products funded by loans.

On the relevance of ethics to the rich and the powerful

Wealthy and powerful people sometimes think that they can get away with anything. Unfortunately, the law catches up with them at some point of time. Some of these high-profile businesses are now with the IBC authorities, having gone out of the hands of the promoters. For many of these leaders, there is no peace of mind, and their power, influence and money are of no use. When powerful people fall, people desert them quickly.

On dealing with unethical competitors

It is not easy, but we must realize that they will be exposed at some point of time. Then their whole edifice will crumble. We must have the stamina to stay our course and withstand such competitors who may do better than us in the short run.

On inculcating ethics among employees

Leaders should actively propagate the importance of ethics. During townhalls, it is important for senior leaders to be transparent and explain the mission and philosophy of the company and what it stands for. For example, at Careers 360, there is a core principle: Nothing at the cost of the student. Once, a university reported Rs 24 lakhs as the highest salary offered. Careers 360 questioned this declaration as it was an international placement and the figure of Rs 24 lakhs was highly misleading. When employees see the company and senior leaders stand up and speak out to uphold key principles, they begin to understand the importance of ethics.

On teaching ethics to students

We must make the subject interesting and relevant to students. We must provide good examples and talk about leaders who went behind bars for their unethical practices. We must also make students understand that what is unethical today may be declared illegal tomorrow. (A good example is cutting trees.) So it is important to embrace the right practices proactively, rather than cut corners, even if it is legal today.

Students must also be made to understand that working with ethical companies is also good from a career standpoint. Consider two companies at the opposite ends of the spectrum: Sahara and HDFC. Someone who had joined Sahara at a much higher salary would have been on the road a few years later, desperately looking for a job and prepared to settle for even half the salary. On the other hand, someone who had started her career with HDFC at a much lower salary, after a few years, would have been in the market looking for a much higher paying job.

Prasad added that ethics must be demonstrated while delivering the program. Case discussions should be centered around ethics. Teachers should be seen to be credible and impartial and conforming to the highest standards of integrity. Like soft skills, ethics should be a part of every course.

Responding to another question, Mr Maheshwer mentioned that it is wrong for educational institutions to sell dreams to students. Student should be made to understand the struggles involved in one’s career. The focus should be on enabling the students to confidently face the challenges of life. When dealing with students, educational institutions must err on the side of caution rather than be too aggressive.

Two business leaders who have followed ethical practices are Anu Agha and Harsh Mariwala. Such examples can also be narrated to the students.

On the high valuation of Edtechs

The business of education has good prospects in India especially as the country’s infrastructure is limited. Startups and aggregation platforms have a big role to play. We must hope that it is not a bubble waiting to burst. If the bubble bursts, many students will be affected. Over time, thanks to the influence of parents, students and regulators, we can expect good practices to evolve. We need some more time for the laws and regulations to evolve in the edtech sector.

On speaking out against the rich and powerful

We do not need to be powerful or rich to influence society. We can all exercise influence in our own zone. We should first try to exercise influence in our immediate circle. It need not be very big. We have to start small in the journey and scale up over time. Once people realize that we are serious and passionate about upholding integrity and ethics, our sphere of influence is bound to expand.

A very impactful session on ethics and values. Very good moderation by Prasad and Sudhakar.

We thank Dr. Vedpuriswar for bringing out the highlights in the form of this note