Ethics and Start-Up Culture: Complying with Corporate Governance

By Madarapu Nagaraju

With the booming start-up industry on everyone’s mind, it is interesting to understand how these organizations come to define their ethical standards. There is often an added advantage attached when one is the underdog. The overall positive and transparent attitude that start-ups carry to their business makes for an infectious and exciting environment. They are open about their ethical dilemmas and decision-making process.

In my experience, when we talk about corporate governance, which is almost synonymous with ethics in start-ups or in any company, we compare them to the standard operating procedures that the corporate adheres to while making an important decision. This also includes an objective setting and creating social, regulatory, and market norms, pursuant to the same.

In terms of start-ups complying with the corporate governance system, there are certain areas, I feel that remain a concern, such as:

Knowledge

A clear and defined knowledge of the legal and financial responsibility that the company has to its internal and external relationships is a must. This essentially points out to a great need for managers and professionals to invest in skills and practices that give them a better idea on how to run an ethically sound organization.

Time Constraints

Start-ups are expanding at an alarming rate, but they are aware of how important it is to hire quality. Because of this, there are fewer people handling multiple roles. Here responsibility and accountability can pose as issues when there is no clear guidance.

No Clear Hierarchy

It definitely is a great concept where everybody is a part of the decision-making process, but, at times, one needs a leader to steer the vessel, especially in turbulent waters.

Charm Preceding Logic

A lot of the times, it is the charm or the charisma that leads the recruiter to hire or assign rather than the actual merit of the person. Charm is definitely the most important thing in creating an impression but, for the impression to last long, one needs capability.

Reinforcements of Core Values

We have already looked at a couple of values and responsibilities that start-ups have introduced and tried to incorporate into their workforce. Start-ups such like InMobi, Flipkart and Snapdeal are few of the many organizations that emphasize integrity, honesty and innovation as their core values.

As for their core values, Integrity, Freedom, Responsibility and Respect are constantly highlighted in these organizations’ portfolios. Ethics are integrated into the core value of the system and the founders usually lead by example.

Emotional Decision Makings

I have already mentioned that start-ups are driven by transparency and equal rights for all. However, when the relationship becomes more personal than professional with the colleagues and the boss, people tend to slip into a comfortable mode. This mode makes them take decisions that tend to be more emotional in nature.

A couple of years ago, I worked in an organization where the employees, management and leaders got along very well and took care to speak politely with one another. However, a lot of feedback, criticism and reviews were not communicated properly because we were worried about how our subordinates would react. This may not affect the company’s norm at a particular moment, but the absence of a standard operating procedure may lead to a regulatory breach in company policies.

The many motivational stories in India of successful start-ups inspire millions to choose the path of entrepreneurship. There have also been many attempts to put together a winning formula, but this again depends on the dynamic models and policies that are attached to every organization. I am excited and optimistic about this thriving industry and the hope it represents. The road not taken that is being taken a lot more these days, albeit with the thorns that line up the way!

A clearly defined organizational structure and an ethical base are vital to a start-up’s functioning corporate governance system. Effective plans must be instilled in the values, vision and the culture of the company for all the stakeholders.

With theintroduction of “Startup India” led by the Narendra Modi government, a more specific light is being thrown on the effects that this particular culture is having on the economy and professional workforce.

About the author: Madarapu Nagaraju is a Co-founder and Director at KnowledgeHut. With over seven years of experience, he possesses a bias for innovation and has an ability to connect the dots between thinking up strategies and executing them on the ground. He has played a pivotal role in building international alliances and expansion of the learning business overseas from one centre in Bengaluru to over 90 countries. A strong proponent of the lean practices, he strongly believes in the quote: “Simplicity is the ultimate sophistication.”