The Hindu Business Line : Is it goodwill or lubrication?

Giving away discounts and commissions for business has a long and respectable history; still it is fraught with a potential hazard which managers must keep a sharp eye out for.

AUTUMN, the season of mists and mellow fruitfulness, is a time of celebration in India. Gifts of late have grown in size and value, far beyond flowers, dry fruit and the occasional bottle of the bubbly.

Any customer is fair game for inducements of all kinds. Hotel chains promise special tariff on food and rooms, airlines tempt you to take exotic holidays. It all depends on how much business you have done in the past year.

Every household products manufacturer worth his salt must show off when it comes to festive season freebies. For you and me, of course, these are mouth-watering goodies we might not indulge in, with our own money.

Eventually we pay for everything indirectly because the frequent flyer points come from the original price of the service.

Giving away discounts and commissions for business has a long and respectable history; still it is fraught with a potential hazard which managers must keep a sharp eye out for.

From Christmas and Diwali hampers to corporate gift-giving from one organisation to another, seems a small and innocuous step.

Yet that is where trouble inevitably follows, of two kinds. First there is the magnitude of the gratuity itself. It is no longer a question of a dinner at a fabulous restaurant or a weekend in a resort, but millions of dollars.

Secondly, there are issues of personal culpability and erosion of ethics and morality (if such things still matter!) especially where an individual's discretionary decisions are involved.

A company supplies bits and pieces of essential equipment to a foreign country while it is under an embargo, and collects more than strictly necessary to cover costs and passes the difference on to someone who will facilitate the order. What is more the payment itself is made through a cut-out or intermediary, keeping the original company's image squeaky clean.

The recipient country's political leadership indulges in a bit of palm greasing to get the sort of opinion it wants in its favour through what are usually known as the `good offices' of the politicians in another country.

And then — here's where the fun starts — the business men of yet another country, which went hammer and tongs to get UN sanctions imposed, themselves buy goods originating from that country via a circuitous route, taking pains to please all politicians along the way.

Perhaps you would call this a special case of customer delight and of adroit supply chain management? At each step a few millions of `gifts' and `goodwill' and `special discounts' change hands. `So what's new about that you ask?

Something along these lines has now been unearthed by an independent UN inquiry commission; the evidence is there in black and white, pointing fingers at over a hundred Indian companies of all shapes and sizes, all tarred with the same brush.

Officers representing a company passing on or receiving a favour or a discount might be business as usual in some parts of the world, if it helps to beat competition.

Nonetheless, questions arise. What stops the person creaming a little bit off the top for himself?

Some managers would argue that the top management who themselves don't have a clean record, would look silly if they extolled the virtues of integrity and honesty; so they have no option but to look the other way if some one along the way in the long conduit helped himself to part of the spoils of war!

It is under such conditions that, in my view at any rate, you begin to see who the really professional managers and corporate citizens are — and sort them out from the spin doctors and crooks.

S. Ramachander

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