Business ethics:
an illusion, a luxury or a necessity?
With trust in the business community all but lost, it is vital to reflect on
what went wrong and how future financial crises can be avoided. It all starts
with moral behaviour in the workplace, argues Cynthia Schoeman
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he current international as regards sustainability. The tendency application of laws, rules, regulations,
economic crisis has, not of most organisations to favour rules systems and procedures. The other
surprisingly, resulted in trust as a mechanism to shape behaviour approach is to improve ethical
in the business community being at an represents an apparently easier option behaviour. Two concepts are relevant
all-time low: a BBC debate at the World than a value-based approach. Yet, in this regard: ethical maturity and
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Economic Forum in Davos recently while rules are necessary, they are ethical boundaries.
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noted that this extends to CEOs who certainly not sufficient to achieve Ethical maturity reflects whether
are not regarded as trustworthy. moral behaviour. We also need values. behaviour is shaped by rules or values.
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There is certainly enough evidence And we need values more, because Ethical maturity ranges from low –
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of unethical behaviour to warrant ethical behaviour can be achieved with which reflects compliance with rules –
statements like the one above. Former sound values and very few rules, but to high – which reflects a commitment
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NASDAQ chairman and founder of a not vice versa. to values. However, rules are almost
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top Wall Street investment securities What then are sound values? Values always externally imposed, and their
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company, Bernard Madoff, accused of in business mostly comprise both moral effectiveness stems largely from the
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$50 billion fraud, currently tops the values and business values: moral quality of enforcement. Values, on
list. When questioned by FBI agent values such as integrity, fairness and the other hand, offer a much more
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o
Theodore Cacioppi about his actions, respect, and business values such as sustainable source of influence of
Madoff admitted that “there is no customer focus and innovation. The behaviour inasmuch as they are
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innocent explanation”. pertinent values in this situation are personally owned. The effectiveness
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The question much debated now is moral values. of values stems from the quality of the
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how and why a crisis of this proportion
happened. Speculation about the
causes includes lack of understanding, The question much debated now is how and why a crisis
lack of knowledge, system failure,
lack of managerial oversight, lack of
of this proportion happened. Speculation about the
regulation and greed. causes includes lack of understanding, lack of knowledge,
Was this a failure of values or a
failure of rules? Probably both. Given
system failure, lack of managerial oversight, lack of
that values and rules (which include
regulation and greed.
laws, rules, regulations, systems and
procedures) are two of the primary
drivers of ethics, it is not surprising Therefore, in theory, if we have values, most notably if they are shared
that the failure of both was followed by moral values and rules (again, not just and lived.
unethical behaviour. any rules but good, comprehensive Ethical boundaries are a crucial,
If we compare these two drivers, rules that are fair to all stakeholders), often-neglected facet of ethical status,
it is clear that values and rules are we should achieve ethical behaviour. In which address the nature and impact
neither focused on the same intended practice, however, we will more often of behaviour and/or decisions. Are they
outcome, nor do they achieve the be faced with the question of how to exclusive – for self only, or inclusive
same results. Rules aim primarily to improve our ethical status. – for self and other stakeholders?
achieve compliance, while values aim One approach is to reduce unethical Exclusive ethical boundaries, which
primarily for commitment – which behaviour. This can be achieved to exclude the interests and concerns of
represents a big difference, not least a large extent by the more effective relevant stakeholder groups, do not
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