BEWARE THE ETHICAL DIVIDE

Ethics in the workplace is becoming an increasingly important focus area. The question I would like to address is whether this is driven more by a desire to reduce the costs of breaches of ethics or by a genuine commitment to doing the right thing. This represents a fundamental difference, and is but one of many more such ethical divides.

Organisations that are committed to maintaining sound ethics need to consciously avoid the gaps which risk undermining their ethical status and eroding the effectiveness of their ethical initiatives.

Saying and doing gap

The most common example of an ethical divide is the gap between what is said and done.

This often takes the form of a gap between the company’s values, code of conduct or policies relative to their culture and practices. Examples of this are as endless as they are damaging to the organisations and its leadership. It occurs, for example, when the value statement includes respect but employees are demeaned in front of colleagues or clients, when the code of conduct is explicit about expensive gifts from clients or suppliers but ignores this at year end, and when the recruitment policy is not applied when a family member of the boss applies for a job.

The most junior employee is easily able to recognise the lack of alignment - if not outright contradiction.

Similarly, an approach of “do as I say, not as I do” will rarely achieve the desired behavioural outcome – as most parents have long since worked out. When leaders are the guilt parties the added consequence is that their actions erode the leadership credibility in the organisation and the leader’s position as a positive role model.

These types of saying-doing ethical divides are made all the more harmful because actions serve as a very effective communication medium. The ethical status of a leader or an organisation is judged not on intentions, but rather on demonstrable behaviour.

Triple bottom line gap

Ethical gaps can also occur between the three bottom lines: social, environment and economic.

The social dimension includes, among many other factors, sound stakeholder relationships, a goal supported by corporate governance guidelines and the Social and Ethics Committee (as mandated by the new Companies Act). However, the inclusiveness which this implies is not always practiced, for example when the local communities’ interests are not taken into account.

Claiming an environmental commitment needs supporting, visible actions which extend beyond paper recycling bins in the office. Trying to avoid the costs of, for example, pollution by not treating waste or emissions properly refutes a triple bottom line or ESG (environment, social and governance) approach.

Business’s role in society can also create an ethical divide. Their role is increasingly defined as an alignment between their very significant levels of power and influence and the extent of their behaviour as good corporate citizens. However, the Global Corporate Reputation Index 2012 found that major global brands have a gap between their performance in the marketplace and their citizenship. The Index noted that demonstrating and communicating their commitment to good corporate citizenship would strengthen their reputation, which required visible, authentic, and consistently delivered citizenship programs. Insufficient or insincere commitments would only further highlight the gap.

Gaps between senior management and employees

An ethical divide is also created when leaders and senior management are seen to be above the law or when their actions flaunt the values and rules of their organisations. The privileges of leadership do not include exemption from compliance when commitment is what is expected.

Similarly, if organisations discriminate between senior management and employees in how they handle incidents of misconduct, this too creates a problematic divide. Choosing to handle serious leadership misconduct internally and in secret, rather than openly or by referring it to the appropriate authorities, is often defended on the grounds that publicizing such unethical behaviour can have a detrimental effect on the organisation. It can negatively impact its reputation, its customer relationships and, in severe cases, the share price for publicly traded companies.

However, the risks are far greater if the misconduct is kept quiet and then exposed by another party, such as the press. In this event, the organisation will not only have to deal with the inherent discrimination, but also with its earlier secretive handling of the matter, which is likely to exacerbate the consequences.

The ethical and illegal, and unethical and legal gaps

The assumption that what is ethical is legal and what is unethical is illegal ignores many ethical divides.

The classic example in South Africa was the apartheid policy. Many actions under that banner may have been technically legal at the time, but they certainly were not ethical.

Prior to the promulgation of the Competition Act, collusion was more of an ethical issue than a legal one. However, further legislation has filled this gap and clearly defines what constitutes illegal collusive behaviour– and there are many convictions to emphasise the change.

In the workplace, bribery and corruption are both unethical and illegal, but what about actions that are less clearly defined – such as acting unfairly? Fairness is a prized ethical value in many organisations. Acting unfairly can be illegal when, for example, someone is appointed or promoted on the grounds of favouritism or because of a family or personal relationship, rather than because this is the best person for the job. It is also unfair to withhold credit due to others and rather claim it for yourself -but that’s not illegal.

Supply chain ethical divides

The requirement to conduct business ethically increasingly extends to an expectation that the organisation’s suppliers conduct their businesses ethically as well. This is a very noteworthy extension of the company’s ethical responsibilities, which lends itself to an ethical divide between the company and its suppliers, especially as regards suppliers’ labour practices.

There are many incidents of unethical practices, an example being the use of child labour in factories in the East and on cocoa plantations in West Africa and South America. Another current example concerns workers subjected to forced overtime without pay. However, in January 2012 Nike paid factory workers in Indonesia a $1 million settlement for unpaid overtime. While the settlement took 11 months of investigations and negotiations by a nongovernmental organisation and a trade union and did not fully compensate the workers for all their overtime hours, it is recognised as having set a precedent that could have far-reaching implications for workers in Indonesia.

Such practices have given rise to consumer boycotts, such as the well known boycott in the 1990s in Europe and the USA against Nike for unacceptable labour practices in their factories in Indonesia and Vietnam. This, together with the consequent negative publicity, has the potential to adversely affect profits, thus linking supply chain ethics directly to the company’s (economic) bottom line. In the transparent world of today, it is likely that this will be an increasingly high profile ethical divide.

Value gaps between company and employee values

In the workplace it is ideal that personal and organisational values should be aligned. However, personal values can differ widely as they are affected by a great variety of factors including upbringing and culture. This can lead to a serious ethical divide. An employee may have grown up in circumstances that nurtured dishonesty, or in which it was acceptable to be rude to others. Such a background does not make this sort of behaviour acceptable at work.

Therefore, though different individual values may be held, it is not only appropriate, but essential that in the workplace the organisation espouses a set of values that reflects what is acceptable in that environment. The values in the workplace are not a means for accommodating the full spectrum of values – from impeccable to appalling – among employees and stakeholders. They serve, instead, to define the criteria and standards by which an organisation strives to operate.

The many potential ethical divides in the workplace all pose risks and bring with them negative consequences. If organisations are aware of these pitfalls, they can mostly be avoided quite easily. However, this will probably not earn them any noteworthy recognition: while misconduct is punished, good behaviour is mostly taken for granted. But it will ensure that their path to an increasingly better ethical status, with all the associated rewards, continues to progress without unnecessary setbacks.