Determination of key indicators to measure transparency

By Riya Jain & Abhinash Jena on December 2, 2024

Business ethics and corporate governance are essential for having responsible and sustainable business practices. The presence of ethical practices helps businesses to foster transparency, accountability and trust (Adeusi et al., 2024; Sarma et al., 2024). The focus on maintaining transparency and ethical governance helps businesses foster ethical behaviour, improving decision-making and mitigating risks. The principle helps in supporting the business’s sustainability and long-term success (World Economic Magazine, 2024).

In today’s time wherein businesses are becoming more focused on attaining sustainability, there is a need for the encouragement of openness and sound governance practices to understand the expectations and issues of the stakeholders. These efforts could help in developing stakeholder trust, improving performance, and attaining a more sustainable future by supporting transparency and good governance (Samri, 2023).

This article focuses on building the linkage between ethical governance and transparency and the Sustainable Development Goal (SDG) 12, Responsible Consumption and Production. As the SDG 12 goal focuses on resource efficiency, businesses that value ethical governance and transparency are more likely to engage in responsible consumption and production methods, ensuring that their operational practices reflect a commitment to sustainability. Therefore, to have a better understanding of the sustainability status of Indian logistic companies, the examination of the ethical governance and transparency status of the sector is essential.

This article evaluates the ethical governance and transparency practices of Indian logistics companies by analyzing key indicators, including supplier diversity and workforce inclusivity. It builds on prior findings that highlighted a growing dependency on top trading houses and limited opportunities for differently-abled employees. Using Data Analysis Expressions (DAX) in Power BI, we analyze data from 14 companies, covering 11 basic indicators and 3 Principle 1 indicators for the years 2023 and 2024. Weighted scores are calculated to assess the overall ethical governance and transparency status of the Indian logistics industry.

Total employment

The total employment figure is a straightforward count of employees, representing the organization’s overall workforce. The indicator is highly relevant for measuring ethical governance and transparency in several ways, especially when viewed through the lens of workforce composition, inclusivity, and the distribution of roles within an organization. As the logistics industry is a labour-intensive industry, the total employment indicator is relevant for having a better overview of the industry.

DAX formula used

Total employment = SUMX('Goal 1', 'Goal 1'[Total employees]+'Goal 1'[Total workers])

Percentage of disciplinary actions relative to total employees

Disciplinary actions define the actions taken by employers to address performance issues, breaches, and misconduct of workplace conduct (Kingfisher, 2024). As most Indian logistic companies do not report disciplinary actions taken by law enforcement agencies for charges of corruption/bribery thus this shows that there is a lack of effective policies present in maintaining discipline (TVS Supply Chain Solutions Limited, 2024; Blue Dart Express Limited, 2024). To understand the Indian logistic industry’s ethical governance and transparency status, this indicator is computed using the following DAX formula.

Disciplinary Action Percentage = DIVIDE(SUM('Goal 1'[Number of Directors/KMPs/employees/workers against whom disciplinary action was taken by any law enforcement agency for thecharges of bribery/ corruption]), [Total employment])

Average percentage of females on the Board and Key Management Personnel

In the Indian logistics industry, only 20% of the workforce in 2018 comprised women (Cleopatra, 2024). To assess the industry’s progress in fostering an inclusive environment and promoting female participation in leadership roles, the computation of this indicator is crucial.

DAX Formula used

Average Female Percentage = AVERAGEX('Goal 1', ('Goal 1'[% of female in key management personnel]+'Goal 1'[Percentage of female in Board of directors])/2)

Percentage of differently abled employees relative to total employees

Despite the promotion of a diverse workforce for social welfare, many companies are still not employing differently abled employees. This could be seen in the case of Indian logistic companies too wherein, many companies like T VS Supply Chain Solutions Limited (2024) or Blue Dart Express Limited (2024) have a 0% share of differently abled employees in their workforce. This share helps in understanding company value for diversity and inclusivity, therefore, to have more insights into the company’s efforts toward inclusivity and equal opportunity for differently abled individuals, this indicator is computed using the following formulas:

Total differently abled employement = SUMX('Goal 1', 'Goal 1'[Total differently abled employees]+'Goal 1'[Total differently abled workers]) 
Differently abled employment percentage = DIVIDE([Total differently abled employement ], [Total employment])

Ratio of Female Representation in Board vs Key Management Personnel

This ratio reveals if there’s a disparity in female representation between the Board and other key management roles. To understand the status of women in different leadership roles, this indicator is computed using.

Female representation ratio = DIVIDE(SUM('Goal 1'[Percentage of female in Board of directors]), SUM('Goal 1'[% of female in key management personnel]))

Ethical governance and transparency score

After calculating individual indicators, the next step is to assign a weighted score to each. This score reflects the significance of each indicator in assessing ethical governance and transparency. The indicators and their weights are as follows:

  • Disciplinary Actions Percentage: 20%
  • CSR Expenditure Percentage: 20%
  • Percentage of Females in Board and Management: 20%
  • Purchases from Top 10 Trading Houses Percentage: 15%
  • Sales to Top 10 Dealers Percentage: 15%
  • Differently Abled Employees Percentage: 10%

These weights are applied to each indicator’s score to calculate the overall ethical governance score. The DAX formula is as follows

Ethical Governance and Transparency Score = SUMX('Goal 1', ('Goal 1'[CSR expense (% of average profit)]*0.20) + ('Goal 1'[Purchases from top 10 trading houses as % of total purchases fromtrading houses]*0.15)+('Goal 1'[Sales to top 10 dealers/distributors as % of total sales to dealers/distributors]*0.15)+([Disciplinary Action Percentage]*0.20)+([Differently abled employment percentage]*0.10))

Using this formula, the value of the ethical governance and transparency score is derived to be 0.65.

Ethical governance and transparency performance

Based on the computed score, we have classified the organization’s governance performance as follows:

  • Excellent: 80-100 points
  • Good: 60-79 points
  • Average: 40-59 points
  • Below Average: 20-39 points
  • Poor: 0-19 points

The DAX formula for this performance assessment is as follows:

Score Category = SWITCH(TRUE(), [Ethical Governance and Transparency Score] >= 80, "Excellent", [Ethical Governance and Transparency Score]  >= 60, "Good", [Ethical Governance and Transparency Score]  >= 40, "Average", [Ethical Governance and Transparency Score] >= 20, "Below Average", "Poor")

Here, as the overall ethical governance and transparency score is below 20 points thus the Indian logistic sector status is Poor. Key indicators such as the percentage of disciplinary actions, female representation in leadership roles, and the employment of differently-abled individuals were calculated and examined to assess the ethical governance standards in the industry. The DAX modelling identified that the status of the Indian logistic sector is poor in terms of ethical governance and transparency, however, for a deeper understanding of the overall ethical governance and transparency status more examination is required.

References

NOTES

I am an interdisciplinary educator, researcher, and technologist with over a decade of experience in applied coding, educational design, and research mentorship in fields spanning management, marketing, behavioral science, machine learning, and natural language processing. I specialize in simplifying complex topics such as sentiment analysis, adaptive assessments and data visualizatiion. My training approach emphasizes real-world application, clear interpretation of results and the integration of data mining, processing, and modeling techniques to drive informed strategies across academic and industry domains.

I am a Senior Analyst at Project Guru, a research and analytics firm based in Gurugram since 2012. I hold a master’s degree in economics from Amity University (2019). Over 4 years, I have worked on worked on various research projects using a range of research tools like SPSS, STATA, VOSViewer, Python, EVIEWS, and NVIVO. My core strength lies in data analysis related to Economics, Accounting, and Financial Management fields.

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