There are many factors to consider when a company does business with another. Many global businesses give very little regard to one of the most important aspects. There emphasis is making money and profit.
There is nothing wrong with making money and profit, but the manner in which you make it raises the questions of “Business Ethics. ” Business ethics, not only in South Africa, but all over the world has become a key principle in the global market. Foreign countries no longer look at rational organisational structures, but instead concentrate on emotional values such as staff motivation, behaviour and attitudes. It is important for owners, managers and leaders to have an understanding about ethics, although financial management and marketing is good to know.
Businesses who adopt the characteristics of creating an ethical environment are likely to make decision which promotes social responsibility than profit seeking motives. This can influence other organisations or employees entering the organisation for the first time with unique values that promotes the common good of the business. South Africa, a developing country is exposed to a global market. Potential partners, investors, new businesses are focus on our communication and relations with the world.
Each one of our businesses, whether small or big has a social responsibility to its environment, community and society. This report provides guidelines to support owners, managers and leaders of organisations to establish moral values, principles and standards, which will address the diversity amongst individuals within the organisation to function as a team. My focus is primarily directed to the importance of maintaining a business ethical environment and the approach organisations need to carry out in the 21st century when dealing with its partners, society, communities and customers.
Today, organisations in South Africa not only focus on making money, but consider other aspects that attributes to the success of its corporate vision, values, appropriate behaviour, and strategic models. One of these factors is, “Business Ethics”. The study of business morals, values, principles, and standards conducted on a daily basis. The choice that people make that determines right from wrong, good and bad. It is important for owners, managers and leaders to have an understanding about ethics. Although financial management and marketing is good to know, I feel it’s better to understand ethics.
Our behaviour, attitude and actions play an important role when dealing with partners, employees, suppliers, customers and community. Many businesses have failed in the past due to a bad reputation. Not understanding or knowing how to relate. Creating an ethical environment within an organisation is one of the key principles for business success. This report summarises the important facts of business ethics. It will focus primarily on the importance of maintaining a business ethical environment and the approach organisations need to carry out in the 21st century when dealing with its partners, employees, suppliers, customers and community.
Approach and Methodology
This report will provide the factors to understanding business ethics, enabling owners, managers and leaders of organisations to create a better approach when doing business with the outside world. Research included documents and web content, such as, the history of business ethics by Richard T. De George, organisational behaviour by Amanda Werner, business ethics as published by the U. S department of commerce, why business ethics written by John Hooker, principles practiced in business collected from businessmanagement. uite101. com, and approaches to business ethics dealing with foreign countries.
Together this report provides guidelines to support owners, managers and leaders of organisations to establish moral values, principles and standards, which will address the diversity amongst individuals within the organisation to function as a team. My focus is primarily directed to the importance of maintaining a business ethical environment and the approach organisations need to carry out in the 21st century when dealing with its partners, society, communities and customers. The approach and methodology is to summarise the content of my findings and identify the tools you will need to establish a business ethical environment for your organisation.
What is Business Ethics?
Business ethics, not only in South Africa, but all over the world has become an important part in the global market. Foreign countries no longer look at rational organisational structures only, but instead concentrate on emotional values such as staff motivation, behaviour and attitudes. Many businesses over the years have received a bad reputation just for being operational.
This is why so many organisations place emphasis on business ethical codes of conduct. Business ethics can therefore be defined as the morals, values, principles and standards of the organisation or the behaviour of the business in its daily conduct with the outside world. For instance, if a manager relates to a supplier or customer he cannot communicate with them as he pleases, but instead conduct himself according to the guidelines prescribe by the organisation how managers should communicate with suppliers and customers.
Why is Business Ethics Important?
Today, business is not just about making money or profit. Although there’s nothing wrong with it, but the reality is, business are expected to live up to various standards of responsibility when dealing with the outside world. Normally these expectations come from the various role players within the organisation, but can also be from external factors like, suppliers and customers and society. According to Rampersad (2004), every organisation has an ethical duty to its shareholders, employees, customers, suppliers and the community at large.
In the same do everyone have to contribute to the values of the organisation. The effectiveness about this type of ethical behaviour is if everyone meets the highest ethical standards and values of the business it will provide benefits to all. Businesses who adopt the characteristics of creating an ethical environment are likely to make decisions which promotes social responsibility than profit seeking motives. This can influence other organisations or employees entering the organisation for the first time with unique values that promotes the common good of the business.
Organisations also have an ethical duty towards it suppliers and customers. This duty can be to buy in the best quality goods from its suppliers and inform customers what type of ingredients were used in its products. This will create customer satisfaction and eliminate any uncertainty with the customer, which in return increases the organisations reputation.
The Approach to Business Ethics
Ethics takes place through human interactions and relations. It is usually humans that create the problem and solution. There are various approaches one can follow to create an ethical environment, but when we speak about business ethics we mainly look at three concerns which is:
- avoid breaking the criminal law in one’s work-related activity;
- avoid action that may result in civil law suits against the company;
- avoid actions that are bad for the company image. (James Fieser, Unknown)
These three concerns are the primary focus area of any business. If any one of these concerns would occur within an organisation it will lead to loss of money and create a bad reputation for the business, which will have a great impact on the organisations cashflow.
Implementing ethical codes therefore will guide the organisation in its daily conduct and eliminate possible chances of these concerns ever happening. The responsibility of implementing and creating an ethical environment lie with the owners, managers and leaders of organisations. The second king report identified seven ethical principles for owners, managers and leaders, which can be used to approach business ethics within the organisation. These principles are:
- Discipline – to instruct a person to follow a code of conduct, senior management must adhere to recognised ethical behaviour
- Transparency – Outsiders must be able to analyse the organisations actions
- Independence – Potential conflict of interest must be minimized
- Accountability – Individuals and groups must be held accountable for their actions
- Responsibility – Boards must be responsible for all stakeholders.
- Fairness – Companies must have balance systems, taking into account those who have an interest in the company
- Social responsibility – Companies must be aware of an respond to social issues.
The report sets out a code of corporate practice that is mandatory for all private and public companies, public sector administrators and all state institutions that govern financial markets. The king report emphasizes non-financial issues such as ethics, safety, the environment, social issues as well as the earnings of directors and implicitly, the management of human resources (Erasmus & Wordsworth 2002) It is very important that usiness owners, managers and leaders take the responsibility to establish business ethics or ethical codes within their organisations. There are also other approach models one can follow, for instance: Mey (2004) points out 4 critical interventions which can be used as a guideline to establish an ethical environment.
- Senior Leadership Commitment – Leaders of organisations play an important function when establishing an ethic environment. Although owners and managers drive the process they need to support and participate in the development and equipping sessions.
- Code of ethics It is the guidelines for decision making within the organisation. The best way for this code to be created is to have representatives from all departments to assist the organisation to establish such a code. These will the instructions of how managers, leaders and employees should conduct themselves within the organisation.
- Training This is to expose employees to business ethics and provide them with the necessary skills to make ethical decisions.
- Reward Structure Business can introduce incentivised schemes to promote ethical behaviour.
Understanding business ethics is important for owners, managers and leaders of today. The implementation of ethical codes creates a path of success and builds the reputation of any organisation around the world. South Africa, a developing country is exposed to a global market. Potential partners, investors, new businesses are focus on our communication and relations with the world. Each one of our businesses, whether small or big has a social responsibility to its environment, community and society.
How we deal with it will demand a response. If we treat people with the respect, we will reap the reward of their time, efforts and energy that leads to success. Owners, managers and leaders determine which values, principles and standards are important to see your organisations success. Manage these ethical processes and integrate it into the product, service and behaviour. The results of such a combination are the success of any business.
- Erasmus, B. & Wordsworth, R. 2002. Aspects of ethics in human resources management. Management Today, 18(1):34-38
- James Fieser, Unknown, Business Ethics, http://www. utm. edu/staff/jfieser/vita/research/Busbook. htm [10 April 2010]
- Mey, M. 2004. The development of a human resource model that supports the establishment of an ethical organisational culture, Unpublished D. Tech Dissertation, Port Elizabeth: Port Elizabeth Technikon.
- Rampersad, H. March 2004. The links between Individual and collective learning and ethics. Management Today, 20(2):36-41