Corporate culture shock

Historically, ethics has been an integral part of our social development. Today, it plays a vital role in business culture.

Ethical debate from the earliest philosophers is testament to just how deeply embedded ethics is in social enquiry. Over the last two millennia, a plethora of ethical and moral codes and standards have been established, if not entrenched, across cultures and throughout the world, playing a vital role in keeping social order.

Businesses are social organisations. As such they are subject to social norms. In any social group, ethics plays a fundamental role in maintaining a healthy balance. Although businesses generally exist for profit, wherever there are people, social issues will always matter and impact on performance.

Economist Milton Friedman wrote that corporate executives’ responsibility is “to make as much money as possible while conforming to the basic rules of society, both those embodied in law and those embodied in ethical custom. The only entities who can have responsibilities are individuals. A business cannot have responsibilities.” While his opinion has been superseded by a triple bottom line approach which acknowledges significant business responsibility, what is noteworthy is his view that a company’s ethics are the embodiment of the sum of its individual employee’s integrity. The company cannot impart ethics but individuals who lead the business can. Maintaining an ethical corporate culture can give rise to greater compliance with laws and rules, and a greater commitment to the moral values of society, while strengthening the bottom-line by increasing productivity and profitability.

Businesses need to focus on ethics if they really want to compete in an economic climate that is not partial to unethical and unlawful practices. Top management needs to understand and monitor the ethics imparted by employees, as well as their own, if they are to truly understand their organisation’s ethical status.

In establishing an ethical culture the focus should be less about rooting out the ‘bad apples’ than it is about seeking to create a clear set of organisational values, and promoting a culture that upholds them. Clear procedures need to be put in place to deal with any issue before it becomes too hot to handle.

A new business tool has been developed to identify a company’s ethical status. The tool is called The Ethics Monitor and enables the measurement, monitoring and proactive management of an organisation’s ethical behaviour, from top to bottom.

Creator and proprietor of The Ethics Monitor, Cynthia Schoeman says, “In the workplace, ethics need to be managed proactively and not reactively, and regularly rather than on an ad hoc basis.”

Schoeman is MD of Ethics Monitoring & Management Services. With a BA and MBA from Wits Business School, she is a seasoned lecturer on and facilitator of workplace ethics and how to improve corporate culture. Her book, ‘Ethics: Giving a Damn, Making a Difference’, is due to be published shortly.

Schoeman says many executives might view the maintenance of ethical standards as a function of the Human Resources department. – a common misconception. The building of ethical behavior and an ethical culture can only happen from one starting point – and that’s the very top. If top executives do not heed the importance of ethics, then it is unlikely that the majority of employees will either.

“Ethics is the new fault line for business leaders,” says Schoeman. “It’s unlike any other workplace challenge because failure cannot be corrected by simply cutting costs during the next quarter.”

With the new Companies Act and the King III Report placing a greater emphasis on ethical business, an ethical corporate culture is a beneficial trait to have and may even become a contributor to competitive advantage. Having a tool to monitor and manage ethics is bound to minimise risk and increase the bottom-line.

Posted by Cindy Maulgue on HR Highway
6 July 2011