Ethics and the Profession of Valuation
By Addoor Krishna Rao
M.B.A. M.A., CAIIB, B.Sc.(Agri.), FIV
Ethics are about making choices that may not always feel good or seem like they benefit you, but are the “right” choices to make. In our childhood, our parents have taught us the “Golden Rules of Life”, like “Be honest”, “Always tell the truth”, “Don’t steal”, “Don’t hurt others”. As the years passed, we started making compromises. That was the beginning of the dilution of the concept of “ethics”. As a result, in personal lives most of the people try to live by the “Golden Rules”. But, many think that it is not related to professional or business side of the life. Therefore, it is necessary to be very clear about the concept of ethics in life.
1. Ethics in Life
Ethics is very important for the development of an individual personality as well as for building an institution. Such an organization consisting of highly ethical and value based individuals is called an institution. While organizations aim at maintenance of internal order and efficiency in goal realization, institutions stretch beyond these goals. The actions of the institutions are valued in the community and society. While all institutions come into existence as organizations, the cutting edge for them to be called as great institutions is certainly the high pedestal of ethics and values on which they stand.
Consider the example of Karnataka State Open University (KSOU), Mysuru. The UGC cancelled the recognition given to the University. In spite of that the KSOU awarded the Degree Certificates which were not valid to thousands of students. One of the students filed a complaint against “Unfair Trade Practice” of the University at Mysuru District Consumer Dispute Redressal Forum. In September 2017, the Forum has ordered the University to pay a compensation of Rs.2 Lakhs to the student. It has also ordered to pay Rs.5,000 compensation for the inconvenience caused and Rs.2,000 as cost of the litigation to the student. Further, the KSOU has cheated about 1.5 lakh students! As per the Law, the KSOU can only offer courses at the level of graduation or above. But the University offered courses at Pre-University level and also at SSLC level (in clear violation of the provisions of the Law.) About 1.5 lakh students, who have completed these courses by paying thousands of rupees as fees, are now holding a “certificate from the KSOU” which has no value at all.
Esman and Blaise define institutions as organizations which incorporate, foster and protect normative relationships and action patterns and perform functions and services which are valued in environment. Its functions and services are related to society’s commonly agreed requirements. An institution is more enduring and is perceived as an indispensable part of the community. Its internal structures embody and protect commonly held norms and values of the society. Hence institution building means - making efforts by all the rank and file to transform the organization into an integrated organic body, establishing its identity founded on fundamental values and ethics.
Self-mastery and self-discipline are the foundation of good business relationships. Trustworthiness is the basic prerequisite for building long-standing relationship. There has been a terrific dip in the credibility in individuals, organizations and even political leadership in various countries. No profession is an exception. Frauds are on the increase in the recent days.
2. Ethics – Different aspects
In olden days, ethics and moral science comprised the most important part of the education curriculum. Slowly, with the increase in the commercial value based studies, people have turned a deaf ear for these values. We have been callous about the more important aspect of human dignity. Now time has come to realise the importance of inculcation of values. Knowledge, expertise, ethics, morality, character and other virtues should become part and parcel of modern day training packages in all the organizations and institutions.
Philosophically speaking, manifestation of infinite oneness in human nature is described as love and empathy and it is the basis of all our ethics and morality. Ethics is unity and its basis is love. The basis of all social, political and economic systems rests upon the goodness of the persons. No nation is great or good because the lawmakers enact the laws, but because its people are great and good. There is a goal beyond these systems. All great masters taught the same thing. Jesus Christ envisioned and enunciated that the stronger basis for the success of any system is not law but morality and purity.
Morally speaking, ethics always says - Not I, but the society comes first. The efforts made by the individuals must always be directed towards achieving in the interest of nation, society, community and organization. Every one should keep in mind – ‘ I must hold myself last’. So, one must give up the plane of matter and rise to other spheres to seek a deeper expression of the infinite. We have to bear in mind that we are all debtors to the world and the world does not owe us anything. It is a great privilege for all of us to be allowed to do anything for the world. In helping the world we help ourselves. When we see a person doing good work, helping others, unselfishly, it means that he can not be confined within the limited circle of ‘me and mine’ and becomes broad minded with an unlimited potential for serving others.
There are different dimensions of ethics in a profession like that of a valuer. Ethics and values in relation to each client, ethics and values towards each person providing vital information, ethics in terms of practices followed in valuation, ethics with regard to the work culture and ethics of our responsibility and accountability towards society in the capacity as a valuer.
One should never make any extra effort to garner the extra rupee through unethical means. Unethical accumulation of lucre is the root cause of self-destruction of an individual. Quality of life does not come out of the extra rupee earned through dubious means, but through inculcation of more ethical values and satisfaction derived by doing an honest and fair job.
Everyone should become a good human being first. Subsequently professionalism can be developed automatically with the inherent virtues. Individual wealth alone does not bring happiness to any person, according to a great ancient wisdom text ‘Hitopadesha’. It says, “a wise man while earning wealth thinks that he is going to live for ever and when he prays to God, he thinks that he is going to die the next moment.” Man should never think that his spiritual life is different from his professional life. One should make efforts to implement his moral, ethical and spiritual accomplishments in one’s professional life.
In our anxiety to get results, we often adopt short cuts. But when we just look back and see, we can easily ascertain that we could not have got to the place where we are, without coming the way we came. There is no way to parachute to the mountain peak. We simply have to walk the talk and travel the road, sometimes strewn with thorns, since it is always true that the road to success need not always be very smooth. The thrill we derive while undergoing the process of righteous march, and the happiness, which comes to us as a result is immeasurable. Shortcuts and unethical practices may bring short-term successes but ultimately bring doom upon one’s personality. No long standing relationships can be built abruptly and haphazardly. They have to be nurtured assiduously with sincerity, honesty and mutual trust.
3. Two Dimentions of Ethics
There are two dimensions of ethics. First one is personality ethics, which is dubious. We may try to lubricate your social and business interactions with techniques and skills. In the process we may truncate the vital character base. It is impossible to anticipate fruits where we have no roots. It is after all the principle of sequencing which works naturally in life. Personality ethic is superficial. It won’t help us to create and sustain the foundation necessary for building effective relationships. Unethical practices result in pain, frustration, and stress. We also feel uneasy and uncomfortable. We may take occasional steps to ease the pain, but when the pain becomes chronic, we get used to it. We start learning to live with it. We try to treat the symptoms with quick fixes and techniques, which are like band-aids of personality ethic.
In contrast, the other dimension is character ethics. It is a natural tendency. It flows like a fountain. The genuine and credible business and social relationships can be built with the help of character ethics. The most important ingredient of the character ethic is - synchronization of what we think, what we say and what we do ultimately. In Sanskrit we call it ‘thrikarana sudhi’. Hence one must always be aware of the tendencies and ill effects of personality ethic, and make efforts to nip it in the bud.
Greed is another big obstruction in our ethical life. As Aurobindo, the great spiritual guru exhorted –“money is the visible sign of a universal force. In its origin and its true action it belongs to the divine. Like other powers of the divine, it is delegated here. But there is the danger of this divine power being usurped by the lower nature of man for the uses of ego, and held by the arsenic influences and perverted to their purpose.” We must always keep in mind Mahatma’s words –“each unto his need – but not to his greed”. No amount of riches can atone for poverty of character.
“Total development of our people is essential to achieving our goal of corporate excellence”, says O’Brien of Hanover Insurance Company. People with high levels of personal mastery are more committed. They take more initiative. They have a broader and deeper sense of responsibility of work. To seek personal fulfillment only outside of work and to ignore the significant portion of our lives, which we spend, working, would be to limit our opportunities to learn and internalize lessons from experiences. Such internalization fortifies us against possible slide down from desirable path.
In the present day Business world, we use the concept of EVA very often, which means Economic Value Added. It is a tool to measure performance, valuing acquisitions and determining remuneration etc., in corporate governance. It is OK. But EVA also should mean - Ethics Value Added. This is a more durable and old-fashioned value. It is a fact that Ethics cannot be captured in a structure and reflected in a balance sheet, but is certainly invisible core strength for a great institution.
Adi Shankaracharya gives three V’s to the mankind for an effective ethical life, through his great Sanskrit work –‘Viveka Chudamani”. These are - Vichara (deep thinking like what we call a SWOT analysis), Viveka (discrimination - what is good and what is bad) and Vairagya (detached and dispassionate view). Even Gita gives a call to every one to become a Karma Yogi. The essence of the yoga is – develop the skill of performing your actions ethically. To achieve the positive results of being a karma yogi, one has to practice wholesome action. One should not become simply the bread winners, but builders and winners, by following the principles of ethics in individual as well as professional life.
One has to pay utmost attention to the means of work as to its end. The great defect in life is that many people are drawn so much to the results. The goal is so much more enchanting and alluring and much more conspicuous in the mind set that they lose sight of the details altogether. Proper attention to the finishing, strengthening, of the means is much more important than the results. With the means perfectly in place, the end must come in excellent shape. Once the ideal is chosen and the means determined, we might almost let go the ideal, because we are sure it will be there, when the means are perfected.
Let us conclude our reflections on the importance of ethics and values for building great individuals, institutions, societies and nations with a relevant quotation from Woodrow Wilson -“Business underlies everything in our national life, including our spiritual life. Witness the fact that in the Lord’s Prayer, the first petition is for daily bread. We should at the same time ensure that our actions always concur with our spiritual thinking.”
4. Impact of Lack of Ethics in Professional Services and Business
Globally there is a sharp increase in the incidence of frauds in various professional services and business. Apart from negligence of the responsible people in the places, unethical practices have been primarily responsible for many of the frauds taking place at different times. If frauds are not prevented, then there will be loss of monetary and public image. Repeated instances of fraud means, people lose faith in the institutions and the systems.
In the recent past, we have witnessed innumerable instances of mismanagement, embezzlement and squandering of funds at different levels of management, bringing about the collapse of the institutions in different parts of the world. Enron, WorldCom, Satyam Computers and the Global Financial Institutions involved in the “Sub-prime Crisis” are classic examples. The credibility and trustworthiness of the investors and public in the institutions were shattered with the unethical practices followed by these companies.
5. Do’s and Don’ts for the Valuers
On the basis of the above reflections on various aspects and dimensions of ethics, we can derive following “Do’s and Don’ts” for the valuers:
Be truthful and honest with the clients.
Always act in such a way which will enhance the trust between you and the clients.
Take up valuation of only such assets for which you are authorized by the Institution of Valuers.
Always follow the principles of valuation in letter and spirit.
Always follow the laid down procedure for valuation like writing the valuation report only after spot inspection and examination of all the relevant documents.
Always carefully examine the facts by going beyond what appears at the surface.
Be loyal to the Institution of Valuers and follow the norms set by the Institution.
Always act in way to uphold the dignity of Valuers and the Institution of Valuers.
Do not yield to the pressure of the client and do not change the valuation to suit the convenience of the client.
Do not interfere in the valuation word of another valuer in any manner.
Remember, strictly following the above list “Do’s and Don’ts” is not just the duty of every valuer but the ‘Dharma” of every valuer.
6. Summary:
Ethics is very important for the development of an individual personality as well as for building an institution. Shortcuts and unethical practices may bring short-term successes, but ultimately bring doom upon one’s personality. No long standing relationships can be built abruptly and haphazardly. They have to be nurtured assiduously with sincerity, honesty and mutual trust. Being professionals we should always remember that others watch us. Further, it is our duty to provide our services following the systems and procedures. Finally, in all our actions, we should follow the “Dharma”.
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