Why ethics matter in the corporate world

Albert Dhafana Corporate Governance
“The economy, stupid” is a famous political campaign phrase coined by James Carville, who was the campaign strategist for William (Bill) Clinton in the 1992 United States of America presidential campaign.

William Clinton managed to unseat George H.W. Bush to become the 42nd president of the United States. In the Zimbabwean corporate world scenario, one is tempted to remark “the ethics, stupid”, as a way to point out the supposed weak link in the ways in which companies are being run.

Our country needs a strong manufacturing base imbued with innovation , finished products which can hold their own against other brands on the world market and a sound infrastructure base all supported by good corporate leaders.

The Zimbabwe Agenda for Sustainable Socio-Economic Transformation blueprint lists these as necessary ingredients for economic revival.

This economic blueprint may remain a pipe dream if the captains of industry neglect or ignore investment in business ethics, which according to Gael McDonald, is the difference between a living and a dying company.

Conventional management thought defines ethics as norms or standards of acceptable behaviour by citizens of a given community. The standards are “right versus wrong”, “good versus bad”, “just versus unjust”, “fair versus unfair”, “beneficial versus harmful” and many other such comparisons.

They are in most cases a subjective measure of a fitting or acceptable human behaviour or actions, because of the cultural, circumstantial and situational qualification.

For example a standard behaviour among the Manyika people of Zongoro, may not necessarily hold for those in Kairezi of Nyanga. The subject of ethics becomes problematic when one analyses the different cultures in which businesses operate.

There are differences, some as stark as day and night, among cultures be it the occidental or western, oriental or Asiatic based, Islamic and African. The situation becomes confusing because of the effects of colonialism, imperialism as well as globalisation.

No culture has remained in an absolute or pure form because of interactions within and among people. Nevertheless, we need to identify an almost universal practice or culture which our businesses can adapt to, so as to achieve economic growth and perspective.

The culture in Zimbabwean businesses, right now, is definitely not the appropriate one. Our ethics (if there still remain any), need serious revision.

Corporate Governance is concerned with how the affairs of corporate bodies are handled by directors, statutory and common law corporate requirements and remedies and sanctions provided by competent legal bodies.

Business Ethics on the other hand rely on cultural and societal expectations as to acceptable norms and behaviour. Business Ethics cannot be seen or read outside corporate governance because companies exist and serve in societies, with inadvertent expectations.

Every business should be concerned about ethics, thus making a deliberate option to respond proactively to the cultural and societal needs and expectations of communities they serve. Businesses in Zimbabwe cannot escape the long held values, norms and behaviours of our communities.

The concept of Unhu/Ubuntu defines us as a people. My being is determined in a collective or communal sense and manner. Among the Karanga, the appropriate response to “Good morning” is “tamuka kana mamukawo” (I have risen well, if YOU, have as well).

In Africa, “munhu, munhu navanhu/nevamwe” (I am, because WE, are). Discounting, some evidently bad practices like being overly superstitious and harmful rituals, the African culture promotes high moral capital and generally a humane and caring society. Zimbabweans, and Africans who remain true and sincere to our values, generally have a good human factor. Such people adopt a moral as opposed to an amoral approach to ethics when running businesses.

Moral approach to business ethics

a) Guiding Principle: Businesses realise that they have both economic and social goals to satisfy as they undertake their activities. A business which is motivated solely by ‘business’ is a danger to society and itself. Often, we encounter business people with opulence and extravagance in a sea of poverty.

The poor and impoverished who support their businesses through sales continue to sink in “slimy pits” of poverty. Society does not expect business people to be disciples of “Mother Theresa”. They expect fair pricing, quality products and some investment in social institutions like schools and recreational facilities.

This is supported by the Shona concept of “Kandiro kanoenda kunobva kamwe” (one good turn deserves another) NOT “Kakara kununa kudya kamwe” (survival of and by the “thiefest”).

b) Attitude towards Corporate Social Responsibility: A moral approach or attitude to CSR is tolerant and channels corporate funds to non-member stakeholders of the corporation. It is sad, that in Zimbabwe, CSR has been reduced to a marketing gimmick and for public relations purposes.

The vulnerable and poor are commoditised and “sold” on the altar of profiteering and greed. No wonder, innocent children of humble means grace the websites of so called human development agencies, and are the source of millions, which sustain the powerful and the rich.

c) Corporate Governance Approach: The stakeholder approach is the most ethical. Stakeholders include communities in which the business operates, employees, the Government, civic society, pressure and lobby groups. In Zimbabwe, the Communal Areas Management Programme for Indigenous Resources is the closest model of the stakeholder approach.

There have been sad reports of mining giants and timber companies which exploit resources, destroying forests and the land, only to abandon such areas without land reclamation and reforestation. Such corporations are only motivated by profit and pleasing an elite group called shareholders. This is a sin to humanity.

d) Corporate Governance Responsiveness Strategy: A morally sound corporation is proactive in its governance approach. Directors plan and involve stakeholders in the corporation’s operations.

They carry out Environmental Impact Assessments to mitigate the risks associated with bad practices which can harm the surroundings.

Such businesses value consultations to ensure that their interventions, prices and other practices are informed by evidence. This moral approach favours corporation and compliance with laws and statutory bodies like ZIMRA, NSSA, EMA and SAZ. In contrast, the amoral approach is defensive and views compliance with the law as an inconvenience and expensive.

We need ethical women and men to realise economic growth and prosperity. That person is YOU and ME.