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ETHICS: Ethics and Profits


Who was it that said “the first step to wisdom is admitting what you don’t know”? I really have no idea – and of course I feel wiser for saying so – but I do wish that this old chestnut could be more commonly observed in business. I am often amazed at how a few years in commerce can obliterate a person’s ability to admit ignorance. I usually have to plead with my undergraduate students to attempt a response to my questions, even when they know the answer, whereas in my classes at the Graduate School of Business, students are constantly performing the most audacious mental and verbal contortions to convince me and their classmates that they know what they are talking about, when in fact they have no clue.

Few people enjoy owning up to weak spots in the armour of their knowledge, and nowhere is this truer than in the gladiatorial arena of business. There are man-eaters out there: hesitate in your answer and someone else will steal the opportunity to be noticed; say that you’re unsure and you’ll be passed over for a colleague who knows no more but claims the opposite. The last thing an ambitious young professional would get caught saying is “excuse me, I’m not sure exactly what that word means, please explain”.

This is particularly true of the term “ethics”. Many people aren’t even sure whether it is singular or plural (it can be either: an ethic is a moral principle, so there are many ethics; but ethics is the study of moral principles, too). There is also confusion about the difference between “ethics” and “morality”, between “unethical” and “immoral”, and so on (there is no substantial difference). People know that ethics is about right and wrong, virtue and vice, good and bad, but there is a particular lack of clarity about the scope of ethics: to whom, to what, and how often, does ethics matter?

Much of the recent attention paid to business ethics treats the subject as if it were a separate business area, as if the average firm should be divided into marketing, operations, human resources, ethics, and so on. If sales decline, haul in the marketing director. If the company’s Corporate Social Investment (CSI) is exposed as superficial, heads are going to roll over in Ethics. But this is a mistaken conception of ethics, which should never be seen as somebody else’s responsibility, for it is responsibility itself, and therefore, it applies to anyone and everyone in an organisation.

In professions like accounting, a common error is to presume that ethics begins and ends with a code of ethics. If a CA(SA) can successfully make the case that her behaviour conforms to the Code of Professional Conduct (CPC), then she may be tempted to claim that her conduct is entirely ethical. However, this may not be the case: codes are not sufficient, for they do not cover all situations, and they generally focus on what sorts of behaviour one should avoid to escape ethical misconduct, rather than on what one should do to promote good, positive ethics. For example, the responsibilities to do CSI are not mentioned in the CPC, despite widespread agreement that such ethical responsibilities exist.

It is helpful when considering ethics to think of a firm as a collection of individuals. A common misnomer applied to the individuals that comprise contemporary organisations is the notion of a “work/life balance”. It is a misnomer because there is no real distinction between work and life: work is, for most of us, a very large and time-consuming part of our lives. Perhaps if people saw through this artificial separation, they would be less tolerant of jobs that make them miserable, or which prevent them from spending time with friends and family. Perhaps, too, they would see that the ethical values that they subscribe to in their personal lives are not extinguished simply because they are in the office. According to the Harvard psychologist Steven Pinker, ethics is “close to our conception of the meaning of life. Moral goodness is what gives each of us the sense that we are worthy human beings. We seek it in our friends and mates, nurture it in our children, advance it in our politics, and justify it with our religions.” How could we possibly switch off something so important when we get to work?

Ethics matters to everyone, in every activity, always – whether you think of yourself as an individual, a businessperson, a professional, or all three at once. It cuts across every division and every decision, and in business it should therefore be considered as often as profitability.

This does not imply, however, that ethical issues should be viewed in competition with profitability: often the ethical choice is the profitable choice, precisely because it is profitable (after all, the shareholders are entitled to something in exchange for their contributions). Indeed, there is a vital distinction between the questions of what ethics is, and what is ethical. The latter will be the subject of future articles in this column.

Jimmy Winfield, B.Bus.SC, BCom (Hons), PGDA, is a lecturer in the Department of Accounting at the University of Cape Town, and also runs the Cape Business Seminars.