Ethical conduct relies on values and capability

30th September 2016 By: Terence Creamer - Creamer Media Editor

Ethical conduct relies  on values and capability

The fact that the main lecture hall at the Gordon Institute of Business Science (Gibs), in Johannesburg, was bursting at the seams last week for a discussion on ethics and its importance in driving trust in society and business is a strong reflection of the ‘signs of our times’.

While attendance was no doubt aided by the fact that former Finance Minister Nhlanhla Nene was part of the panel, it nevertheless serves to highlight a genuine hunger that has grown among business practitioners and citizens for the restoration of the country’s moral compass.

There is deep concern that chronic unethical behaviour is undermining trust in government and business. The result, Gibs Ethics and Governance Think Tank leader Rabbi Gideon Pogrund argues, is a “trust deficit” that has left many citizens viewing business as an inherently negative force and is resulting in the rise of political populism.

Pogrund suggests that, unless people buy-in to the ethical principles underlying South Africa’s world-class corporate governance codes and public-finance legislation, their impact will remain limited. “At best, people will comply in a shallow fashion – you will have a tick-box exercise. At worst, you’ll have circumventions and even violations.”

The question he poses is how to move ethics from the periphery to the centre. “How do we make ethics an integral part of our business models – so that compliance becomes less of a goal and more of an outcome?”

Nene and his fellow panellists – Laurie Dippenaar, of First Rand, and Zyda Rylands, of Woolworths – agreed that values were more important than rules. They also concurred that there was no single action that could be taken to ensure the maintenance of good values, while acknowledging that rot at the top of an organisation would spread. In addition, there was consensus that the reward for exercising good values was significant: it built trust, which, in turn, was inextricably linked to the good reputation of the organisation.

However, Professor Lynn Paine, of Harvard Business School, moved to highlight the critical relationship between a person’s competences and their ability to act ethically.

The execution of values across an organisation depended, she said, on an individual’s ethics as well as on his or her capabilities. “Often misconduct – these actions that create distrust – have to do with a lack of competences,” Paine explained. Therefore, building values had to be coupled with building capabilities.

Companies aspiring to operate ethically and responsibly also needed to develop an atmosphere where problems could be brought into the open. “If people are afraid to make a mistake and bring things forward, then you are creating an environment where you are at high risk of misconduct.”

In other words, values are critical, but in the absence of the requisite skills and supportive environments, even the most ethical employee could run into difficulty.