Do organisations really understand ethics?

Of course organisations understand ethics at a level of what’s right and good versus what’s bad and wrong. Their leaders may even behave ethically. But being ethically competent entails much more. Two important issues are discussed below which illustrate that a deeper and broader understanding of ethics is crucial to improving an organisation’s ethical status.

  1. Ethics is often inhibited by a focus that is limited and inaccurate
  2. It is self-evident that focusing on the right issues and the crucial levers is critical in order to realise the organisation’s objectives. Devoting too much attention, time and resources to peripheral or low-impact factors risk undermining the organisation’s intended outcomes.

    This principle also applies to workplace ethics – which raises the question of what the primary focus is.

    For the majority of organisations, ethics is largely focused on rule-based mechanisms such as legislation, rules, regulations, policies, procedures and checks and balances aimed at minimising unethical conduct. However, much as this focus and the rule-based mechanisms are essential, it is not sufficient to create an ethical organisation.

    An analogue that makes the point that ethics is often curtailed by a limited focus rests on the following question. If an organisation wants to improve its profitability, what are the two major drivers that can realise this? The answer, of course, is to increase sales / revenue and to decrease costs. The difference between these two approaches is well recognised. Increasing sales and revenue is clearly a preferable sustainable path, while cost reduction needs to be balanced against risks such as eroding capacity.

    Applying this analogue to ethics translates into a focus on reducing misconduct, for which rule-based mechanisms in conjunction with fair and consistent enforcement and consequences are an effective approach. However, the key question is ‘What is the organisation doing to strengthen its values and improve ethics?’ Given that, as in the profit analogue, this represents a valuable source of ethics improvement, the answer should not be ‘nothing’.

    As to ethics being inhibited by an inaccurate focus, this rests on the fact that in the vast majority of cases employees already know what is right and wrong. Phrased differently, unethical behaviour in the workplace is rarely the results of an absence of knowledge. Yet ethics initiatives are mostly focused on building or improving employee’s knowledge of ethics.

    What this focus ignores is a crucial ethical perspective, that being of understanding ethics as a ‘knowing-doing gap’. This perspective recognises that despite employees having a sound knowledge and understanding of what constitutes ethical and unethical conduct, it will not necessarily translate into ethical conduct. In some cases this knowing- doing divide is not merely a gap – it appears to be a vast chasm!

    The implication of this concept is that the primary focus area should be on that crucial space between knowing and doing, specifically on positively influencing the choices employees make. This does not invalidate a focus on building and maintaining good levels of ethical awareness and understanding, for example, via innovative, interesting initiatives. But the pivotal factor is the choice that determines the people’s actions.

  3. Stakeholder inclusion needs to apply in good times as well as bad
  4. Stakeholder inclusivity – encompassing, among others, employees, shareholders, funders, clients, consumers, suppliers, the community and the environment – is widely recognised and accepted as an ethical approach that is non-negotiable for organisations today. What this entails is well set out in King IV, including that the governing body should take into consideration the “legitimate and reasonable needs, interests and expectations of all material stakeholders in the execution of its duties in the best interests of the organisation over time” and that they should exercise on-going oversight of stakeholder relationship management.

    The challenge that warrants serious attention is how stakeholders are treated when there is an organisational crisis or an ethical failure. Excluding stakeholder’s interests or not taking their concerns into account does not only amount to stakeholder exclusion. It is also increasingly viewed as being unethical.

    The manner in which Tiger Brands handled the Listeriosis crisis that emanated from its Enterprise Food plant in Polokwane and that caused more than 200 deaths is one such example. Tiger Brands will be remembered for trying to deny responsibility and refusing to apologise, which illustrated that they have much to learn about handling an ethics crisis (for guidance, refer to our article How best to recover from a breach of ethics). As regards the focus on stakeholders, the company’s approach was anything but inclusive.

    In order for the company’s response to the Listeriosis victims – those who died, who fell ill and their families – to be considered inclusive and hence ethical, it would need to have included care and compassion as a core feature of its approach. However, the CEO’s statement of 4 March 2018 regarding Enterprise recall focused instead on food safety: “Food safety remains the highest priority at Tiger Brands – where we always place consumers’ health and safety above all else. …” While food safety is obviously important, people’s lives are a great deal more important. Failing to express genuine care or compassion and to acknowledge the harm caused to others exacerbate situations such as this significantly.

    The listeriosis outbreak also affected other stakeholders. This included consumers who were reliant on polony as a cheap food source and, crucially, food outlets, especially traders operating in the informal market selling ready-made or prepared food. This illustrates another ethical concept that organisations needs to understand, namely ‘shared costs’. In terms of this concept, the guilty party does not carry the full burden of its ethical failing. Instead, the negative costs and consequences are ‘shared’ by other parties, such as the informal traders, who are completely innocent of any unethical conduct. This, of course, adds to the public outrage. It warrants that organisations adopt a co-operative approach, not an adversarial approach, to other affected parties.

Apart from the issues discussed above, there are many more examples when a deeper, broader knowledge of workplace ethics would be beneficial for the organisation. The question that remains is whether the level of ethical competence within the organisation is sufficient to ensure that the organisation and its leadership act wisely as regards ethics, and, if not, whether the organisation will act to remedy the gap.

by Cynthia Schoeman
© Ethics Monitoring & Management Services (Pty) Ltd, 2018