Business

What’s the new buzz word in business? Ethics. It can boost economic growth

2016-05-20 12:39

“It matters that we begin to behave in a different way,” chief executive of the Johannesburg Stock Exchange, Nicky Newton-King, told the recent launch of the Gibs ethics and governance think-tank. 

She said South African companies are deeply committed to the success of the country and to building an inclusive growth model: “In this country, at this time, it is about how we engage with the larger South African project.” 

Director of the think-tank, Gideon Pogrund, said there is widespread alarm over the ethical failures and social problems that threaten South Africa’s future. The aim of the think-tank is to initiate a high-profile national conversation about business ethics that will ultimately be translated into a practical plan of action. 

“We are convinced that this can advance the ethical state of business in South Africa. Ethics are integral to the country’s competitive advantage and our economic growth,” Pogrund said. 

Newton-King told the gathering that the “South African moral compass is defined by all of us, not just by government, business or labour. Talking is important, as it will enable us to build an ethical framework for engagement and to discover our shared destiny.” 

 

Defining ethical leadership

Dr Reuel Khoza, chairperson of Aka Capital, said ethical leaders strive to put the needs of their followers before their own. 

Unethical leaders fail to distinguish between right and wrong and are self-serving. Khoza said leadership is not about gaining followers, or about being effective, “it is about distinguishing between good and bad behaviour and doing that which is beneficial for the greater good.” 

Khoza explained that President Nelson Mandela was considered an icon of leadership because he believed in serving others. 

“Those who have followed him as the leadership of our country are not serving the national interest, but rather tend to be self-serving.” 

Mark Lamberti, chief executive of Imperial Holdings, said leaders implement ethics through their own behaviour. “It is a culture that develops over time, not simply a set of rules, but rather how we interact with each other.” 

Long-termism and the creation of stakeholder value 

Lamberti said the purpose of business was not to merely create value for shareholders, but rather the creation of sustainable stakeholder value. 

“Business must start to take a longer term view. Short-termism has damaged the global economy and drives us towards unethical behaviour. People are less likely to embark on unethical conduct if they take a long-term view.” 

While markets tend to look at the short term and not reward long term thinking, this can create significant risks, Newton-King said. Long-term consideration is important for the sustainability of the country. 

The South African project 

The interests of business go beyond shareholders, Newton-King said. 

“South Africa has obvious social pressures. We have failed in our duties as business leaders and must ask ourselves what role we are playing to make this country sustainable.” 

Many people had experienced little or no benefit from South Africa’s transition to democracy, Lamberti said, adding that it is a business imperative to address this. “This excluded or marginalised group will determine whether we fail as a country, and have become easy fodder for populists,” he said. 

Dr James Motlatsi, founder member of the National Union of Mineworkers, said business must look at how they build relationships with employees and stakeholders as an ethical imperative, as there are broader social issues at play beyond profit. 

“Employers and employees should have a common goal,” he said. 

Referring to the often acrimonious relationship between business and organised labour, Motlatsi said the parties “need to understand the common interest of the country first. This is our country, and it is our responsibility to develop it equally and undivided.” 

Business and the eradication of corruption 

Lamberti said it is important for business to deal decisively with any dishonesty as soon as it is discovered. 

Khoza said business often succumbs to the temptation to bribe and collude, and that the act of corruption requires both a corruptor and a corruptee. 

Corruption is a societal issue and not one that is confined only to the public sector, Newton-King added. “Business has to support those who are fighting corruption, such as the Public Protector and Corruption Watch, which they often do at an enormous personal cost. 

“Corruption makes all of our lives more expensive and the future less sustainable.” 

» City Press is a media sponsor of the Gibs forums.

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