IN AN ETHICAL MELTDOWN, IT IS IMPERATIVE TO KEEP ETHICS ALIVE

#KeepingEthicsAlive

The current ethical status in South Africa is, to say the least, very troubling. Reports and claims of state capture, corruption and self-enrichment by a select few continue to emerge. The consequent political uncertainty coupled with low economic growth – with junk status threatening even lower growth – pose numerous risks, such a resultant caution among corporates about increased fixed investment and employment. In a situation where there is such a serious and high-profile ethical meltdown, a major imperative is keeping ethics alive. This represents a meaningful contribution that the business sector can make to minimising the acceptance and consequent spread of lowest-common-denominator unethical behaviour.

The current ethical context has been shaped by numerous events. Key among these was the March 2016 statement by Mcebisi Jonas, the former deputy minister of Finance, that the Gupta family offered him the position of Minister of Finance (to replace the then-Finance Minister Nhlanhla Nene). This was followed in November 2016 by the Public Protector’s State of Capture report. On 18 May this year, the South African Council of Churches revealed the findings of its research into state capture, entitled the Unburdening Panel, which reveal how the scheme used to loot state resources has been executed in South Africa by powerful people aligned with President Jacob Zuma. More recently, the report, Betrayal of the Promise: How South Africa is being Stolen, was produced by the State Capacity Research Project, an interdisciplinary, inter-university research partnership, convened by Mark Swilling. The authors comprise one journalist (using a pseudonym) and eight academics from the Universities of Cape Town, Witwatersrand, Stellenbosch and Johannesburg. The Report finds that there is a need “to save South African democracy and development practice from a power elite that pursues its own interests at the expense of South African society, in particular the poorest people who will suffer first and most from the consequences of what is in reality a de facto silent coup.”

These reports, as well as the detailed events that have brought us to the current ethical breakdown, are generally well known. What is not being accorded equal attention is what this means for organisations and what they can do about it.

Key implications hinge not only on corporates needing to manage increasing economic pressure, but also on the results of the 2017 Sanlam Benchmark Survey, which found that almost 73% of professional, middle class South Africans are experiencing financial stress. This is, of course, pertinent for the country. As noted in Ingé Lamprecht’s article in Moneyweb,“The middle class is the spine of the economy and the tax base and a lot of South Africa’s sustainability as a nation depends on this group”. The current unethical context also negatively impacts business’ clients and employees. With respect to the latter, employees are likely to be experiencing low morale arising from the chaotic, unethical political situation and are faced with an economy that acts against wage increases. This scenario poses a number of business challenges such as reduced productivity and the possibility of increased white collar crime.

The question corporates should be considering is, what are we doing about this? Have our Board and executives given sufficient consideration to understanding and addressing this situation? Do they have an ethics plan?

At a strategic level, it is important to have a clear ethic goal for the company which is supported by an ethics strategy, both of which, in turn, are shared with and well understood by all the organisation’s stakeholders. Assuming organisations can achieve appropriate and well-aligned ethical conduct among stakeholders without this is frankly wishful thinking. Added to this is the leadership’s commitment to ethics, which crucially needs to be visible to all stakeholders beyond general, corporate statements to this effect.

More broadly the key focus should be on keeping ethics alive. Given the current situation, there is a greater need than ever before to understand why ethics matters - not only for organisations but also for employees and stakeholders. Ethics training, or more informal ethics conversations, should be used to discuss the question of WIIFM^* as regards ethics. The level of ethics engagement that can be built from this basis is really noteworthy. The benefits for the organisation are obvious, not least because it creates a foundation for greater levels of ethical responsibility, it fosters and promotes ethical behaviour within the company, and minimises the risk that employees use current poor ethical examples to justify similar unethical behaviour. Moreover, every person a company equips with a sound understanding of ethics and why it matters represents not only an employee, but also a family member, a community member, and a citizen of our country. In this way, ethics training has a much wider reach than just within the corporate environment.

The current ethical crisis presents another opportunity for corporates inasmuch as an ethical reputation is likely to be even more rewarded than before, given than many companies will be less focused on ethics due to increased economic pressure, or worse, because ethics is perceived to be unimportant. What’s important in this regard is for companies to effectively communicate their ethical culture (as part of their ethical capital) so as to gain the competitive advantage it offers. In this regard, a good starting point is for companies to assess their ethics annually (as required by the Companies Act and recommended by King IV^TM) and then to report on this to all of their stakeholders. This report-back to stakeholders can reflect the company’s ethical status (which should extend beyond the measurement of ethical awareness to quantify actual ethical behaviour) as well the improvements it has made over time.

A further, innovative approach to creating an ethical reputation is for companies to offer ethics training to their external stakeholders or potential clients. Sanlam, for instance, is currently sponsoring ethics talks for professionals to explore a variety of ethical challenges experienced by these professionals. Such an initiative serves both to strengthen an organisation’s ethics stance and to position it more prominently as an ethics advocate

Unfortunately, these kinds of initiatives are threatened by the current, tougher economic situation. But, in these precarious times, a focus on and engagement with ethical conduct should in fact be a prioritised imperative. In this way, the business sector can meaningfully contribute toward greater ethical behaviour in South Africa and in so doing, reduce the spread of lowest-common-denominator unethical behaviour.

by Cynthia Schoeman