ETHICS: The Good, The Bad and The Ugly

‘The good, the bad and the ugly’ may remind some readers of the 1966 western starring Clint Eastwood in which, despite the title, arguably all three gunslingers were bad. This is also often the impression created when the term is applied to ethics. There is a great deal of evidence of bad and ugly unethical behaviour in the private and public sectors and there seems to be so little good – which is a good reason to explore how workplace ethics stacks up in terms of who and what constitute the good, the bad and ugly.

The Ugly

‘The ugly’ can be viewed as the worst category of ethical offences, eclipsing mere bad deeds. One of the main criterion that would define it as really ugly is the extent of the impact of the misconduct. Unethical conduct by governments or large multinational corporations falls within this category because, unlike the average company with a few hundred or a few thousand employees, they impact many more people. When there is, for example, widespread national corruption it affects the country’s citizens, its businesses and institutions, its neighbours, its trading partners, its visitors, and all who deal with it.

And when corruption is rife, it not only obscures what is good in the country, but makes the government and the country as a whole look unethical. Even worse, the longer an unethical reputation persists, the more entrenched it becomes. The consequences of this scenario can be dire if, for example, investment in that country is reduced or diverted, affecting ethical and unethical businesses and institutions alike. For countries with a bad ethical reputation, such as Zimbabwe, the cost includes eroding the population’s quality of life. Such situations are regularly associated with those in power amassing great personal wealth without benefiting their people. This was an important, contributing factor to the on-going unrest across North Africa and the Middle East that started in 2011 – which could lead to social protests elsewhere too.

A significant consequence of extensive fraud, bribery and corruption is that it adds to the cost of living for citizens or to the cost of doing business - but, crucially, without adding corresponding value. Citizens often pay additional fees to public officials for services to which they are entitled. In business, instead of the full contract amount going towards the delivery of the product or service, only a portion is productively employed. KPMG’s Africa Fraud Barometer quantifies the cost of fraud in Africa in 2011 as amounting to a staggering US$10.9 billion.

The Bad

The cases of misconduct which fall within ‘the bad’ category are arguably no less bad than those above – they only tend to negatively impact fewer people. This typically includes unethical practices and conduct in the private sector, and there are many examples which illustrate a wide range of misdeeds.

Locally Wendy Machanik is accused of misusing trust funds in her estate agency and Rael Levitt was found guilty of running a mock auction and is accused of paying kickbacks to attorneys, banks and liquidators. Internationally, the UK phone hacking scandal led to the demise of the News of the World, and the Leveson Committee recently declared that Rupert Murdoch was not “fit and proper” to run News Corp. In the US Scott Thompson, Yahoo's CEO of just four months, has been forced to resign because he falsely claimed to have a computer science degree.

The repercussions of this range of misdemeanours are significant: job losses when companies are shut down, damaged individual and corporate reputations, falling share prices and the loss of market and investor confidence. Within specific industries, such as insurance and medical aid, fraud leads to higher premiums for all members. When the organisation’s leaders are guilty of breaches of ethics, because of their influence as role models this has the particularly destructive outcome of fuelling ‘lowest common denominator’ behaviour.

Guilty individuals sometimes attempt to use in their defence the claim that ‘everyone’ is doing the same thing. Both Machanik and Levitt claim that their conduct was widely practiced in their industries. Even if that is so, it does not lessen their guilt or make the behaviour acceptable.

It is also not a sound argument to claim that the incident was merely a ‘mistake’. Mistakes and errors imply that the behaviour or incident was accidental in nature – which, crucially, means that it was not intentional. However, when the misconduct has happened over a period of time – such as Thompson’s inclusion of a fraudulent degree on his CV – it cannot be considered an error. Similarly, when the conduct was in clear breach of the law and good business governance practices, it cannot be reframed as a mistake when uncovered. On the contrary, it implies an intention to delude or defraud.

The Good

Finding the good in the field of ethics may appear to require one to be a ‘Pollyanna’, the character in the best-selling 1913 novel who always found something to be ‘glad’ about no matter what the circumstances. The apparent lack of ethical organisations or institutions is evidenced by a question I have often posed to audiences, which is to name just three companies operating in South Africa that are widely viewed as ethical or have distinguished themselves as being ethical. That audiences are rarely able to identify even one company is not a good sign and presents little to be glad about.

There are, of course, companies that are ethical. The US based Ethisphere Institute produces an annual list of the world's most ethical companies. The current list includes 145 companies in countries including United States, Great Britain, Japan, Portugal and India. Companies that are recognised as ethical include American Express, General Electric and Starbucks, all of which have made the list for six years running.

But which local companies should be recognised as being ethical? This includes companies set up on a moral foundation such as fair trade companies and publications such as Ethical Living. There are also many companies that can be acknowledged for facets of ethics, such as promoting awareness of the environment, supporting the protection of the rhinos or making our roads safer by repairing potholes and directing traffic.

The local companies that do come to mind as ethical are those that are working in the broad field of ethics to make a difference. The Institute of Directors of Southern Africa, for example, is credited with advancing corporate governance enormously via the King Reports, and they also run excellent training for directors. The Institute for Accountability in Southern Africa makes an important contribution to upholding constitutionalism through the promotion of the values of accountability and responsiveness. Lead SA is a really noteworthy project by Primedia Broadcasting to encourage citizens to make a positive difference and to make our country a better place. And Ethics Monitoring & Management Services is exclusively focused on promoting and supporting the improvement of workplace ethics. Together these companies and initiatives act against “lowest common denominator” tendencies to help other organisations to reduce unethical behaviour and improve ethical behaviour.

Apart from these examples, there must be other local companies that are ethical. However, they have rarely achieved widespread recognition for their positive ethical status. This is a real waste of ethical capital which is an important and valuable asset – and it should not happen. Being recognised as being ethical brings with it many advantages: the ability to attract and retain key staff and board members, increased customer and supplier loyalty, enhanced brand equity, and, ultimately, a unique source of competitive advantage that cannot easily be copied. In order to reap the benefits from their ethical culture and conduct, companies should measure and report on their ethics and project it as a distinguishing feature of their organisation.

From the perspective of ‘the good, the bad and the ugly’, how does workplace ethics score?

The bad and ugly will probably continue to dominate our headlines, echoing the tendency of the press to focus on bad news. But while bad news may sell newspapers, it ruins countries and businesses. The choice to change to make ethics a national or corporate goal should not rest on what others are or aren’t doing. You may not be able to change them and their behaviour, but you can change your behaviour and strive to positively influence those around you. It all adds up to strengthen ‘the good’ category and to make a difference which is worth having.

By Cynthia Schoeman