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P H I L O S O P H Y F O R B U S I N E S S ISSN 2043-0736
Issue number 8
30th May 2004
I. 'Business "Ethics"?' by Rachel Browne
II. 'Recommendations to Prohibitions' by Amanda McLeod
III. 'Bhagavad Gita and Management' by M.P. Bhattathiry
There are two contrasting cultural perspectives on business ethics in this
issue, from Amanda McLeod, a researcher in the School of Historical Studies,
Monash University, Australia, and M.P. Bhattathiry, Retired Chief Technical
Examiner to the Government of Kerala, India.
Among the questions raised by McLeod's article is the change in attitudes
towards discounting manufacturers' recommended retail prices, once seen as a
shady business practice, and now defended as the consumer's right to choose the
most competitively priced product.
Bhattathiry's timely advice from the Bhagavad Gita echoes the latest thinking
in management philosophy evidence of an undercurrent of Eastern philosophy in
the thinking of contemporary management 'gurus'.
Rachel Brown continues her theme, raised in her article, 'Is there such a thing
as Business Ethics?', Issue 6, 4th April 2004, questioning the impact of the
study of business ethics on the wider business world.
I. 'BUSINESS "ETHICS"?' BY RACHEL BROWNE
Having looked at many business ethics web-sites with their language heavily
loaded with ethical concepts, I have turned to the Financial Times with its
straight-forward style of reporting and find an almost total lack of ethical
language and content. This is apart, of course, from mention of "social
Corporate and social responsibilities seem to be the main ways in which
companies want to appear ethical.
In a recent report by the Financial Times we learn that companies are spending
an undue amount of time filling in forms and surveys related to their socially
responsible activities. The Financial Times editorial for 5.4.2004 states that
it is tempting to suggest to companies that they "should simply chuck the
questionnaires into the bin". However, the editorial proceeds to what it takes
to be a better idea which is to only fill in the questionnaires which serve the
company's interests. If a company wants to be listed on the FTSEGood Index, it
need only fill in questionnaires which will forward this aim and should ignore
any other requests for information.
The editorial says companies "should only respond in cases where their
interests will be served" (my emphasis). The sentence means that this is what a
company ought to do if it's end is to attract investors, because investors are
now looking to put money into the "Good" index. Although the end is to become
listed as "good" the "should" is not a command to be good and there is no
Next to this editorial is a letter from Brian Shaad of Corporate Responsibility
Coalition suggesting that a reporting framework with legal force would obviate
the need for form-filling. For sure, legal force would provide an "ought" which
does not depend on money-making aims, but one with legal rather than ethical
In the same copy of the FT there is a report on an investment trust scandal
which led to the FSA trying to get compensation for investor-victims. This was
to be voluntary for companies involved in the scandal but "Companies have
argued that joining a voluntary compensation process would be an admission of
legal liability that would make them vulnerable to litigation". This is to say
that they will not accept responsibility. Here the end is not to have to pay
for shady business practice. This is newsworthy, and it seems that companies
don't mind admitting this. That it appears in a national newspaper won't change
Mr Godfrey of the Association of Investment Trust Companies is quoted as saying
"If there has been wrong-doing and it's identified, that probably gives the
consumer some confidence that they won't get ripped off". Here is a bit of
ethical language "wrong-doing" but the end is to gain consumer confidence
so that business will once again thrive.
The practices and language used to describe the business world in the
straight-forward FT style convey something quite different from the ideals and
ethical language in which business ethics web-sites are absolutely seeped.
There is a massive gulf between business ethicists and the real world which is
reminiscent of religious ideals in contrast with actual behaviours of people.
But this is natural. The Financial Times is for those who make money, not for
those interested in ethics and law. It might well be argued that the
company/management has no right to take the "ethical" course. The people who
own a company are the shareholders. These shareholders are only shareholders
because they expect financial return.
Last time I wrote in this newsletter, questioning the idea of business ethics,
I suggested that business ethics should be developed into business law if it is
to have proper force. This is what seems to be happening in relation to
reporting on social responsibility.
Those who take ethics to be abiding by ethical principles, such that we don't
need law, face major difficulties. To abide by a principle is rational and
entails the idea that you know what you are doing. But mankind has a massive
capacity for self-deception. It is functionally and evolutionary adaptive and
helps us survive. In a recent article in the Philosopher's Magazine by Alfred
Mele we find research evidence on this. "A survey of one million high school
seniors found that all students thought they were above average in their
ability to get on with others" (my emphasis). That the students believe this is
so will supposedly lead them to be more sociable.
If we can deceive ourselves so very easily, then whether or not we are behaving
ethically is something we can deceive ourselves about. Business needs more law,
but how does it come to pass?
Taking up the analogy just mentioned, if religious beliefs or doctrines, such
as "Thou Shalt not Kill" come to be reflected in the law, then these are ones
which we all, rationally, agree with. "Thou Shalt not Covet Thy Neighbours
Wife" simply lacks any reasonableness that most people could recognise.
Returning to the case of form-filling fatigue, would most people recognise it
as better to make a statement of corporate/social responsibility in the yearly
accounts, or would most people allow a company the freedom to chuck all their
questionnaires in the bin and keep their virtuous activities as known only to
themselves? The former would be a legal requirement and the latter looks like
an ethical attitude that is not about appearance and non-ethical aims. As to
the latter, would this be a form of self-deception as to what is best for the
shareholders? Would it be lacking self-awareness in regard to proper ends such
that it would look naive? The suggestion made by the FT editorial to bung out
that which doesn't further business ends isn't naive. Nor is it self-deceiving.
It is clear sighted in its means and ends: Get to the FTSEGood.
Currently our philosophical thoughts are about individuals in relation to
ethics. To be virtuous as an individual is opposed to being boastful. The aim
to get into the FTSEGood is not an ethical aim.
Since there are many ethical concepts and theories and no general agreement on
which theory is correct and these theories are about individuals not
companies the very nature of business ethics lies on extremely weak
foundations. The law is easier. The law works on principles of reasonableness.
In the case of investment trust scandals, I would believe that everyone except
the investment trusts themselves would think that there are sufficient reasons
for the companies to take responsibility. But that is because the "everyone" I
am talking about is looking at it in an ethical sense which is something we
firstly apply to individuals. There are "victims": People haven't been treated
with respect due to them as human beings. Kant thought that treating others
with respect as human beings was the essence of ethics. He also argued that to
be moral was to act in accordance with one's duty as a rational being. A
company is not a rational being or an individual but an organisation which has
to look out for it's own interests rather than those of others. In the case of
the individual person, ethically, we expect him to look out for his own
interests. To an extent we expect him to put his own interests before those of
others but we don't think it ethical for an individual to have victims.
If there is no business ethics and there needs to be more law, are the laws to
be based on what we would call the ethical when judging from the vantage point
of individuals, as we do when we don't think people should be victims of
investment companies? What principles would be used to say what should and
should not become law? While "conning people" looks obviously illegal, the
filling of questionnaires about social responsibility and whether certain
aspects of a company's business in relation to the community should be made
known looks like a grey area. We can't depend on what most people believe is
reasonable in this case because most people don't have any thoughts about this
at all. It could be based on what some of us assume most people would assume to
be reasonable if they thought about it. But the FT and Shaad's opinions both
seem reasonable. Shaad's position is more ethical in that it means companies
can't act on the basis of how they want to appear. This isn't Shaad's
reasoning, but it is an ethical consideration and this consideration is not
likely to underlie or found the law. So will the foundation of business law be
ethics? The use of this term is a sham and I would say "no".
It is most likely that the decision on how to proceed will come from a legal
body. It is doubtful that any laying down of the law will be because of fatigue
syndrome. It won't be because companies are complaining about this. It will be
based on what it is reasonable to do.
(c) Rachel Browne 2004
II. 'RECOMMENDATIONS TO PROHIBITIONS' BY AMANDA MCLEOD
From the Australian 'Code of Advertising Standards'
to the Trade Practices Act 1974
The Trade Practices Act 1974 is the most significant commercially and
consumer-oriented legislation ever enacted in Australia. The Act, which bought
the dual ideologies of consumer protection and business competition together
for the first time, changed the balance of power between buyer and seller by
writing the notion of consumer rights into law. Today, there is virtually no
consumer or business transaction that is outside the Act's control.
The key to economic prosperity in the post-World War Two era was to be the
combination of mass production and mass consumption. Advertising was an
important medium to sell the mass consumerist message. Rather than fighting for
unfettered free-market competition, advertisers and marketers came to realise
the advantages of adopting restraints on unethical business practices.
The Australian advertising industry had long called for honest advertising in a
quest to achieve legitimacy for the profession and the medium. By the
mid-1950s honest advertising was called for to allow an equal playing field for
competition. Retail trading associations began to formulate codes of conduct
designed to 'eliminate existing discount schemes and other methods of cutting
fixed price lines of merchandise' in an attempt to 'combat undesirable
practices'. The Electrical Retailer Development Association's National
Principles of Advertising for electrical goods became effective on 1 October
These earlier calls for business ethics by the Australian commercial sector
were primarily focused on 'business-to-business' ethics. Increasingly however,
focus would also include consumer-oriented restraints to control unethical and
misleading sales practices. 'The retail trade as a whole must maintain an
intense interest in public attitudes', argued Sir Norman Nock, a large hardware
retailer, at the first residential conference for retailing executives. The
retail trade, he continued, 'should constantly engage in an unremitting
day-to-day effort to preserve public goodwill'. By 1957 the customer, rather
than business, was the greatest loser from price cutting, argued Phil Warburton,
managing director of electrical goods retailer Warburton Franki Ltd. The
retailer and consumer, he concluded, would benefit jointly from price fixing
and controls on profit margins if they were policed by an advertising code.
As the first post-war sales boom ended in the mid-1950s there were increasing
calls for business ethics to be observed. Competition between businesses for
consumer patronage led to an increase in unethical and misleading sales
practices including deceptive advertising, cut-price discounting and no-deposit
hire purchase finance. Although the commercial sector considered such behaviour
to be limited to a dishonest few, traders insisted that honest business
practices needed to be protected. Misleading and deceptive practices, they
argued, made healthy competition impossible. Urgent calls came from
retailers in the state of Victoria who stressed: 'unless our members are more
prepared than they have been in the past, to energetically seek and obtain
their share of distribution, it will go from them almost entirely'. The
Electric Domestic Appliance Association of Western Australia formed in 1954 'to
prevent a few so-called "smart guys" from prostituting the selling and spoiling
it for the majority of wholesalers and retailers alike'.
Controls on business activities steadily increased from the mid-1960s. Although
the commercial sector favoured voluntary codes of ethics over legislative
controls, there was little sustained resistance to the idea of consumer
protection. Business saw the advantages of laws that promoted competition and
controlled restrictive trade practices. Consumer protection would also protect
reputable business practices and give consumers the confidence they needed to
enter the 'buying situation'.
The objective of the '1964 Rules and Regulations' of the Australian Association
of National Advertisers was to 'promote and safeguard the interests of its
members' by promoting a healthy relationship with consumers. Point 3.b, of the
Australian Association of National Advertisers' 'Code of Advertising
Standards', made it clear: 'promoting the elimination of fraudulent,
untruthful, misleading or otherwise objectionable advertising, increasing
thereby the public confidence in advertising and in advertised goods and
services'. The Australian Association of National Advertisers (AANA)
presented a submission to the Senate Select Committee in 1965, enquiring into
the establishment of the Victorian Consumers Protection Council. The AANA
outlined its support of industry self-regulation. By 1972 the AANA had 350
members including banks, food, cosmetics and insurance companies, motor
manufacturers and many other large companies who bought advertising space. The
AANA's revenue amounted to $250 million annually. The companies AANA
represented accounted for 75-80 per cent of the total amount spent on
advertising in Australia.
By the early 1970s it was becoming obvious to the commercial sector that the
market could not rely on marketing alone to maintain healthy consumer demand.
Increased competition, caused by the fear of market saturation and rising
inflation, heightened the need to protect consumers and reputable businesses
from a deceptive 'fringe element'. The ideology of marketing ethics was not
unfamiliar to the commercial sector, as voluntary codes of conduct had already
been promoted as a remedy to consumer discontent. Australian governments began
to recognise the vote-winning benefits of consumer protection. However, much of
the state-based legislation was criticised for being nothing more than
Prior to 1972 Australian federal governments had never taken the initiative in
legislating in the interests of consumers. In his 1972 election campaign,
future Labor Prime Minister Gough Whitlam stressed that he would, if elected,
give consumer protection high priority. It had previously been assumed that the
Australian Constitution prevented 'Commonwealth involvement in the consumer
protection field'. The Australian Labor Party had constitutional advice to the
contrary. The Constitution gave the federal government wide-ranging powers in
the form of its tariff and corporations powers and the weights and measures
provisions. But, the common law had been unable to keep up with the changes
in the consumer market and a completely new Act was needed.
When the Whitlam Labor government established the Interim Commission on
Consumer Affairs in 1973, the Sydney Morning Herald considered it the 'first
major step towards comprehensive consumer protection for Australians'. The
Interim Commission laid the foundation for the introduction of consumer
protection provisions in the Trade Practices Act.
The consumer movement and commercial sector jointly applauded the passing of
the federal Trade Practices Act 1974 as a 'major breakthrough' and legislation
with real bite. The Act, largely the work of the Labor attorney general Lionel
Murphy, combined the diverse ideologies of competition promotion and consumer
protection. Significantly, the Act wrote the notion of consumer rights into law.
The new Act exemplified changes that had occurred in the consumer market and
followed ten years of state-based consumer orientated legislation. The
complexities of the consumer market had left the old caution 'caveat emptor'
(let the buyer beware) outdated. Many, from consumer groups to business, saw
the Trade Practices Act 1974 to change the overall philosophy of consumer
protection and selling in general. With the passing of the Trade Practices
Bill, the commercial sector was issued with a newer and stronger warning,
'caveat venditor' 'let the seller beware'.
Edwin Quick, president of the Australian Association of National Advertisers
since 1972, was adamant that 'for AANA members who live by the Australian code
of Advertising Standards the consumer protection provisions are not expected to
cause difficulties'. Murphy, referring to the AANA's Code of Advertising
Standards, told the Senate 'the provisions in this Code are remarkably close to
the consumer protection provisions in the [Trade Practices] Bill. In fact one
could be forgiven for thinking that the draftsman of this Bill started with the
Code as a basic precedent'. Quick noted in a self-congratulatory tone, 'this
is a tribute to AANA's foresight and integrity', and evidence that 'the
Association is sensitive to changing public attitudes'.
In response to Murphy's remarks about the AANA's Code, Peter Long told
delegates to the 'Consumer controversy' seminar, 'We are quietly proud'. 'In
essence, responsible advertisers know that in serving the interests and
fulfilling the expectations of consumers they are serving their own interests
and fulfilling their own expectations', he concluded. Advertising News also
reported the similarities between the two documents. The AANA saw the
advantages of consumer protection law. Thus the association was more than
willing to accept Murphy's provisions and his public recognition of the AANA's
efforts in the area of consumer protection earned him the respect of the
Controls on advertising were considered to be entirely consistent with the
ideology of marketing. Peter Long explained the potential power consumer had:
'If the expectations of buyers aroused in advertisements are not satisfied on
consumption, there will be no repeat sale to the buyers'. The problems did not
stop there, he continued, 'they will quickly spread word to other potential
buyers to avoid the product or service in question'. Marketers needed to
prevent consumer discontent influencing sales outside the 'buying situation'.
Consumer law, therefore, would go some way to re-gaining the consumer's waning
In 1965 the AANA had advocated that self-regulation by individual advertisers
was the best and most meaningful way to protect consumers. By 1974 the AANA
had changed its stance. Kevin Luscombe, federal president of the AANA, accepted
that 'the Trade Practices Act will be good for the advertising business'.
But there was one important 'difference between the AANA's Code and the Trade
Practices Bill'. Murphy explained, 'the provisions in the Code are described as
'recommendations'. Those in the Bill are prohibitions'. Murphy believed that
the Trade Practices legislation would 'ensure that the consumer is not dependent
on marketing organisations observing recommended standards'. Murphy
considered some problems were simply too great to be controlled by voluntary
codes of conduct. Despite preferring self-regulation, Luscombe saw that
legislation could have a positive effect. 'It will provide for those who have
(wrongly) believed that advertising has no discipline, an observable police
Measures to promote competition such as the prevention of monopolies, resale
price-maintenance and other restrictive trade practices had been included in
the Restrictive Trade Practices Act 1965 and were also included in the 1974
Act. But competitive free enterprise between businesses was not enough to
ensure the best and most comprehensive protection for consumers. Murphy's Act
changed the rules of the game. Implicit in the incorporation of the consumer
protection provisions in the new Act, was the notion of fair play in the form
of protection 'from unfair commercial practices'.
Murphy identified six categories of restrictive trade practices that prevented
healthy competition: contracts, monopolisation, exclusive dealing, resale price
maintenance, price discrimination and mergers. Contracts included any
arrangements or understandings in restraint of trade or commerce such as price
fixing. Monopolisation was 'confined to conduct by which a person who is in a
position to control a market takes improper advantage of his power'. Exclusive
dealing included 'restraints that a supplier imposes on a dealer buying from
him'. It also involved resale price fixing, price discrimination and mergers
that were likely to lessen competition. Price discrimination, mergers,
exclusive dealing and consumer protection had not been dealt with in previous
legislation. The restrictive trade practices provisions of the Act were
accompanied by strong sanctions of up to $250,000 for a corporation. In doing
so, the Act offered not only the promotion of competition, but also economic
measures to keep prices down. Protecting and fostering true competition and
keeping prices down would ultimately benefit the consumer.
As the effects of the early 1970s world oil crisis began to be felt, the
Australian Labor Party argued that the promotion of competition by prohibiting
certain practices would also fight rising inflation. Both sides of politics
recognised the urgency to combat inflation. But 'consumer protection also
assists in the fight against inflation', argued Murphy, because 'it is the
consumer who has to bear the burden of higher prices and of unfair methods of
dealing'. Senator Everett shared Murphy's point of view. He claimed that it
would 'lead to a reduction in prices and in course of time be
anti-inflationary'. The urgent necessity to deal with rising inflation
encouraged the passage of the Trade Practices Bill.
R.E. Atchison, deputy chairman of Australia's largest and most influential
consumer organisation, the Australian Consumers Association, called the Trade
Practices Act 1974 a major breakthrough for consumers. 'Many of the bad
practices such as signing away your rights when filling in guarantee forms and
the like are now illegal'. Murphy clarified the previous legislation's
inadequacies. 'The practices covered by it, with the exception of resale price
maintenance and collusive tendering, were not prohibited but merely declared
them to be examinable'. The Trade Practices Act 1974 included two classes of
provisions: restrictive trade practices and consumer protection against false,
misleading or unfair practices. It put certain conditions and warranties on
consumer transactions and prevented business from avoiding them by 'fine print'
It is not surprising that the restrictive trade practices legislation was
amended in 1974. Nor was the introduction of national consumer protection
unexpected. The Act was important because of the incorporation of the
ideologies of competition and protection into the same document. Jenny Hocking
in her biography of Lionel Murphy remarked that the business community's
response to the Act was 'surprisingly low-keyed'. While the response was
certainly low-key it was not surprising. There was little sustained
apprehension or criticism relating to the legislation. Even the Liberal Party's
criticism seemed to be opposition for opposition's sake. Rydges, Australia's
leading business journal, also positively reported the Act's passage. The
advertising industry, which perhaps had more to be concerned about than most,
was largely in favour of the Act. The industry accepted the benefits and was
willing to advise its community to work within the Act's guidelines. The
restrictions placed on advertisers were taken seriously by the industry and
changed the way it conducted its business.
As the Australian Trade Practices Act 1974 illustrates, the implementation of
any business ethics policy depends on the participation of all stakeholders.
Moreover, it is worth keeping in mind that ethical business policy, if made
mandatory, offers greater opportunity to give equal weight to all stakeholder
interests. The successful implementation of mandatory business ethics
ultimately benefits everyone.
1. Robert Crawford, 'Selling a Nation: Depictions of Australian National
Identity in Press Advertising 1900-1969', PhD Thesis, Monash University, 2002.
2. 'Vic. ERF & unethical ads', Electrical Weekly (hereafter EW), 16 July 1954,
p.39; 'Ethics', EW, 15 October 1954, p 6.
3. 'Code of Advertising: RTA (NSW) letter to manufacturers', EW, 29 October
1954, p 3; 'Britain's Radio and TV Trading Code', EW, 13 August 1954, p 33;
'RTDAV Fridge Association adopt RETRA Code', EW, 19 December 1958, p 34.
4. 'National principles of advertising', EW, 19 September 1958, p 4.
5. Sir Norman Nock 'Retailers' community responsibility', address at the first
residential conference for retailing executives at the College of Retailing
(Sydney), reprinted in EW, 16 July 1954, p 22.
6. Phil Warburton, 'Let's get back to sanity in major appliance marketing!',
EW, 15 March 1957, p 8.
7. Harry Atler, 'Is fair trade the answer?', talk presented before the
Washington, D.C., U.S.A., Appliance and Radio Dealer Association, EW, 22
October 1954, p 9; F. R. Casserly, 'Retailer Frank Casserly on fair trading',
letter to the editor, EW, 29 October 1954, p 34; John Handley, 'What price
ethics?', EW, 5 November 1954, p 6; J. Jeffreys, 'Fair trading', letter to the
editor, EW, 26 November 1954, p 4; Price Cutting, 'QLD assns & pricecutting',
EW, 16 July 1954, p 39; 'WA Retailers' pres. criticises unsound trading', EW,
30 July 1954, p 3.
8. 'Victorian retailers attack misleading advertising', Radio Electrical
Weekly, 1 September 1947, p.46.
9. 'Ethical trading "cleansing operation" in WA', EW, 5 November 1954, p 24.
10 Noel Butlin Archives Centre (hereafter NBAC), Australian National
University, Australian Association of National Advertisers (hereafter AANA),
Z169/59, AANA Rules and Regulations (amended 14 October 1964).
11. NBAC, AANA, Z169/68, '50 years of achievement', 50 Years of Service to
Advertisers, October 1978, p 10.
12. 'What is false and misleading advertising', Rydges, May 1972, p 38.
13. Brian Johns, 'Whitlam to promise prices tribunal', Sydney Morning Herald,
10 November 1972, p 1.
14. 'Consumer body to determine new standards', Sydney Morning Herald, 14
September 1973, p 11; 'Consumer protection move', Sydney Morning Herald, 16
October 1973, p 9.
15. NBAC, AANA, Z169/70, E. J. Quick, presidential address, AANA Annual
Report 1974, presented at the 23rd annual convention of the AANA,
Albury/Wodonga, NSW, 22 October 1974.
16. NBAC, AANA, Z169/70, Lionel Murphy, 'Australian Code of Advertising
Standards', 23 August 1974.
17. NBAC, AANA, Z169/70, E.J. Quick, presidential address.
18. NBAC, AANA, Z169/31, Peter Long, an address on 'The responsibility of
advertisers in informing and educating the Consumer', at 'The consumer
controversy' seminar arranged by the Home Economics Association of N.S.W.,
Sydney, 3 May 1975, p 1.
19. '"Answer Critics" Kirby', Advertising News, 25 October 1974, p 9.
20. NBAC, AANA, Z169/31, Peter Long, 'The responsibility of advertisers', p.1.
21. NBAC, AANA, Z169/69, J. H. Bowden, submission to the Consumer Protection
Council, October 1965.
22. Kevin Luscombe, 'Act will be good for advertising', Trade Practices Lift
Out, the Age, 11 November 1974.
23. NBAC, AANA, Z169/70, Lionel Murphy, 'Australian Code of Advertising
Standards', 23 August 1974.
24. NBAC, AANA, Z169/70, 'Trade practices legislation and other restraints on
marketing practices', address by the Attorney-general of Australia, Senator
Lionel Murphy QC address to a seminar sponsored by the AANA Sydney, 23 August
1974 in AANA, Basic Documents relating to consumer protection under the Trade
Practices Act 1974 (compiled 1975), p 12.
25. Kevin Luscombe, 'Act will be good for advertising'.
26. Trade Practices Bill 1974, Second Reading, 30 July 1974, p 540.
27. 'Trade Practices Legislation and other restraints on marketing practices',
p 10; Trade Practices Commission, First Annual Report, Year Ended 30 June 1975,
Canberra, 1975, pp 1&10.
28. Lionel Murphy, Trade Practices Bill 1974, Second Reading, 30 July 1974, p
29. Senator Everett, maiden speech to Senate, Trade Practices Bill 1974, Second
Reading, 13 August 1974, p 830.
30. R.E. Atchison, 'The consumer rip-off: how to sell air, water or almost
nothing for lots of money', no date, p 6.
31. 'Trade Practices Legislation and other restraints on marketing practices',
32. Jenny Hocking, Lionel Murphy A Political Biography, Melbourne, 1997, p
33. Through the AANA and Advertising News.
(c) Amanda McLeod 2004
Dr Amanda McLeod
School of Historical Studies
Diffusion of Democratic Principles Project
Faculty of Law
III. 'BHAGAVAD GITA AND MANAGEMENT' BY M.P. BHATTATHIRY
'Mind is very restless, forceful and strong, O Krishna,
it is more difficult to control the mind than to control
the wind' Arjuna to Sri Krishna
India's one of the greatest contributions to the world is Holy Gita.
Arjuna got mentally depressed when he saw his relatives with whom he has to
fight. The Bhagavad Gita is preached in the battle field Kurukshetra by Lord
Krishna to Arjuna as a counselling to do his duty. It has got all the
management tactics to achieve the mental equilibrium.
Management has become a part and parcel in everyday life, be it at home,
office, factory, Government, or in any other organization where a group of
human beings assemble for a common purpose, management principles come into
play through their various facets like management of time, resources,
personnel, materials, machinery, finance, planning, priorities, policies and
Management is a systematic way of doing all activities in any field of human
effort. It is about keeping oneself engaged in interactive relationship with
other human beings in the course of performing one's duty. Its task is to make
people capable of joint performance, to make their weaknesses irrelevant so
says the Management Guru Peter Drucker.
It strikes harmony in working equilibrium in thoughts and actions, goals and
achievements, plans and performance, products and markets. It resolves
situations of scarcities be they in the physical, technical or human fields
through maximum utilization with the minimum available processes to achieve the
The lack of management will cause disorder, confusion, wastage, delay,
destruction and even depression. Managing men, money and material in the best
possible way according to circumstances and environment is the most important
and essential factor for a successful management. Managing men is supposed have
the best tactics. Man is the first syllable in management which speaks volumes
on the role and significance of man in a scheme of management practices. From
the pre-historic days of aborigines to the present day of robots and computers
the ideas of managing available resources have been in existence in some form
or other. Now that the world has become a big global village, management
practices have become more complex and what was once considered a golden rule
is now thought to be an anachronism.
Management Guidelines from The Bhagavad Gita
There is an important distinction between effectiveness and efficiency in
Effectiveness is doing the right things.
Efficiency is doing things right.
The general principles of effective management can be applied in every field,
the differences being mainly in the application than in principles. Again,
effective management is not limited in its application only to business or
industrial enterprises but to all organisations where the aim is to reach a
given goal through a Chief Executive or a Manager with the help of a group of
The Manager's functions can be briefly summed up as under:
Forming a vision and planning the strategy to realise
Cultivating the art of leadership
Establishing the institutional excellence and building
an innovative organisation.
Developing human resources.
Team building and teamwork.
Delegation, motivation, and communication.
Reviewing performance and taking corrective steps whenever
Thus Management is a process in search of excellence to align people and get
them committed to work for a common goal to the maximum social benefit.
The critical question in every Manager's mind is how to be effective in his
job. The answer to this fundamental question is found in the Bhagavad Gita
which repeatedly proclaims that 'you try to manage yourself'. The reason is
that unless the Manager reaches a level of excellence and effectiveness that
sets him apart from the others whom he is managing, he will be merely a face in
the crowd and not an achiever.
In this context the Bhagavad Gita expounded thousands of years ago by the Super
Management Guru Bhagawan Sri Krishna enlightens us on all managerial techniques
leading to a harmonious and blissful state of affairs as against conflicts,
tensions, lowest efficiency and least productivity, absence of motivation and
lack of work culture etc common to most of the Indian enterprises today.
The modern management concepts like vision, leadership, motivation, excellence
in work, achieving goals, meaning of work, attitude towards work, nature of
individual, decision making, planning etc., are all discussed in the Bhagavad
Gita with a sharp insight and finest analysis to drive through our confused
grey matter making it highly eligible to become a part of the modem management
It may be noted that while Western design on management deals with the problems
at superficial, material, external and peripheral levels, the ideas contained in
the Bhagavad Gita tackle the issues from the grass roots level of human thinking
because once the basic thinking of man is improved it will automatically enhance
the quality of his actions and their results.
The management thoughts emanating from the Western countries particularly the
U.S.A. are based mostly on the lure for materialism and a perennial thirst for
profit irrespective of the quality of the means adopted to achieve that goal.
This phenomenon has its source in abundance in the West particularly the U.S.A.
Management by materialism caught the fancy of all the countries the world over,
India being no exception to this trend.
Our country has been in the forefront in importing those ideas mainly because
of its centuries old indoctrination by the colonial rulers which inculcated in
us a feeling that anything Western is always good and anything Indian is always
inferior. Hence our management schools have sprung up on the foundations of
materialistic approach wherein no place of importance was given to a holistic
The result is while huge funds have been invested in building these temples of
modem management education, no perceptible changes are visible in the
improvement of the quality of life although the standard of living of a few has
gone up. The same old struggles in almost all sectors of the economy,
criminalisation of institutions, more and more social violence, exploitation
and such other vices have gone deep in the body politic.
The reasons for this sorry state of affairs are not far to seek. The western
idea of management has placed utmost reliance on the worker (which includes
Managers also) to make him more efficient, to increase his productivity. They
pay him more so that he may work more, produce more, sell more and will stick to
the organisation without looking for alternatives. The sole aim of extracting
better and more work from him is for improving the bottom-line of the
enterprise. Worker has become a hireable commodity, which can be used, replaced
and discarded at will.
The workers have also seen through the game plan of their paymasters who have
reduced them to the state of a mercantile product. They changed their attitude
to work and started adopting such measures as uncalled for strikes, Gheraos,
sit-ins, dharnas, go-slows, work-to-rule etc to get maximum benefit for
themselves from the organisations without caring the least for the adverse
impact that such coercive methods will cause to the society at large.
Thus we have reached a situation where management and workers have become
separate and contradictory entities wherein their approaches are different and
interests are conflicting. There is no common goal or understanding which
predictably leads to constant suspicion, friction, disillusion and mistrust
because of working at cross purposes. The absence of human values and erosion
of human touch in the organisational structure resulted in a permanent crisis
Western management thought, although it has allowed some to acquire prosperity
for some time, has absolutely failed in its aim to ensure betterment of
individual life and social welfare. It has remained by and large a soulless
management edifice and an oasis of plenty for a chosen few in the midst of poor
quality of life to many. Hence there is an urgent need to have a re-look at the
prevalent management discipline on its objectives, scope and content.
It should be redefined so as to underline the development of the worker as a
man, as a human being with all his positive and negative characteristics and
not as a mere wage-earner. In this changed perspective, management ceases to be
a career-agent but becomes an instrument in the process of national development
in all its segments.
Bhagavad Gita And Managerial Effectiveness
Now let us re-examine some of the modern management concepts in the light of
the Bhagavad Gita which is a primer of management by values.
Utilisation of Available Resources
The first lesson in the management science is to choose wisely and utilise
optimally the scarce resources if one has to succeed in his venture. During the
curtain raiser before the Mahabharata War Duryodhana chose Sri Krishna's large
army for his help while Arjuna selected Sri Krishna's wisdom for his support.
This episode gives us a clue as to who is an Effective Manager.
Attitude Towards Work
Three stone-cutters were engaged in erecting a temple. As usual a H.R.D.
Consultant asked them what they were doing. The response of the three workers
to this innocent-looking question is illuminating.
'I am a poor man. I have to maintain my family. I am making
a living here,' said the first stone-cutter with a dejected
'Well, I work because I want to show that I am the best
stone-cutter in the country,' said the second one with a
sense of pride.
'Oh, I want to build the most beautiful temple in the
country,' said the third one with a visionary gleam.
Their jobs were identical but their perspectives were different. What Gita
tells us is to develop the visionary perspective in the work we do. It tells us
to develop a sense of larger vision in one's work for the common good.
The popular verse 2.47 of the Gita advises non-attachment to the fruits or
results of actions performed in the course of one's duty. Dedicated work has to
mean 'work for the sake of work'. If we are always calculating the date of
promotion for putting in our efforts, then such work cannot be
commitment-oriented causing excellence in the results but it will be
promotion-oriented resulting in inevitable disappointments. By tilting the
performance towards the anticipated benefits, the quality of performance of the
present duty suffers on account of the mental agitations caused by the anxieties
of the future. Another reason for non-attachment to results is the fact that
workings of the world are not designed to positively respond to our
calculations and hence expected fruits may not always be forthcoming .
So, the Gita tells us not to mortgage the present commitment to an uncertain
future. If we are not able to measure up to this height, then surly the fault
lies with us and not with the teaching.
Some people argue that being unattached to the consequences of one's action
would make one unaccountable. Accountability is a much touted word these days
with the vigilance department sitting on our shoulders. However, we have to
understand that the entire second chapter has arisen as a sequel to the
temporarily lost sense of accountability on the part of Arjuna in the first
chapter of the Gita in performing his swadharma.
Bhagavad Gita is full of advice on the theory of cause and effect, making the
doer responsible for the consequences of his deeds. The Gita, while advising
detachment from the avarice of selfish gains by discharging one's accepted
duty, does not absolve anybody of the consequences arising from discharge of
This verse is a brilliant guide to the operating Manager for psychological
energy conservation and a preventive method against stress and burn-outs in the
work situation. Learning managerial stress prevention methods is quite costly
nowadays and if only we understand the Gita we get the required cure free of
Thus the best means for effective work performance is to become the work
itself. Attaining this state of nishkama karma is the right attitude to work
because it prevents the ego, the mind from dissipation through speculation on
future gains or losses.
It has been presumed for long that satisfying lower needs of a worker like
adequate food, clothing and shelter, recognition, appreciation, status,
personality development etc are the key factors in the motivational theory of
It is the common experience that the spirit of grievances from the clerk to the
Director is identical and only their scales and composition vary. It should have
been that once the lower-order needs are more than satisfied, the Director
should have no problem in optimising his contribution to the organisation. But
more often than not, it does not happen like that; the eagle soars high but
keeps its eyes firmly fixed on the dead animal below. On the contrary a lowly
paid school teacher, a self-employed artisan, ordinary artistes demonstrate
higher levels of self-realization despite poor satisfaction of their
This situation is explained by the theory of Self-transcendence or
Self-realisation propounded in the Gita. Self-transcendence is overcoming
insuperable obstacles in one's path. It involves renouncing egoism, putting
others before oneself, team work, dignity, sharing, co-operation, harmony,
trust, sacrificing lower needs for higher goals, seeing others in you and
yourself in others etc. The common portrait of a 'self-realising' person is
that he is a man who aims at his own position and underrates everything else.
On the contrary, the Self-transcenders are the visionaries and innovators.
Their resolute efforts enable them to achieve the apparently impossible. They
overcome all barriers to reach their goal.
The work must be done with 'detachment'. This is because it is the Ego which
spoils the work. If this is not the backbone of the Theory of Motivation which
the modern scholars talk about what else is it? I would say that this is not
merely a theory of Motivation but it is a theory of Inspiration.
The Gita further advises to perform action with loving attention to the Divine
which implies redirection of the empirical self away from its egocentric needs,
desires, and passions for creating suitable conditions to perform actions in
pursuit of excellence. Tagore says working for love is freedom in action which
is described as disinterested work in the Gita. It is on the basis of the
holistic vision that Indians have developed the work-ethos of life. They found
that all work irrespective of its nature have to be directed towards a single
purpose that is the manifestation of essential divinity in man by working for
the good of all beings lokasangraha. This vision was presented to us in the
very first mantra of lsopanishad which says that whatever exists in the
Universe is enveloped by God. How shall we enjoy this life then, if all are
one? The answer it provides is enjoy and strengthen life by sacrificing your
selfishness by not coveting other's wealth. The same motivation is given by Sri
Krishna in the Third Chapter of Gita when He says that,
'He who shares the wealth generated only after serving the
people, through work done as a sacrifice for them, is freed
from all the sins. On the contrary those who earn wealth
only for themselves, eat sins that lead to frustration and
The disinterested work finds expression in devotion, surrender and equipoise.
The former two are psychological while the third is the strong-willed
determination to keep the mind free of and above the dualistic pulls of daily
experiences. Detached involvement in work is the key to mental equanimity or
the state of nirdwanda. This attitude leads to a stage where the worker begins
to feel the presence of the Supreme Intelligence guiding the empirical
individual intelligence. Such de-personified intelligence is best suited for
those who sincerely believe in the supremacy of organisational goals as
compared to narrow personal success and achievement.
Work culture means vigorous and arduous effort in pursuit of a given or chosen
task. When Bhagawan Sri Krishna rebukes Arjuna in the strongest words for his
unmanliness and imbecility in recoiling from his righteous duty it is nothing
but a clarion call for the highest work culture. Poor work culture is the
result of tamo guna overtaking one's mindset. Bhagawan's stinging rebuke is to
bring out the temporarily dormant rajo guna in Arjuna. In Chapter 16 of the
Gita Sri Krishna elaborates on two types of Work Ethic viz. daivi sampat or
divine work culture and asuri sampat or demonic work culture.
Daivi work culture means fearlessness, purity,
self-control, sacrifice, straightforwardness, self-denial,
calmness, absence of fault-finding, absence of greed,
gentleness, modesty, absence of envy and pride.
Asuri work culture means egoism, delusion,
desire-centric, improper performance, work which is not
oriented towards service.
It is to be noted that mere work ethic is not enough in as much as a hardened
criminal has also a very good work culture. What is needed is a work ethic
conditioned by ethics in work.
It is in this light that the counsel 'yogah karmasu kausalam' should be
understood. Kausalam means skill or method or technique of work which is an
indispensable component of work ethic. Yogah is defined in the Gita itself as
'samatvam yogah uchyate' meaning unchanging equipoise of mind. Tilak tells us
that performing actions with the special device of an equable mind is Yoga. By
making the equable mind as the bed-rock of all actions Gita evolved the goal of
unification of work ethic with ethics in work, for without ethical process no
mind can attain equipoise. Adi Sankara says that the skill in performance of
one's duty consists in maintaining the evenness of mind in success and failure
because the calm mind in failure will lead him to deeper introspection and see
clearly where the process went wrong so that corrective steps could be taken to
avoid such shortcomings in future.
The principle of reducing our attachment to personal gains from the work done
or controlling the aversion to personal losses enunciated in Ch.2 Verse 47 of
the Gita is the foolproof prescription for attaining equanimity. The common
apprehension about this principle that it will lead to lack of incentive for
effort and work, striking at the very root of work ethic, is not valid because
the advice is to be judged as relevant to man's overriding quest for true
mental happiness. Thus while the common place theories on motivation lead us to
bondage, the Gita theory takes us to freedom and real happiness.
The Gita further explains the theory of non-attachment to the results of work
in Ch.18 Verses 13-15:
If the result of sincere effort is a success, the entire
credit should not be appropriated by the doer alone.
If the result of sincere effort is a failure, then too the
entire blame does not accrue to the doer.
The former attitude mollifies arrogance and conceit while the latter prevents
excessive despondency, de-motivation and self-pity. Thus both these
dispositions safeguard the doer against psychological vulnerability which is
the cause for the Modem Managers' companions like Diabetes, High B.P. Ulcers
Assimilation of the ideas behind 2.47 and 18.13-15 of the Gita leads us to the
wider spectrum of lokasamgraha or general welfare.
There is also another dimension in the work ethic. If the karm ayoga is blended
with bhaktiyoga then the work itself becomes worship, a seva yoga.
Manager's Mental Health
The ideas mentioned above have a close bearing on the end-state of a manager
which is his mental health. Sound mental health is the very goal of any human
activity more so management. An expert describes sound mental health as that
state of mind which can maintain a calm, positive poise or regain it when
unsettled in the midst of all the external vagaries of work life and social
existence. Internal constancy and peace are the pre-requisites for a healthy
Some of the impediments to sound mental health are:
Greed: for power, position, prestige and money.
Envy: regarding others' achievements, success, rewards.
Egotism: about one's own accomplishments.
Suspicion, anger and frustration.
Anguish through comparisons.
The driving forces in today's rat-race are speed and greed as well as ambition
and competition. The natural fallout from these forces is erosion of one's
ethico-moral fibre which supersedes the value system as a means in the
entrepreneurial path like tax evasion, undercutting, spreading canards against
the competitors, entrepreneurial spying, instigating industrial strife in
business rivals' establishments etc. Although these practices are taken as
normal business hazards for achieving progress, they always end up as a pursuit
of mirage the more the needs the more the disappointments. This phenomenon may
be called as yayati-syndrome.
In Mahabharata we come across a king called Yayati who, in order to revel in
the endless enjoyment of flesh exchanged his old age with the youth of his
obliging youngest son for a mythical thousand years. However, he lost himself
in the pursuit of sensual enjoyments and felt penitent. He came back to his son
pleading to take back his youth. This yayati syndrome shows the conflict between
externally directed acquisitions, motivations and inner reasoning, emotions and
Gita tells us how to get out of this universal phenomenon by prescribing the
Cultivate sound philosophy of life.
Identify with inner core of self-sufficiency
Get out of the habitual mindset towards the pairs of
Strive for excellence through work is worship.
Build up an internal integrated reference point to face
contrary impulses, and emotions
Pursue ethico-moral rectitude.
Cultivating this understanding by a manager would lead him to emancipation from
falsifying ego-conscious state of confusion and distortion, to a state of pure
and free mind i.e. universal, supreme consciousness wherefrom he can prove his
effectiveness in discharging whatever duties that have fallen to his domain.
Bhagawan's advice is relevant here:
tasmaat sarveshu kaaleshu mamanusmarah yuddha cha
'Therefore under all circumstances remember Me and then fight'
(Fight means perform your duties)
Management Needs those Who Practise what they Preach
Whatever the excellent and best ones do, the commoners follow, so says Sri
Krishna in the Gita. This is the leadership quality prescribed in the Gita. The
visionary leader must also be a missionary, extremely practical, intensively
dynamic and capable of translating dreams into reality. This dynamism and
strength of a true leader flows from an inspired and spontaneous motivation to
'I am the strength of those who are devoid of personal
desire and attachment. O Arjuna, I am the legitimate desire
in those, who are not opposed to righteousness'
says Sri Krishna in the 10th Chapter of the Gita.
The Ultimate Message of Gita for Managers
The despondent position of Arjuna in the first chapter of the Gita is a typical
human situation which may come in the life of all men of action some time or
other. Sri Krishna by sheer power of his inspiring words raised the level of
Arjuna's mind from the state of inertia to the state of righteous action, from
the state of faithlessness to the state of faith and self-confidence in the
ultimate victory of Dharma (ethical action). They are the powerful words of
courage of strength, of self confidence, of faith in one's own infinite power,
of the glory, of valour in the life of active people and of the need for
intense calmness in the midst of intense action.
When Arjuna got over his despondency and stood ready to fight, Sri Krishna gave
him the gospel for using his spirit of intense action not for his own benefit,
not for satisfying his own greed and desire, but for using his action for the
good of many, with faith in the ultimate victory of ethics over unethical
actions and truth over untruth. Arjuna responds by emphatically declaring that
all his delusions were removed and that he is ready to do what is expected of
him in the given situation.
Sri Krishna's advice with regard to temporary failures in actions is 'No doer
of good ever ends in misery'. Every action should produce results: good action
produces good results and evil begets nothing but evil. Therefore always act
well and be rewarded.
And finally the Gita's consoling message for all men of action is:
'He who follows My ideal in all walks of life without losing
faith in the ideal or never deviating from it, I provide him
with all that he needs (Yoga) and protect what he has
already got (Kshema).'
In conclusion the purport of this essay is not to suggest discarding of the
Western model of efficiency, dynamism and striving for excellence but to make
these ideals tuned to the India's holistic attitude of lokasangraha for the
welfare of many, for the good of many. The idea is that these management skills
should be India-centric and not America-centric. Swami Vivekananda says a
combination of both these approaches will certainly create future leaders of
India who will be far superior to any that have ever been in the world.
(c) M.P. Bhattathiry 2004
Retired Chief Technical Examiner to the Government of Kerala