us id 252042 learner guide
TRANSCRIPT
N a t i o n a l C e r t i f i c a t e : G e n e r i c M a n a g e m e n t
US ID 252042 Learner Guide
Apply the principles of ethics to improve
organisational culture
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Table of Contents
UNIT STANDARD 252042 ....................................................................................... 1
1.1 What is corporate culture? (SO1; AC1) ............................................................... 4
i. Values ............................................................................................................. 4
ii. Ethics .............................................................................................................. 5
iii. Organisational Norms ........................................................................................... 6
1.2 Conflict between personal values and the entity’s values (SO1; AC2) .......................... 7
✓ Sexual harassment at work .................................................................................... 8
1.3 Triple Bottom Line (SO1; AC 3) ....................................................................... 9
SECTION 2: APPLYING THE CONCEPT OF CORPORATE ETHICS ...................................... 12
▪ Unethical practices in the workplace ......................................................................... 12
▪ Good work ethics ................................................................................................. 13
✓ Cost of poor ethics ............................................................................................ 13
2.1 The importance of ethical conduct in South African organisations (SO2; AC 1) ............. 14
✓ Defining the law ............................................................................................... 14
✓ The relationship between ethics and law ................................................................. 14
✓ The South African Constitution ............................................................................. 15
✓ Constitutional court ........................................................................................... 15
✓ Batho Pele ...................................................................................................... 15
✓ Public Finance Management Act No1 of 1999 ................................................... 17
▪ Responsibilities of accounting officers ........................................................................ 17
✓ King Report ........................................................................................... 18
✓ Acts, Regulations And Codes Governing A Sector Or Specific Industry ...................... 20
2.8 Corporate Governance (SO2; AC 2) ................................................................. 22
a. Principles of corporate governance ........................................................................ 23
b. Controls needed for corporate governance ............................................................... 24
2.9 Business Ethical Practices (SO2; AC3) .............................................................. 25
a. Sales and marketing ethics ....................................................................................... 25
b. Bid (tender) rigging ................................................................................................ 27
c. Ethics of accounting information ........................................................................... 28
d. Ethics of human resource management ................................................................... 29
e. Ethics of intellectual property, knowledge and skills................................................... 29
f. Ethics and Technology ........................................................................................ 30
g. Ethics of production .......................................................................................... 30
SECTION 3: ANALYSE A UNIT IN RELATION TO THE PRINCIPLES OF CORPORATE ETHICS ...... 32
3.1 Selecting an instrument to analyse individual and organisational conduct (SO3; AC1) ..... 32
3.2 Applying the selected instrument to gather information (SO3; AC2) .......................... 33
✓ Analyse conduct ............................................................................................... 33
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a. Surveys .......................................................................................................... 33
b. In-depth interviews ........................................................................................... 39
c. Observation ..................................................................................................... 40
3.3 Evaluate the Conduct (SO3; AC3) ................................................................... 40
a. Analyse the data ............................................................................................... 40
b. Describing data ................................................................................................ 41
SECTION 4: STRENGTHENING ORGANISATIONAL ETHICS .............................................. 43
4.1 Implementation of effective conduct (SO4, AC1) ................................................ 43
✓ Preparing an implementation plan ......................................................................... 44
4.2 The role and responsibilities of the manager (SO4, AC2) .............................................. 45
✓ Procedures ...................................................................................................... 45
▪ When the code of ethics is breached ......................................................................... 46
4.2 Monitoring and Evaluating Improvements (SO4, AC4) ............................................ 47
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UNIT STANDARD 252042
Unit Standard Title
Apply the principles of ethics to improve organisational culture
NQF Level
5
Credits
5
Purpose
This Unit Standard is intended for managers in all economic sectors. These managers would typically be second level managers such as heads of department, section heads or divisional heads, who may have more than one team reporting to them. The qualifying learner will be able to analyse the application of corporate ethics in the unit and formulate strategies to promote the organisational code of conduct and application of ethics in the unit.
Learning assumed to be in place
It is assumed that learners are competent in:
▪ Communication at NQF Level 4.
▪ Mathematical Literacy at NQF Level 4.
▪ Computer Literacy at NQF Level 4
Unit standard range
▪ The learner is required to apply the learning in respect of his/her own area of responsibility.
▪ Unit refers to the division, department or business unit in which the learner is responsible for managing and leading staff.
▪ Entity includes, but is not limited to, a company, business unit, public institution, small business, Non-Profit Organisation or Non-Governmental Organisation.
▪ Corporate ethics includes business ethics and the ethical norms and standards of public sector entities
Specific Outcomes and Assessment Criteria
Specific Outcome 1: Demonstrate understanding of the relationship between values, ethics
and organisational culture and its impact on achieving goals and objectives.
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Assessment Criteria
▪ The relationship between personal values, organisational ethics, and the entity's culture is demonstrated through examples from the South African workplace
▪ The complexity of the conflicts between personal values and the entity's values and ethical codes is illustrated with examples from the South African workplace
▪ The potential impact of organisational values and culture on the entity's triple bottom line are analysed and described
Specific Outcome 2: Apply the concept of corporate ethics to a unit
Assessment Criteria
▪ The imperatives for ethical conduct in South African organisations are explained with reference to acts, regulations, codes and other documents relevant to the entity. Relevant documents include the South Africa's Constitution, the King Report, PFMA, the principles of Batho Pele, as well as acts, regulations and codes governing the sector or specific industry
▪ The role of corporate governance within an entity is analysed to determine the contribution of a unit in promoting internal organisational codes and ethical practices
▪ The specific ethical practices of a unit in different areas are analysed with examples. Areas include accounting information, marketing, sales, production, intellectual property, tendering processes, Information Technology and Human Resources
Specific Outcome 3: Analyse a unit in relation to the principles of corporate ethics
Assessment Criteria
▪ An instrument is selected for analysing individual and organisational conduct in respect of organisational values, codes of conduct and corporate ethics
▪ The instrument is applied to gather and record information within a unit in respect of organisational values, codes of conduct and corporate ethics
▪ The instrument is applied to evaluate the current state in a unit against the desired state in respect of organisational values, codes of conduct and corporate
Specific Outcome 4: Formulate recommendations for strengthening shared organisational values, the code of conduct and ethical practices
Assessment Criteria
▪ An implementation plan is prepared that described the strengthening of the entity's values, code of conduct and ethical practices in the unit
▪ The role and responsibilities of the manager are described in terms of decision making to strengthen the values, code of conduct and ethical practices in a unit and the entity
▪ The communication activities for promoting the entity's values, code of conduct and ethical practices are outlined in the plan, with role allocation and time frames
▪ The process for monitoring and evaluating improvements in relation to the entity's organisational values, code of conduct and ethical practices in a unit is described with role allocation and time frames
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Unit Standard Essential Embedded Knowledge
▪ The South African Constitution.
▪ King Report on Corporate Governance.
▪ National and international best practices in respect of business/corporate ethics.
▪ Personal and organisational values.
▪ Principles of business/corporate ethics
Critical Cross-field Outcomes (CCFO)
▪ Identify and solve problems using critical and creative thinking processes in applying ethical principles in the unit
▪ Work effectively with others as a member of a team, group, organisation or community to improve the culture of the unit
▪ Organise and manage oneself and one`s activities responsibly and effectively in order to demonstrate ethical conduct
▪ Collect, analyse, organise and critically evaluate information in order to identify areas of unethical conduct in the unit
▪ Communicate effectively using visual, mathematical and/or language in the modes of oral and/or written persuasion to promote ethical conduct in the unit
▪ Use science and technology effectively and critically, showing responsibility to the environment and health of others in promoting ethical practices in the unit and entity
▪ Demonstrate an understanding of the world as a set of interrelated systems by recognising that mathematical problem-solving contexts do not exist in isolation to demonstrate how personal, social, organisational and national values and beliefs impact on the entity's culture
▪ Participating as responsible citizens in the life of local, national and global communities by promoting ethical practices in the unit and entity
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SECTION 1: VALUES, ETHICS & ORGANISATIONAL CULTURE
Specific Outcome 1:
Demonstrate understanding of the relationship between values, ethics and organisational culture and its impact on achieving goals and objectives.
Assessment Criteria
1. The relationship between personal values, organisational ethics, and the entity's culture is demonstrated through examples from the South African workplace
2. The complexity of the conflicts between personal values and the entity's values and ethical codes is illustrated with examples from the South African workplace
3. The potential impact of organisational values and culture on the entity's triple bottom line are analysed and described
1.1 What is corporate culture? (SO1; AC1)
It is important to understand corporate culture and the elements that make up corporate culture, as this is unique to each organisation.
Corporate culture might be best summarized in the often-heard statement:
Corporate culture is the pattern of shared beliefs, attitudes, assumptions and values in an organisation which you probably won’t find written down anywhere, but still dictates the way people act and interact and strongly influence the ways in which work is carried out.
Corporate culture reflects what has worked in the past and can work for an organisation by creating an environment which is conducive to performance improvement and the management of change.
It can also work against an organisation when barriers are erected which prevent employees from doing the work in such a way that the goals set by top management are met. Barriers would include resistance to change and lack of commitment.
Corporate culture is determined by the values, norms and ethics of the organisation. Employees see corporate culture as organisational climate, and it will influence and be expressed by management style.
i. Values
Values refer to what is regarded as important. They are expressed in beliefs of what is best or good for the organisation and what sort of behaviour is desirable. You will find corporate values in the mission and vision statements of an organisation and typically includes what the company commits to regarding the following:
“It might not make much sense to you, but that’s the way we do things around here!”
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1. Care and consideration for people and the environment
2. Care for customers
3. Competitiveness
4. Equity in the treatment of employees
5. Excellence of products and service
6. Company growth
7. Innovation
8. Market/customer orientation
9. The performance orientation of the company
10. The commitment to productivity of the company
11. Provision of equal opportunity for employees
12. Quality
13. Social responsibility
Values are essentially general in nature and provide broad guidelines to groups or peoples.
For example, a value may be held by a group or people that negotiation and clear debate is the correct manner to resolve differences or conflict. It would therefore be below the collective standard of this group of people, to solve a problem using violent means.
Of course, the opposite will also be true; it may the accepted standard of a group to immediately solve conflict through the application of violence.
ii. Ethics
How should we live? Shall we aim at happiness or at knowledge, virtue, or the creation of beautiful objects? If we choose happiness, will it be our own or the happiness of all?
And what of the more particular questions that face us: is it right to be dishonest in a good cause? Can we justify living in opulence while elsewhere in the world people are starving?
Is going to war justified in cases where it is likely that innocent people will be killed? What are our environmental obligations, if any, to the generations of humans who will come after us and to the nonhuman animals with whom we share the planet?
Ethics deals with such questions at all levels. Its subject consists of the fundamental issues of practical decision making, and its major concerns include the nature of ultimate value and the standards by which human actions can be judged right or wrong.
The word ethics is derived from the Greek word ethos. Ethics deals with the morality of persons as individuals and also that of groups of individuals. Ethics assess not only what people are seen to be doing, but also examines what they think is right, fitting and just.
People are often judged by what they do or are seen to be doing, but their actions do not necessarily reflect their thoughts or feelings, or what they are often saying.
Ethics can be defined as a moral philosophy or code of morals practiced by a person, group of people or workplace.
Therefore, we can say that ethics concerns itself with what is morally good or bad and what is right or wrong.
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People often act within the context of traditions and customs, but, and this is important, ethics always involves 'reflective evaluation', that is, a serious thought process takes place before action takes place. In other words, individuals like to feel that what they do is right, just and/or accepted as correct.
iii. Organisational Norms
Norms are the unwritten rules of behaviour or culture that apply in the company. These rules will provide employees with informal guidelines on how to behave.
Norms tell people what they are supposed to be doing, saying, and believing, even wearing. They are not expressed in writing – if they were, they would be policies or procedures. They are passed on by word of mouth or behaviour and can be enforced by the reactions of people if they are violated. Norms can exert very powerful pressures on behaviour because of these reactions- we control others by the way we react to them.
Norms refer to such aspects of behaviour as:
i. How managers treat subordinates and how subordinates relate to their subordinates
ii. The prevailing work ethic, e.g. ‘Work hard, play hard’, or ‘Come in early, stay late’, or ‘If you cannot finish your work during the business hours you are obviously inefficient’, or ‘Look busy at all times’, or ‘Look relaxed at all times’.
iii. Status- how much importance is attached to it; the existence or lack of obvious status symbols
iv. Ambition- naked ambition is expected and approved of, or a more subtle approach may be the norm
v. Performance- exacting performance standards are general; the highest praise that can be given in the organisation is to be referred to as very professional
vi. Politics- rife throughout the organisation and treated as normal behaviour; not accepted as overt behaviour
vii. Loyalty- expected, a cradle-to-grave approach to careers; the emphasis is on results and contribution in the short term
viii. Anger- openly expressed; hidden, but expressed through other, possibly political, means
ix. Approachability- managers are expected to be approachable and visible; everything happens behind closed doors
x. Formality- a cool, formal approach is the norm; forenames are/are not used at all levels; there are unwritten but clearly understood rules about dress.
Many people consider good work ethics to be an intrinsic part of the character of a person. As such, personal ethics can be cultivated, but often it cannot be achieved if the person has no inner desire to accomplish it. Typically, those who feel that they have good work ethics feel a sense of purpose and do their jobs well. People who have questionable work ethics sometimes find that they have a bothered conscience, and that they do not do their work as well as they could.
The concept of ethics remains the same, whether it is applied in your personal life or in the workplace, because it is a choice you make, and you know what is
right and what is wrong.
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People in almost every South African workplace talk about organisational culture, a phrase that characterises the working environment. When an employer interviews a prospective employee, they explore whether or not the candidate is a good “cultural fit.” Culture is difficult to define, but you generally know when you have found an employee who appears to fit your culture. The employee displays good values and ethics, and it is evident that he/she would be able to comply with the values and ethics of the company.
Aligning one’s values and ethics to that of their company’s allows for improved performance which in turn aids the achievement of the company or department’s goals and objectives.
1.2 Conflict between personal values and the entity’s values (SO1; AC2)
As previously discussed, values are collective standards whereby right and wrong, good and bad and pretty and ugly are separated. An individual, belonging to different a cultural group with different values, finds it very difficult to determine and adapt to another person's or company’s ethical code. In today’s high-pressure work environment, it is not unusual for conflicts to arise between our values as individuals and the compromises that we must make for our organisation’s values and expectation.
✓ Personal Values
You might not be aware of it, but your personal values inform many of your day-to-day activities or decisions. For example, you may go to the gym every morning which can be linked to your valuing a healthy lifestyle. Or perhaps you only buy locally sourced food, which means you value the production of foods made in South Africa.
If you take the time to do so, you may be able to identify a whole list of values simply by asking yourself questions like 'what makes me happy?' and 'which goals do I want to reach?' Ranking them will help you to establish your core values: the ones that matter the most.
Then it's time to consider how this translates to your professional life. Is there anything specific you look for in a job – flexible working hours, a strong team dynamic, a clear goal to work towards? Use your values as a reference point to narrow down the jobs that would work for you.
✓ Entity Values
Company values and personal values are much the same in the fact that they are both markers of identity, acting as guiding principles for what is said and done. However, while personal values are for us to uncover, company values are consciously chosen and pre-set.
Ideally, these values function as a force of unity, creating a healthy working environment in which everyone works towards a common goal. A misalignment of values amongst employees can seriously damage working relationships and productivity as that common purpose is jeopardised. Businesses will therefore look for people who all share the company values.
There are some common workplace values that most companies look for including honesty and integrity, strong work ethic and professionalism. It's important however that you research each company individually. The company website, social media pages and job ad all hold valuable information through the language that is used and the posts that are shared.
In the workplace, we have to cope with the values and ethics of the organisation as well as our own personal value systems. The challenge to managers is to manage the conflict that can result due to:
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• differing value systems and ethics of employees
• the difference between the value system and ethics of the organisation and those of employees
• abiding by the value system and ethics of the organisation as well as those expected by the concept of the triple bottom line
Conflict occurs in our daily lives and is nothing new to us. The chances are good that an individual’s personal value system may be in conflict with the corporate code of ethics.
In other words, an employee may view an action at work as cruel, due to his or her upbringing or past experiences, while the corporate environment may see the action as dishonest.
In the workplace and in life in general, we have certain rights. These include the rights to property, the right to be paid for labour and the right not be harassed. We will discuss some of the actions to take if your rights conflict with the personal value systems of other employees or the organisation’s value system:
Example 1
✓ Sexual harassment at work
You have been harassed by your co-worker on three occasions. This is the fourth time and he/she claim they touched you inappropriately by accident. The first three times were uncomfortable but now it is becoming obvious.
▪ The first time this happens, you should tell the person that you don’t like being touched in that manner.
▪ By the fourth time it is obvious that this person is not doing it by accident. You should pose yourself and report this to your and his/her superior.
▪ Make sure that there is someone who can corroborate your story.
▪ You will then most probably have to write a report on the incidents and hand it over to your superior.
▪ Your superior will then take the complaint up with the relevant parties and a disciplinary hearing will be held.
(This process differs from organisation to organisation)
Example 2
✓ Non-payment of wages or salary
You have been working for an organisation for two months and still haven’t been paid. You can:
▪ Go to the Department of Labour
▪ They will give you a form to fill in with your complaint
▪ The department will then phone your employer and ask them if the allegations are true and if they are aware that the employee is unhappy about the mentioned complaint.
▪ The department will then send the employer a formal complaint on which they have seven working days to respond.
▪ Next a hearing will be scheduled at the department of labour to see if the two parties can come to an agreement.
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▪ If the two parties cannot come to an agreement, a court hearing will be scheduled, and the employer will stand trial.
Example 3
✓ Conflict of personal and organisational value systems
John who was an employee at a local bakery was hungry and ate the left over rolls in the bakery, without paying for them. This behaviour is unethical and is seen as “dishonesty”.
Alex, John’s supervisor, grew up in poverty and knows how it feels when one is hungry and there is no meal to have however the organisational value system and code of ethics outweighs that of the personal value system.
It is important for an organisation to implement a value system that suits the need and the culture of the organisation. This should be included in the code of ethics.
In all the situations above the manager should
▪ exercise discretion
▪ consider all the value systems
▪ try to find a solution where every party wins and/or learns
1.3 Triple Bottom Line (SO1; AC 3)
The triple bottom line (abbreviated as "TBL" or "3BL", and also known as "people, planet, profit") is used to explain the values and criteria for measuring organisational (and societal) success:
i. Economic (profit)
ii. Ecological (planet)
iii. Social (people)
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In practical terms, the triple bottom line in accounting terms means expanding the traditional reporting framework to not only look at the financial aspects of an organisation but also at the organisation’s ecological and social performance.
The concept of TBL states that a company's responsibility should be to stakeholders as well as shareholders. In this case, "stakeholders" refers to anyone who is influenced, either directly or indirectly, by the actions of the firm.
People, planet and profit describe the triple bottom line and the goal of sustainability.
i. People
"People" (human resources) refers to fair and beneficial business practices toward labour, the community and the region in which a corporation conducts its business.
A triple bottom line enterprise seeks to benefit many constituencies and not to exploit or endanger any group of them.
ii. Planet
"Planet" (environment or natural capital) refers to sustainable environmental practices. A TBL company seeks to benefit the natural order as much as possible, or at the least to do no harm and limit environmental impact. A TBL organisation reduces its ecological footprint by:
▪ carefully managing its consumption of energy and non-renewable resources
▪ reducing manufacturing waste
▪ rendering waste less toxic before disposing of it in a safe and legal manner.
Currently, the cost of disposing of non-degradable or toxic products is borne financially by governments and environmentally by the residents near the disposal site and elsewhere. In TBL thinking, an enterprise which produces and markets a product which will create a waste problem should not be given a free ride by society. It would be more equitable for the business which manufactures and sells a problematic product to bear part of the cost of its ultimate disposal.
Ecologically destructive practices, such as overfishing or other endangering depletions of resources are avoided by TBL companies as these are controversial to the company’s values and culture.
iii. Profit
"Profit" is the economic value created by the organisation after deducting the cost of all inputs, including the cost of the capital tied up. It is the real economic impact the organisation has on its economic environment. Therefore, an original TBL approach cannot be interpreted as simply traditional corporate accounting profit plus social and environmental impacts unless the "profits" of other entities are included as social benefits.
Although the triple bottom line has been around for decades, events such as the political uproars of the millennium, the BP oil spill, and climate change cast an almost constant spotlight on corporate ethics and corporate social responsibility. “Business as usual” now has a very different meaning.
Often environmental sustainability is the more profitable course for a business in the long run
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For global companies, changing operations to minimize risk and fight climate change, for example, requires a lot of time and money. But an upfront investment in corporate sustainability can pay off. Companies that treat sustainability seriously—by making a business case for it and setting concrete goals—are the ones that profit from sustainable activities. The success and profitability of corporate sustainability initiatives really depend on one thing: a talented employee who knows how to take the triple bottom line from theory to reality. This employee must have specialized knowledge of environmental science, accounting, and economics as well as leadership skills and the ability to use systems thinking to make strategic business decisions. Sustainability is the future. And with this unique mix of experience and skills, sustainable management professionals can build some of the most prosperous triple bottom line companies in the world.
Formative Assessment 1
Formative Assessment 2
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SECTION 2: APPLYING THE CONCEPT OF CORPORATE ETHICS
Specific Outcome 2:
Apply the concept of corporate ethics to a unit
Assessment Criteria
1. The imperatives for ethical conduct in South African organisations are explained with reference to acts, regulations, codes and other documents relevant to the entity. Relevant documents include the South Africa's Constitution, the King Report, PFMA, the principles of Batho Pele, as well as acts, regulations and codes governing the sector or specific industry
2. The role of corporate governance within an entity is analysed to determine the contribution of a unit in promoting internal organisational codes and ethical practices
3. The specific ethical practices of a unit in different areas are analysed with examples. Areas include accounting information, marketing, sales, production, intellectual property, tendering processes, Information Technology and Human Resources
✓ Introduction
We have established that a company’s ethics refers to the organisational values, norms and principles which promotes a culture in an organisation where unethical conduct is not tolerated, and unacceptable behaviour eliminated.
Business ethics as we’ve said is about a business doing business in a fair and just way, without lying, cheating, bribing, or hiding information from customers.
It applies to all aspects of business conduct and takes into account and applies to the conduct of all the employees of a business and the business as a whole. Many organisations, worldwide, therefore have an official code of ethics which typically sets out what behaviour is acceptable or not.
▪ Unethical practices in the workplace
Unethical behaviour in the workplace is common and should be managed on a continuous basis.
There are more and more opportunities for unethical people to manipulate various systems in the workplace. Typical examples which can be added to the statistics are hackers who steal information from the software on computers:
1. The one that is most prevalent in South Africa today is bribery.
2. Industrial espionage where information is leaked to competitors in return for payment
3. Invoice fraud - the amounts which are owing to the creditors are fictionalised or they are inflated. This would fall under accounting ethics.
Business ethics examines ethical principles and moral/ethical problems that arise in a business environment in an attempt to do business in a fair and just
way.
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4. Product fraud - poor quality products are released on to the market. When this happens, the company is acting unethically in its production, marketing and social responsibility
5. Advertising fraud - misleading or invalid claims are made for the products.
6. Favouritism - the staff are promoted on the basis of favours, gifts and nepotism.
7. Contracts and tenders are fraudulently granted.
8. Stealing of computer time for one's own benefit.
9. Discrimination in any form
10. Conflict of interest – where employees engage in outside employment and private practice by stealing the company’s customers and doing work for them privately
11. Accepting gifts and benefits from suppliers in return for the allocation of contracts or tenders
12. Misuse of company equipment and assets.
From the above it can be seen that the greatest threat to the organisation comes from within when the conditions are supposed to be normal. Waste, accidents and errors take a large bite out of the profits of the organisation.
▪ Good work ethics
These elements of the work ethic apply to all those working within an organisation and this ethic must be witnessed by that organisation’s clients:
1. Employees must be honest with and loyal to clients.
2. Total quality management would result in sub-standard products not being released onto the market
3. Be on time for work, as arriving late or leaving early means you are stealing from your employer
4. Do not accept bribes and gifts from suppliers
5. Do not use company equipment for your own benefit
6. Loyalty. Successful organisations have loyal employees. These employees are motivated to always carefully consider the interests of the organisation. This loyalty should not however be a blind loyalty and employees should still be free to question decisions.
7. Honesty. Someone who is honest is truthful, law abiding and incorruptible. Dishonest people lie, cheat and steal.
8. Do not commit accounting fraud in any form
9. Avoid favouritism
10. Make sure advertising is truthful
11. Do not abuse company property and machinery
12. Be proud of your work and do your best every day
✓ Cost of poor ethics
1. Loss of trust which leads to poorer relationships and less effective team work
2. Loss of confidentiality,
3. Limited communication,
4. Lack of self-esteem, of commitment and less loyalty
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5. Loss of your/the organisation’s good name
6. The organisation can be blacklisted, meaning that no contracts or tenders will be allocated to it
7. Customers can lose faith in the organisation, leading to a loss of customers to competitors
8. Organisations can be fined for certain unethical practice
2.1 The importance of ethical conduct in South African organisations (SO2; AC 1)
✓ Defining the law
This is significant, as the laws, rules and regulations which govern our everyday lives provide a substantial guideline for right and wrong behaviour. The laws of our country forbid stealing, corruption, fraud and doing harm to one’s fellow man. These laws are supported by the vast majority of South Africans because they reflect the general values held by South Africans and indeed all peoples throughout the world. It would be a difficult task to isolate or identify a tribe, people or nation on earth who regard stealing, murder or kidnapping as the correct way to behave.
✓ The relationship between ethics and law
We have defined ethics and law and now we have a better understanding of the different terms.
The question still remains “What is the relationship between ethics and law?” In other words, how do they relate to each other? Let’s view the relationship in the form of a table:
Law Ethics
In a society there may be some laws, however, which honest, upright and generally law abiding people will refuse to obey, even if they face punishment. This is so because a particular law is regarded as being immoral (bad or wrong).
In South Africa the example of abortion may be used.
Abortion is legal and according to the law, medical staff are compelled to assist those requesting abortion within certain time frames. What if a certain doctor or nurse regards abortion as murder? What should they do? This is a classic case of certain people experiencing a “moral dilemma”.
On the other hand, certain values in a society may not be addressed by the law.
Empirical research in South Africa has conclusively shown that almost 75 % of the population wants the re-introduction of the death penalty as a punishment for certain forms of violent crime.
However, the government of the day refuses to bring back the death penalty due to the increase variety in morals and values.
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Ethical conduct is imperative across the thousands of private and public businesses across the country. Many documents, laws, regulations and codes are in place to protect the rights and values of both the employer and the employee. Some of these documents include:
✓ The South African Constitution
“Fight for Human Rights”
The South African government has committed itself to the protection of the rights of victims of sexual violence through policies also know as the constitution. The Constitution of South Africa is the supreme law of the Republic of South Africa. It provides the legal foundation for the existence of the republic; it sets out the rights and duties of its citizens and defines the structure of the Government.
✓ Constitutional court
The Constitutional Court of South Africa is a supreme constitutional court established by the Constitution of South Africa. It was originally the final appellate court for constitutional matters.
The Republic of South Africa is one, sovereign, democratic state founded on the following values:
• Human dignity, the achievement of equality and the advancement of human rights and freedoms.
• Non-racialism and non-sexism.
• Supremacy of the constitution and the rule of law.
• Universal adult suffrage, a national common voters roll, regular elections and a multi-party system of democratic government, to ensure accountability, responsiveness and openness.
✓ Batho Pele
The Batho Pele initiative aims to enhance the quality and accessibility of government services by improving efficiency and accountability to the recipients of public goods and services.
Batho Pele requires that eight service delivery principles be implemented
▪ regularly consult with customers
▪ set service standards
▪ increase access to services
▪ ensure higher levels of courtesy
▪ provide more and better information about services
▪ increase openness and transparency about services
▪ remedy failures and mistakes
▪ give the best possible value for money.
Putting people first
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The Batho Pele principles are as follows:
Principle Explanation
Consultation
There are many ways to consult users of services including conducting customer surveys, interviews with individual users, consultation with groups, and holding meetings with consumer representative bodies, NGOs and CBOs. Often, more than one method of consultation will be necessary to ensure comprehensiveness and representativeness. Consultation is a powerful tool that enriches and shapes government policies such as the Integrated Development Plans (IDPs) and its implementation in Local Government sphere.
Setting service standards
This principle reinforces the need for benchmarks to constantly measure the extent to which citizens are satisfied with the service or products they receive from departments. It also plays a critical role in the development of service delivery improvement plans to ensure a better life for all South Africans. Citizens should be involved in the development of service standards.
Required are standards that are precise and measurable so that users can judge for themselves whether or not they are receiving what was promised. Some standards will cover processes, such as the length of time taken to authorise a housing claim, to issue a passport or identity document, or even to respond to letters.
To achieve the goal of making South Africa globally competitive, standards should be benchmarked (where applicable) against those used internationally, taking into account South Africa's current level of development.
Increasing access
One of the prime aims of Batho Pele is to provide a framework for making decisions about delivering public services to the many South Africans who do not have access to them. Batho Pele also aims to rectify the inequalities in the distribution of existing services. Examples of initiatives by government to improve access to services include such platforms as the Gateway, Multi-Purpose Community Centres and Call Centres.
Access to information and services empowers citizens and creates value for money, quality services. It reduces unnecessary expenditure for the citizens.
Ensuring courtesy
This goes beyond a polite smile, 'please' and 'thank you'. It requires service providers to empathize with the citizens and treat them with as much consideration and respect, as they would like for themselves.
The public service is committed to continuous, honest and transparent communication with the citizens. This involves communication of services, products, information and problems, which may hamper or delay the efficient delivery of services to promised standards. If applied properly, the principle will help demystify the negative perceptions that the citizens in general have about the attitude of the public servants.
Providing information
As a requirement, available information about services should be at the point of delivery, but for users who are far from the point of delivery, other arrangements will be needed. In line with the definition of customer in this document, managers and employees should regularly seek to make information about the organisation, and all other service delivery related matters available to fellow staff members.
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✓ Public Finance Management Act No1 of 1999
The Republic of South Africa has enacted the PFMA and this act will apply to all government entities. The PFMA is a key element in a set of reforms to the management of government finances. The adoption and implementation of the PFMA is the second phase of reform, and the key objective is to modernise financial management and enhance accountability. Other reforms include the introduction of service delivery indicators, performance budgets and generally recognised accounting practice (GRAP).
▪ Responsibilities of accounting officers
i. In-year management, monitoring and reporting
Accounting officers must monitor progress on the department’s operational plan (including the budget). While systems and processes exist to monitor monthly budgetary performance, accounting officers will need to scrutinise these reports on the basis of the advice provided by the person appointed as the CFO (Chief Financial Officer). These reports should enable the accounting officer to identify any potential under or over spending.
The quality of the information available depends crucially on the accuracy and timeliness of the data entered into the various systems, and this will improve only when accounting officers and CFOs actively scrutinise the reports produced.
ii. Establish effective internal controls
Accounting officers must prioritise the setting up of audit committees and internal audit units, in line with modern practice. They must evaluate whether the ‘blanket’ controls are appropriate to their particular circumstances, by assessing the risks facing their department.
Openness and transparency
A key aspect of openness and transparency is that the public should know more about the way national, provincial and local government institutions operate, how well they utilise the resources they consume, and who is in charge. It is anticipated that the public will take advantage of this principle and make suggestions for improvement of service delivery mechanisms, and to even make government employees accountable and responsible by raising queries with them.
Redress
This principle emphasises a need to identify quickly and accurately when services are falling below the promised standard and to have procedures in place to remedy the situation. This should be done at the individual transactional level with the public, as well as at the organisational level, in relation to the entire service delivery programme.
Public servants are encouraged to welcome complaints as an opportunity to improve service, and to deal with complaints so that weaknesses can be remedied quickly for the good of the citizen.
Value for money
Many improvements that the public would like to see often require no additional resources and can sometimes even reduce costs. Failure to give a member of the public a simple, satisfactory explanation to an enquiry may for example, result in an incorrectly completed application form, which will cost time to rectify.
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iii. Improve expenditure management and transfers
The PFMA must be read in conjunction with the Division of Revenue Act, in particular with its reporting requirements. These new arrangements will assist accounting officers to resolve problems with conditional grants
The PFMA also requires that, unless otherwise contracted, payments be made within 30 days of receiving a supplier’s invoice. This will ensure that Departments do not conceal liabilities, and will bring certainty to creditors, especially SMMEs.
iv. Clear up audit queries Accounting officers must take personal responsibility to address any outstanding queries raised by the Auditor-General or audit committee or face strong sanctions.
v. Banking arrangements Accounting officers must take full responsibility for ensuring that all revenue received by their department is deposited only in the relevant revenue fund, and that all suspense accounts are allocated to the relevant cost centres each month.
vi. Complete financial statements on time
The Act requires annual financial statements to be submitted to the Auditor-General within two months of the year-end, and this will be difficult to achieve unless the routine month-end procedures are completed systematically during the year.
✓ King Report
▪ King Committee
The first King Report on Corporate Governance for South Africa was released in 1994. Since then, the report has been updated twice - once in 2002 (King II), and again in 2009 (King III).
Each new draft has placed an increasing importance on the interrelationship between ethics and corporate governance. For King III, an ethics sub-committee was constituted to advise on good practice in the governance (and management) of ethics.
▪ King I
King I is the abbreviated name for the King Report on Corporate Governance published 1994 in South Africa. Produced by the King Committee on Corporate Governance, it included a Code of Corporate Practices and Conduct, the first of its kind in South Africa.
It aimed to promote corporate governance in South Africa and established recommended standards of conduct for boards and directors of listed companies, banks, and certain state-owned enterprises, with an emphasis on the need for companies to become a responsible part of the societies in which they operate. King I advocated an integrated approach to good governance, taking into account stakeholder interests and encouraging the practice of good financial, social, ethical and environmental practice.
The purpose of the King Report 1994 was to promote the highest standards of corporate governance in South Africa.
In order to operate, companies have to consider:
▪ Industry regulations
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▪ Industry and market standards
▪ Their reputation in the industry
▪ The media who are continually investigating industries and companies
▪ The attitudes of customers, suppliers, employees, investors and local as well as international communities
▪ Ethical pressure groups
▪ Public opinion and public confidence
▪ Political opinion
This means that the company must consider stakeholders such as the community in which the company operates, its customers, its employees and its suppliers need to be considered when developing the company strategy. The purpose of the company and the values by which the company will carry on its daily life should be identified and communicated to all stakeholders.
▪ King II
King II is the abbreviated name for the King Report on Corporate Governance for South Africa published 2002 in South Africa. It followed the 1994 report commonly known as King I. Companies listed on the JSE Securities Exchange also have to comply with King II, which itself requires compliance with global reporting initiative guidelines. It contains a Code of Corporate Practices and Conduct.
This report applies only to certain categories of business enterprises which are:
▪ Companies listed on the JSE
▪ Banks, financial and insurance entities
▪ Public sector enterprises governed by the Public Finance Management Act and the Municipal Finance Management Act.
It refers to seven characteristics of good corporate governance:
▪ Discipline - a commitment to behaviour that is universally recognised and accepted as correct and proper.
▪ Transparency - the ease with which an outsider is able to analyse a company's actions.
▪ Independence - the mechanisms to avoid or manage conflict.
▪ Accountability - the existence of mechanisms to ensure accountability.
▪ Responsibility - processes that allow for corrective action and acting responsibly towards all stakeholders.
▪ Fairness - balancing competing interests.
▪ Social Responsibility - being aware of and responding to social issues.
▪ King III
King 111 states the following regarding ethics in an organisation:
Principle 2.4: The board should actively manage the company's ethics performance
35. Good corporate governance requires that the board takes responsibility for creating and sustaining an ethical corporate culture in the company
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36. The establishment and maintenance of an ethical corporate culture requires the governance of ethics, that is, that the board should ensure that the company has a well-designed and properly implemented ethics management process. The organisation should have a code of ethics and this code of ethics should be integrated into the company's strategies and operations.
37. An ethical corporate culture will require that:
▪ Directors should set an example by conducting ethical practices
▪ The conduct of individuals in the organisation should be based on sound moral values and ethics
▪ The directors of the organisation should support and abide by laws regulating restraints of trade, unfair practices, abuse or the unscrupulous use of economic power and avoidance of collusion; and
The chapters of King 111 are:
▪ Ethical leadership and corporate citizenship
▪ Boards and directors
▪ Audit committees
▪ The governance of risk
▪ The governance of information technology
▪ Compliance with laws, rules, codes and standards
▪ Internal audit
▪ Governing stakeholder relationships
▪ Integrated reporting and disclosure
✓ Acts, Regulations And Codes Governing A Sector Or Specific Industry
Many business sectors and industries have codes of conduct that applies to that specific industry or sector. Some of these codes of conduct are also regulated by law through Acts and regulations. We will discuss a couple of industries to illustrate this.
▪ Transport sector
The transport sector is governed by the following Acts:
-National Road Traffic Act, 1996 (Act No. 93 of 1996)
-National Land Transport Transition Act, 2000 (Act No. 22 of 2000)
The minimum requirements for a code of conduct in terms of these Acts are:
The Code of Conduct must, as a minimum, bind members of a registered association and registered non-members to ensure that they and their drivers—
(a) treat passengers at all times with dignity, respect and courtesy;
(b) refrain from operating a vehicle on a route in respect of which no permit or operating Iicence is held;
(c) refrain from operating unroadworthy vehicles; and
(d) refrain from infringing road traffic laws.
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▪ Tourism sector
The tourism sector has a formal code of conduct called the Tourist Guide Code Of Conduct And Ethics and all tour guides are required to sign this code of conduct:
A Professional Tourist Guide:
▪ Shall be welcoming and demonstrate an enthusiasm for South Africa.
▪ Shall at all times show willingness to provide optimum support and quality service to all tourists and will give tourists an opportunity to enjoy or visit a desired destination.
▪ Shall in no way discriminate in rendering service to any tourist on any basis, e.g. colour, gender, ethnicity, nationality, physical challenge, age, etc.
▪ Shall be impartial, unbiased and positive, and represent South Africa objectively.
▪ Shall be suitably dressed and presentable at all times.
▪ Shall be punctual, reliable, honest, conscientious and tactful at all times.
▪ Shall be a responsible driver, when driving as a guide.
▪ Shall carry out the programme/itinerary of a tour to his/her best abilities and be loyal to the company/organisation that he/she is representing.
▪ Shall deal with conflict in a sensitive and responsible manner Etc.
✓ Private security industry
The private security industry is heavily governed, and the code of conduct is prescribed by law. This is a lengthy document and only the purpose of the code of conduct as well as the layout of the code is shown here:
Code of Conduct Prescribed Under The Private Security Industry Regulation Act, 2001 (Act No. 56 Of 2001)
Purpose, Application And Interpretation Of The Code
Purpose of Code
1. The purpose of this Code is to provide binding rules that all security service providers and employers of in-house security officers must obey in order to -
(a) promote, achieve and maintain a trustworthy and professional private security industry which acts in terms of the law applicable to the members of the industry;
(b) promote, achieve and maintain compliance by security service providers with a set of minimum standards of conduct which is necessary to realise the objects of the Authority;
(c) promote, achieve and maintain compliance by security service providers with their obligations towards the State, the Authority, consumers of security services, the public, and the private security industry in general;
(d) ensure the payment of the applicable minimum wages and compliance with standards aimed at preventing exploitation or abuse of employees in the private security industry, including employees used to protect or safeguard merely the employer’s own property or other interests, or persons or property on the premises of, or under the control of the employer; and
(e) provide for matters incidental to the above.
Application of Code
2. This Code applies to –
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(a) all security service providers, whether registered with the Authority or not, in practising the occupation of security service provider, in rendering a security service or carrying on business in the rendering of a security service, or in performing any other act or function which is subject to the Act;
(b) every person using his or her own employees to protect or safeguard merely his or her own property or other interests, or persons or property on his or her premises or under his or her control, to the extent provided for in the Act and this Code;
(c) every category or class of persons as contemplated in the Act, taking into account the nature of the relevant provisions of this Code as well as the juristic nature of such persons; and
(d) the relevant conduct of a security service provider at any place, irrespective of whether the conduct was committed within or outside the Republic.
This code also applies to:
15. Private investigators
16. Locksmiths
17. Security consultants and advisers
18. Security service providers ensuring order and safety on premises used for sporting, recreational, entertainment or similar purposes
19. Security service providers providing security training
20. Security service providers installing, servicing or repairing security equipment or performing certain functions regarding monitoring devices
2.8 Corporate Governance (SO2; AC 2) Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way an organisation is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed.
The principal stakeholders are the shareholders /members, management, and the board of directors. Other stakeholders include employees, customers, creditors (e.g., banks), suppliers, regulators, and the community at large.
We can also say that corporate governance is a system of structuring, operating and controlling a company with a view to achieve long term strategic goals to satisfy shareholders, creditors, employees, customers and suppliers, and complying with the legal and regulatory requirements, apart from meeting environmental and local community needs.
In corporations, the shareholder delegates decision rights to the manager to act in the principal's best interests. This separation of ownership from control implies a loss of effective control by shareholders over managerial decisions. Partly as a result of this separation between the two parties, a system of corporate governance controls is implemented to assist in aligning the incentives of managers with those of shareholders.
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a. Principles of corporate governance
✓ Rights and equitable treatment of shareholders
Organisations should respect the rights of shareholders and help shareholders to exercise those rights. They can help shareholders exercise their rights by effectively communicating information that is understandable and accessible and encouraging shareholders to participate in general meetings.
✓ Interests of other stakeholders
Organisations should recognize that they have legal and other obligations to all legitimate stakeholders.
✓ Role and responsibilities of the board
The board needs a range of skills and understanding to be able to deal with various business issues and have the ability to review and challenge management performance. It needs to be of sufficient size and have an appropriate level of commitment to fulfill its responsibilities and duties. There are issues about the appropriate mix of executive and non-executive directors.
✓ Integrity and ethical behaviour
Ethical and responsible decision making is not only important for public relations, but it is also a necessary element in risk management and avoiding lawsuits. Organisations should develop a code of conduct for their directors and executives that promotes ethical and responsible decision making. It is important to understand, though, that reliance by a company on the integrity and ethics of individuals is bound to eventual failure. Because of this, many organisations establish compliance and ethics programs to minimise the risk that the firm steps outside of ethical and legal boundaries.
✓ Disclosure and transparency
Organisations should clarify and make publicly known the roles and responsibilities of board and management to provide shareholders with a level of accountability. They should also implement procedures to independently verify and safeguard the integrity of the company's financial reporting. Disclosure of material matters concerning the organisation should be timely and balanced to ensure that all investors have access to clear, factual information.
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b. Controls needed for corporate governance
Corporate governance mechanisms and controls are designed to reduce the inefficiencies that arise from poor ethics. For example, to monitor managers' behaviour, an independent third party (the external auditor) attests the accuracy of information provided by management to investors. An ideal control system should regulate both motivation and ability.
Issues that have to be addressed for effective corporate governance include:
▪ internal controls and internal auditors
▪ the independence of the organisation’s external auditors and the quality of their audits
▪ oversight and management of risk
▪ oversight of the preparation of the entity's financial statements
▪ review of the compensation arrangements for the chief executive officer and other senior executives
▪ the resources made available to directors in carrying out their duties
▪ the way in which individuals are nominated for positions on the board
✓ Internal controls
Internal corporate governance controls monitor activities and then take corrective action to accomplish organisational goals. Internal controls involving corporate governance include:
▪ Monitoring by the board of directors: The board of directors, with its legal authority to hire, fire and compensate top management, safeguards invested capital. Regular board meetings allow potential problems to be identified, discussed and avoided
▪ Internal control procedures and internal auditors: Internal control procedures are policies implemented by an organisation’s board of directors and other personnel to provide reasonable assurance of the organisation achieving its objectives related to reliable financial reporting, operating efficiency, and compliance with laws and regulations. Internal auditors are personnel within an organisation who test the design and implementation of the organisation’s internal control procedures and the reliability of its financial reporting
▪ Dividing the power: Balance of power: The simplest division of power is very common; require that the President or CEO be a different person from the Treasurer. This is done
Principles of Corporate Governance
Rights and equitable
treatment of
shareholders
Interests of other
stakeholders
Role and responsibilities of the board
Integrity and ethical
behaviour
Disclosure and
transparency
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so that the same person is not in control of both the finances of the organisation and the organisation itself. This application of separation of power is further developed in companies where separate divisions check and balance each other's actions. One group may propose company-wide administrative changes, another group review and can veto the changes, and a third group check that the interests of people (customers, shareholders, employees) outside the three groups are being met
✓ External controls
External corporate governance controls include the controls that external stakeholders exercise over the organisation. Examples include:
▪ competition
▪ demand for and assessment of performance information in the form of, for example, financial statements
▪ government regulations
▪ media pressure
▪ takeovers
2.9 Business Ethical Practices (SO2; AC3)
a. Sales and marketing ethics
There are many issues to consider regarding marketing ethics. We will discuss some marketing tactics that can be considered unethical.
✓ Bait and switch
Bait and switch is a form of fraud in which the party putting forth the fraud (for example a store selling electrical appliances) lures in customers by advertising a product or service at a very low price, then reveals to potential customers that the advertised good is not available but that a substitute is.
The goal of the bait-and-switch is to convince some buyers to purchase the substitute good as a means of avoiding disappointment over not getting the bait
✓ False advertising
False advertising or deceptive advertising is the use of false or misleading statements in advertisements. There are many types of false advertising:
Hidden fees and surcharges
Service providers often add fees and surcharges that are not mentioned to the customer in the advertised price.
One of the most common is for activation of services such as mobile phones, but is also common in broadband. In most cases, the fees are hidden in fine print, though in a few cases they are so confused and obfuscated by ambiguous terminology that they are essentially undisclosed
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Mail order companies often hit customers with "shipping and handling " charges not included in the stated price, and only show at the very end of a TV commercial.
Inflated price comparison
When comparing a sale price to a "regular" price for the same product, advertisers can inflate the "regular" price in order to create the impression that the sale price is very low.
The intent is obviously to mislead consumers into thinking that they are saving money by purchasing the "on-sale" item or service by advertising a large-percentage "discount".
Buy x, get y free
This type of false advertising concludes that more is better. By increasing the price of a firecracker, for example, to five times its original marginal profit-based price, a 5-for-1 "special" sale is offered while still keeping the same profit line.
In other cases the free product is of lower quality than the originally-purchased item, or its value a greatly overstated.
Often, buy-one-get-one "deals" are simply an excuse to use the word "FREE" in advertising. The item may simply be "50% off" or "half price", or the shopper may actually be forced to buy at least two, or even in multiples of two. Because the shopper must buy something first, the "free" item is not truly free.
Introductory offers
An introductory offer or "free trial" is an offer for an ongoing service that is valid for a limited period. After this period, the price or terms of the agreement change, often without further notice to any consumers which have accepted the initial offer. This differs from bait and switch because the terms or "bait" are in fact actually delivered (making it only deceptive rather than inherently false), but the switch still occurs later on.
The most common form of this is credit card, which offer low interest rates to start and then rise greatly afterward
Meaningless terms
Manufacturers and sellers often use terms that sound advanced or deluxe to the average consumer, but really mean nothing at all. Most generically, this includes words like "deluxe", "advanced", "super", "ultra", "premium", "heavy duty" and others
Label tampering
Product labels may initially contain truthful information which is later removed or obscured.
For foods, the expiry date may be changed, which in meats can cause dangerous levels of bacteria to grow. Other foods may simply become stale while still being safe to eat. Canned foods may have their labels removed.
Another method of false labelling is hiding or destroying a label indicating the product's origin (e.g. "Made in India" or "Made in Botswana").
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✓ Greenwash
Greenwash is a term used to describe the practice of companies who claim that their products and policies are environmentally friendly, when this is not the case. One such an example is by stating that cost cuts are reductions in use of resources.
It is a deceptive use of green marketing.
✓ Price fixing
Price fixing is an agreement between business competitors to sell the same product or service at the same price. In general, it is an agreement intended to ultimately push the price of a product as high as possible, leading to profits for all the sellers.
Price fixing requires a conspiracy between two or more sellers; the purpose is to coordinate pricing for mutual benefit at the expense of buyers.
In South Africa a while ago, the manufacturers of bread were found guilty of price fixing.
✓ Pyramid scheme
A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, often without any product or service being delivered
A successful pyramid scheme combines a fake yet seemingly credible business with a simple-to-understand yet sophisticated-sounding money-making formula which is used for profit. The essential idea is that the mark, Mr. X, makes only one payment. To start earning, Mr. X has to recruit others like him who will also make one payment each. Mr. X gets paid out of receipts from those new recruits. They then go on to recruit others. As each new recruit makes a payment, Mr. X gets a cut. He is thus promised exponential benefits as the "business" expands.
Such "businesses" seldom involve sales of real products or services to which a monetary value might be easily attached.
b. Bid (tender) rigging
Bid rigging is a form of fraud in which a commercial contract is promised to one party even though for the sake of appearance several other parties also present a bid. It is a form of price fixing and market allocation, often practised where contracts are determined by a call for bids (tenders), for example in the case of government contracts.
Bid-rigging almost always results in economic harm to the agency which is seeking the bids, and to the public, who ultimately bear the costs as taxpayers or consumers
There are some very common bid-rigging practices:
▪ Subcontract bid-rigging occurs where some of the conspirators agree not to submit bids, or to submit cover bids that are intended not to be successful, on the condition that some parts of the successful bidder's contract will be subcontracted to them. In this way, they "share the spoils" among themselves.
▪ Bid suppression occurs where some of the conspirators agree not to submit a bid so that another conspirator can successfully win the contract.
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▪ Complementary bidding, also known as cover bidding or courtesy bidding, occurs where some of the bidders bid an amount knowing that it is too high or contains conditions that they know to be unacceptable to the agency calling for the bids.
▪ Bid rotation occurs where the bidders take turns being the designated successful bidder, for example, each conspirator is designated to be the successful bidder on certain contracts, with conspirators designated to win other contracts. This is a form of market allocation, where the conspirators allocate or apportion markets, products, customers or geographic territories among themselves, so that each will get a "fair share" of the total business, without having to truly compete with the others for that business.
c. Ethics of accounting information
Ethics of accounting information includes:
▪ Accounting practices known as creative accounting, earnings management and misleading financial analysis
▪ Insider trading and forex scams that are criminal manipulation of the financial markets
▪ Executive compensation: when excessive payments are made to corporate CEO’s and top management
▪ Bribery, kickbacks and facilitation payments: While these may be in the (short-term) interests of the company and its shareholders, these practices may be anti-competitive or offend against the values of society.
✓ Bribery
Bribery is an act where money or a gift is given to someone in order to influence the actions of that person. It may be any money, property, object of value, advantage, or merely a promise or undertaking to induce or influence the action, vote, or influence of a person in an official or public capacity
The forms that bribery take are numerous. For example, a motorist might bribe a police officer not to issue a ticket for speeding, a citizen seeking paperwork or utility line connections might bribe a functionary for faster service.
Bribery may also take the form of a secret commission, a profit made by an agent, in the course of his employment, without the knowledge of his principal. Euphemisms abound for this (commission, sweetener, back-kick etc.) Bribers and recipients of bribery are likewise numerous although bribers have one common denominator and that is the financial ability to bribe.
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✓ Creative accounting and earnings management
Creative accounting and earnings management are euphemisms that refer to accounting practices that may follow the letter of the rules of standard accounting practices, but deviate from the spirit of those rules.
The term refers to systematic misrepresentation of the true income and assets of an organisation.
Earnings management usually involves the artificial increase (or decrease) of revenue, profits, or earnings per share figures through aggressive accounting tactics.
✓ Misleading financial analysis
When financial analysis of an organisation is used to misrepresent the organisation, its situation or its prospects, it is misleading.
Misleading financial analysis is sometimes used to obtain money by misdirecting people to invest in a stock market bubble, profiting (or assisting others to profit) from the increase in value, then removing funds before the bubble collapses, for instance in a stock market crash.
d. Ethics of human resource management
The ethics of human resource management (HRM) covers those ethical issues arising around the employer-employee relationship, such as the rights and duties owed between employer and employee.
▪ Discrimination issues include discrimination on the bases of age, gender, race, religion, disabilities, weight and attractiveness.
▪ Issues arising from the traditional view of relationships between employers and employees, also known as At-will employment.
▪ Issues surrounding the representation of employees and the democratization of the workplace: union busting and strike breaking.
▪ Issues affecting the privacy of the employee: workplace surveillance, drug testing.
▪ Issues affecting the privacy of the employer: whistle-blowing
▪ Issues relating to the fairness of the employment contract and the balance of power between employer and employee.
▪ Occupational health and safety.
e. Ethics of intellectual property, knowledge and skills
Knowledge and skills are valuable but not easily "ownable" as objects. Nor is it obvious who has the greater rights to an idea: the company who trained the employee, or the employee themselves? The country in which the plant grew, or the company which discovered and developed the plant's medicinal potential? As a result, attempts to assert ownership and ethical disputes over ownership arise. Ethical issues include:
Patent infringement, copyright infringement, trademark infringement
▪ Misuse of the intellectual property systems to stifle competition.
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▪ Employee raining the practice of attracting key employees away from a competitor to take unfair advantage of the knowledge or skills they may possess.
▪ The practice of employing all the most talented people in a specific field, regardless of need, in order to prevent any competitors employing them.
▪ Business intelligence and industrial espionage.
✓ Copyright
Copyright infringement (or copyright violation) is the unauthorized use of material that is covered by copyright law, in a manner that violates one of the copyright owner's exclusive rights, such as the right to reproduce or perform the copyrighted work.
✓ Industrial espionage
Industrial espionage describes activities such as theft of trade secrets and technological surveillance. Information can make the difference between success and failure. When a trade secret is stolen, the competitive playing field is levelled or even tipped in favour of a competitor.
Corporate espionage is a threat to any business whose livelihood depends on information. The information competitors seek may be client lists, supplier agreements, personnel records, research documents, or prototype plans for a new product or service.
f. Ethics and Technology
The computer and the World Wide Web are two of the most significant inventions of the twentieth century. There are many ethical issues that arise from this technology. It is easy to gain access to information. This leads to data mining, workplace monitoring, and privacy invasion.
Copyright and industrial espionage issues also affect the ethics of technology. The unlawful downloading of copyrighted material and sharing of recorded music over the Internet is more prominent now than ever.
g. Ethics of production
This area of business ethics usually deals with the duties of a company to ensure that products and production processes do not cause harm. Some of the more acute dilemmas in this area arise out of the fact that there is usually a degree of danger in any product or production process and it is difficult to define a degree of permissibility.
▪ Defective, addictive and inherently dangerous products and services (e.g. tobacco, alcohol, weapons, motor vehicles, chemical manufacturing, bungee jumping).
▪ Ethical relations between the company and the environment: pollution, environmental ethics, carbon emissions trading.
Industrial espionage or corporate espionage is espionage conducted for commercial purposes instead of national security purposes.
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1. Ethical problems arising out of new technologies: genetically modified food, mobile phone radiation and health.
2. Product testing ethics: animal testing, use of economically disadvantaged groups (such as students) as test objects.
Formative Assessment 3
Formative Assessment 4
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SECTION 3: ANALYSE A UNIT IN RELATION TO THE PRINCIPLES OF CORPORATE ETHICS
Specific Outcome 3
Analyse a unit in relation to the principles of corporate ethics
Assessment Criteria
1. An instrument is selected for analysing individual and organisational conduct in respect of organisational values, codes of conduct and corporate ethics
2. The instrument is applied to gather and record information within a unit in respect of organisational values, codes of conduct and corporate ethics
3. The instrument is applied to evaluate the current state in a unit against the desired state in respect of organisational values, codes of conduct and corporate
3.1 Selecting an instrument to analyse individual and organisational conduct (SO3; AC1)
Whilst codes of conduct differ across organisations, they aim to influence behaviour by setting out the values, standards of behaviour and business practices that are expected of employees and other stakeholders.
In order to be effective, the development and the implementation of an organisational code needs to be carefully considered. Codes should reflect the true values and behaviours that the organisation wants to uphold rather than being a public relations exercise.
The content of an organisation's code will be influenced by the objectives of the code as well as the organisation's strategy and culture. Codes should use plain, positive language, should be clear and precise and widely accessible. Their implementation should be actively monitored.
There also needs to be training and support for individuals to enable them to deal with circumstances which may threaten the values the organisation wants to uphold.
One of the unknown factors in developing and implementing a code of conduct depends on how individuals are likely to respond to it. An organisation needs to understand how codes will affect individuals' decision making and behaviour.
Below are examples of some of the instruments that an organisation may choose to utilise when analysing an individual/organisation’s conduct in respect of the organisation’s values, codes and corporate ethics:
▪ Conduct an internal survey, using interviews and questionnaires
▪ Conduct an external survey, for example amongst suppliers and customers, also using interviews and questionnaires
▪ Observe the behaviour of employees: This involves looking at what people do and how they behave and then recording the findings
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In order to ensure that the organisation as a whole complies with the ethics as laid down, these instruments are applied to gather and record information. The recorded information is then evaluated, and an overall judgement is made on the organisation’s current state as opposed to the expected state in terms of it’s values, conduct and corporate ethics. Such instruments essentially promote:
1. An effective governance
2. The organisation’s business objectives
3. Identifies the boundaries of legal and ethical behaviour
4. Establishes a system to alert management when the organisation is getting close to (or crossing) a boundary or approaching an obstacle that prevents the achievement of a business objective
3.2 Applying the selected instrument to gather information (SO3; AC2) An organisation’s ethical conduct should be measured like any other critical capability. By using accurate, timely data on the units performance, you will know whether your team/section/department is moving closer to your objectives.
There are many benefits and challenges to measuring the performance of individuals conduct. A well-known maxim is "what gets measured gets done.” The same concept applies.
✓ Analyse conduct
The first step in analysing the ethical conduct is to analyse the behaviour of people in your team to find out if they are complying with the ethics as laid down by the organisation.
The dictionary defines analyse as follows:
▪ To study or determine the nature and relationship of the parts of by analysis
▪ A means to divide a complex whole into its parts or elements. Analyse suggests separating or distinguishing the component parts of something (as a substance, a process, a situation) so as to discover its true nature or inner relationships ‹analysed the collected data›
To analyse conduct, you should utilise any of the previously mentioned instruments.
a. Surveys
When you do a survey, you gather data by using a standardised questionnaire and sometimes also conducting structured interviews.
The basic process of conducting a survey is as follows:
▪ Determine the aim of the survey (also called research)
▪ Identify the population and sample: from which population group will you gather the information?
▪ Decide how to collect replies: how will you get their replies to your questionnaire: by phone, mail, verbally, etc.?
▪ Design your questionnaire: the questions you will ask in order to collect the information
▪ Run a pilot survey: a test survey to check the process, the questions, the aim and the information
▪ Carry out the main survey: the actual research
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▪ Analyse the data: now you will analyse the data in order to find out what it tells you.
It is important that the questions in your questionnaire asks questions that relate to the aim of the survey in the first place e.g. the ethical behaviours of the organisation
This is why you must first determine the aim and identify the population sample and also decide how you will collect the replies before you draw up the questionnaire.
You must also carefully think about how you will analyse the data before you start collecting the data. You should actually know before you even do the questionnaire how you will analyse the data.
✓ Step 1: determine your research aims
Start your survey by setting sown the aims for the survey. Why are you doing research and what do you want to achieve? What do you want to know? If we use Markinor as an example, they want to determine before the election who is going to win in which area, and how the other political parties will do during the elections.
In terms of an ethics programme, it can be that you want to find out:
▪ Whether employees understand the code of conduct and its implications
▪ Whether employees are accepting gifts from suppliers
▪ Whether employees are giving customers gifts in order to obtain business
▪ Whether employees treat all customers equally, etc.
✓ Step 2: identify the population and sample
Sampling is a basic concept used in statistics and is used to try to estimate what the parameters of a population are. For example, I may want to estimate how tall South African men are on the average. Perhaps I will measure a few hundred men and calculate their average. The men chosen for measurement are the sample. The parameter I am looking for is the average height of South African men.
One sip of milk is sufficient to let you know that the milk is sour. This is what sampling is all about. In order gain information about the whole you only need to examine a part. On the other hand, sipping a glass of water tells me nothing about the milk.
Here are a few definitions that statisticians use when dealing with samples:
▪ A ‘population’ is the entire group of objects about which information is wanted.
▪ A ‘unit’ is any individual member of the population.
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▪ A ‘sample’ is a part or subset of the population used to gain information about the whole.
▪ A ‘sampling frame’ is the list or units from which the sample is chosen.
▪ A ‘variable’ is a characteristic of a unit that is to be measured for those units in the sample.
The distinction between population and sample is extremely important to statistics. First, we look at a population then quote some examples to make the distinction clear.
A population is defined in terms of our desire for information about that population. For example, if I want information about all high school students in South Africa, then the population is all high school students in South Africa. Even if I can only choose one high school and its students, the population remains all high school students in South Africa.
It is extremely important to define clearly the population of interest.
If you want to determine how many South Africans are in favour of gun control laws, you must define the population precisely. Are all South African residents included, or only citizens? What is the minimum age you require? Are individuals imprisoned for violent crimes allowed to be included, or just those with minor offences, or none at all?
The following examples are presented to give an understanding of population, sample and variables. Data (numbers) used in most examples are completely fictitious as you have been warned.
Example 1
The national census attempts to collect basic detailed information from each household in the country.
▪ Population: all South African households
▪ Sample: the entire population, as far as possible.
▪ Variables: the number of occupants, age, race, gender, family relationships, access to electricity, water and telephone services.
Example 2
You want to do market research to find out your customers’ preference and usage of various products or services. Undoubtedly you have heard radio or TV announcers state that their station is listened to or watched by 80% of South African while their competitors only make up the remainder.
▪ Population: all South Africans who have either a radio or a TV.
▪ Sample: about 1500 residents of South Africa
▪ Variables: gender, racial group, age, residential area, income category and the answers to the specific question or questions.
When Markinor does a survey before an election, they do not ask every person in the country for their views or opinions, they choose a number of people from the various population groups. The number of people they choose is called a sample: a sub-set of the population, while the population is the members of the group you are interested in.
When you choose the sample for a countrywide survey, you have to make sure that your sample represents the entire population. Usually the sample will then be chosen from a list that contains all the members of the population, such a list is called a sampling frame.
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This is probably what Markinor does when they do surveys before elections. Luckily, for most of the research we want to do we do not have to go countrywide: We can usually choose from our community or customers or the customers of our competitors.
So, you have to decide if you want to include all the employees of the team/section/department in your survey, of if you will focus on people working with the public, for example.
Design the survey
There are three general forms of surveys: questionnaires, interviews and network analysis. This manual introduces questionnaires and only briefly describes interviews.
In addition to surveying with questionnaires and interviews researchers may make direct observations.
✓ Step 3: decide how to collect replies
Now you have to decide the following:
▪ Are you going to mail the questionnaire
▪ Are you going to send the questionnaire by e-mail
▪ Are you going to phone customers
▪ Are you going to question customers face-to-face
If you are going to conduct the survey by means of telephone or face-to-face interviews, you have to decide who will do the interviews and how you will control the quality of the interviews. Remember, if you do not do this yourself, people can lie about how many interviews they conducted and what the response of the people they interviewed were.
It will also be important for the interviewer to explain to the potential respondent why they should answer the questions. They should persuade people to take part in the survey, not force them.
✓ Step 4: questionnaire design
Most researchers make the mistake of asking too many questions. Your greatest enemy in survey research may well be poor response rate. Clear and concise questionnaires can help get the best response.
Design of the questionnaire can be split into three elements:
▪ Determine the questions to be asked
▪ Select they question type for each question type and specify the wording
▪ Design the question sequence and overall questionnaire layout
Determine the Questions to be Asked
Obviously, your questions should relate directly to the aim of the survey and to the specific information that you will require.
Question types
Open-ended Questions: E.g. Do you think football hooliganism is caused by: (tick if appropriate)
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Lack of discipline at home
Players’ behaviour on pitch
Family breakdown
Youth unemployment
Poor schooling
Violence on T.V.
Other (please specify)
Single vs. Multiple Response: E.g. What is your most usual means of travelling to college?
Bus
Car
Bike
Rated Response: A popular approach in the social science is to use Likert scales such as the example below.
Please state how often you use the following: (Please circle the numbers as appropriate)
Very often Often Occasionally Never
Newspapers 1 2 3 4
Books 1 2 3 4
Periodicals 1 2 3 4
Questionnaire instructions
Questionnaire instructions should help respondents by explaining how they should answer questions. Instructions must be clear and should explain to people how they are to complete the questionnaire. As a matter of routine, many researchers find it useful to provide a category where the respondent can indicate ‘no response’ or ‘not applicable.’ This strategy is useful since researchers can separate incomplete responses from thoughtful refusals to respond. The table on the next page shows some typical methods used for questions.
Wording of questions
When you compile a questionnaire, think carefully how you phrase the questions that you are going to ask the people out there. You have to phrase the questions in such a manner that the people who complete them must:
▪ Be able to understand the question
▪ Be able to answer the question
▪ Be willing to give you the information you need
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You also have to ensure that the questions and the way you ask them cannot be constituted as biased in any way, e.g. biased based on race, gender, age, religion, culture, etc.
Decide on layout and sequence
▪ Do not clutter up the form with unnecessary headings and numbers.
▪ Include the contact and return information on the questionnaire, irrespective of whether addressed return envelopes are provided, these can easily become separated.
▪ Identify individual questions for reference purposes.
▪ Be careful not to overfill the page.
▪ Avoid using lots of lines, borders and boxes since these can make the page look too ‘dense’.
▪ Small fonts may put people off, especially people with bad eyesight.
▪ Use a good legible font.
▪ Make good use of italics and bold types, think of using italics consistently to give instructions.
▪ Consider using bold for the questions themselves or for headings. Symbol fonts may also be useful.
▪ Begin with questions that will raise interest.
▪ You should try to keep the flow through the questionnaire logical and very simple, i.e. avoid any complex branching.
✓ Step 5: run a pilot survey
Test the questionnaire on a small sample of your subjects first. If this is not possible at least test it on some colleagues or friends. The aim here is to detect any flaws in your questioning and correct these prior to the main survey.
Having done your pilot survey, you can make amendments that will help to maximise your response rate and minimise your error rate on answers.
✓ Step 6: carry out the main survey
The purpose of doing a pilot survey is to find out if you have to change anything in the questionnaires or in your population sample or even the aim of your survey.
If you are using fieldworkers, you have to ensure that they are well trained to minimise errors in the collecting of data.
▪ Errors when choosing respondents
▪ Interviewer dishonesty
▪ Misinterpreting or misreporting of information
▪ Non responses: where people are not at home or refuse to answer questions
For the process of actually doing the survey, you also have to
▪ Set deadlines: start on a specific day and end on a specific day
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▪ Determine the number of questionnaires you want to complete by that day
▪ If you employ field workers, how many questionnaires every day and how many at the end of the period
▪ You have to put an administrative process in place: who is going to collect the completed questionnaires?
▪ You must also have a quality and cost control system in place to prevent dishonesty and prevent fieldworkers from charging too much and wasting too much time. You could, for example, pay per correctly completed questionnaire.
b. In-depth interviews
Questionnaires are handy but researchers sometimes find interview methods more useful for a couple of reasons. It is easy for many people to ignore a cold questionnaire, but it may be difficult for them to ignore a live person who asks questions.
Of course, the interviewer may arouse some suspicions, but this is part of the job to involve respondents in the task. Interviews are conducted to increase the willingness of the respondent to participate and to obtain information that may be lost with a questionnaire.
We can say that a research interview is:
▪ a structured interaction
▪ between an investigator (also called the interviewer) and a subject
▪ who has been identified as a potential source of information
During a structured interview, the interviewer will initiate and control the interview. The purpose of the interview is so that the researcher obtains information which can be compared and contrasted with information from other interviews
In depth interviews differ from direct observation mainly in the way the interaction takes place. In interviews you will find an interviewer and one or more interviewees. During the interview, the interviewer will focus on the ideas and standpoints of the interviewees about the subject of the research
The interviewer may record information (such as a respondent’s manner and body language) that would be absent with the questionnaire method.
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c. Observation
Observation usually includes a range of methods: informal interviews, direct observation of people, objects or events, collective discussions, analyses of personal documents produced, self-analysis, and life-histories.
You would probably use a questionnaire that you complete while observing the employee, or you may complete the questionnaire directly after observing the employee.
Observation is usually undertaken over an extended period of time. An extended research time period means that the researcher You) will be able to obtain more detailed and accurate information about the people you are studying.
You will be able to observe details such as:
▪ Daily timekeeping
▪ Dress
▪ Communication with team members (or lack thereof)
▪ Meeting deadlines
▪ And even more hidden details, such as behaviour that is not allowed
When you observe employees over a period of time you will be able to see discrepancies between what employees say -- and often believe -- should happen (the formal system) and what actually does happen.
In contrast, a one-time survey of people's answers to a set of questions might be quite consistent, but is less likely to show conflicts between conscious representations and behaviour
3.3 Evaluate the Conduct (SO3; AC3) The Merriam-Webster dictionary defines evaluate as follows:
When you evaluate the ethical conduct, you determine how successful your team or section was in abiding by the ethics and code of conduct of the organisation.
You take the original objectives of the team and compare your findings against these objectives.
In order to compare your findings, you have to be able to draw conclusions from the information. In order to draw conclusions from our data, we have to understand it by looking at it to see what the data is telling us.
a. Analyse the data
Now you have all the information, you have to do something with it: analyse the information. The only reason you went to all the trouble of conducting market research is that you want information, so that you can analyse the information and use it for the benefit of your new venture.
Once you have all the information, you have to organise it, summarise it and simplify the information so that you can make sense of it.
The easiest would be to prepare a document that lists all the questions. You then count all the answers and add the totals to the document.
To determine the significance, worth, or condition of, usually by careful appraisal and study estimate
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Example
Do you play computer games? Yes 1450 No 550
Now you can calculate a percentage of the sample: who plays computer games and therefore might be interested in buying a new game.
Total questionnaires received: 2000
Total Yes 1450 percentage of sample: 72%
Total No 550 percentage of sample 18%
This means that, of the people who took part in the survey, 72% do play computer games.
b. Describing data
Tables organise data and graphs present a clear overall picture of the distribution and spread of the data.
We used tables during the formative assessment to organise data.
▪ Bar graphs
Bar graphs compare measurements at intervals, the bars run horizontally. Column charts compare measurements at intervals and provide a view of data at a specific time. The bars run vertically
The example below shows a column chart indicating how many ice creams were sold from January to May.
If you use a bar chart, the bars will run horizontally and not vertically as with a column chart.
Number Of Ice Creams Sold
In a bar chart, the heights of the bars are important.
When you draw a bar graph, state clearly what you are representing on the two axes. This means that you have to label the axes. Also insert it on the graph above.
▪ Draw the axes at right angles to each other
▪ Choose a scale for the vertical axis and write in the units.
▪ Use a ruler to help you read off the height of a bar.
0
10
20
30
40
50
60
70
80
90
100
Jan Feb March April May
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▪ Pie Charts
The pie chart shows how a whole is divided into parts. The home language distribution is shown on the next page.
The pie chart is a good option to choose when you want to show the relationships that parts have to the total. In this example, all the home languages are compared. They have been ordered from largest (IsiZulu) to the smallest (Other) and are displayed in this manner in the pie chart. The legend on the right as well as the labels and colouring of each section of the pie make the pie chart easy to understand.
Pie charts show us the parts that make up the whole but humans don’t see angles as clearly as we see length. For this reason, the pie chart is not a good choice to compare sizes of various parts with the whole.
A pie chart shows the breakdown of a total. A pie chart is a good way to show how a fixed number is
divided. The whole circle (360 ْ ) represents the total number (or 100%) and we express each part as a
fraction or percentage of the whole. A pie chart is constructed by converting the share of each component into a percentage of 360 degrees.
Car Sales 1996
Corolla 850 units
Ford 425 units
Nissan 250 units
Chevrolet 475 units
Formative Assessment 5
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SECTION 4: STRENGTHENING ORGANISATIONAL ETHICS
Specific Outcome 4
Formulate recommendations for strengthening shared organisational values, the code of conduct and ethical practices
Assessment Criteria
1. An implementation plan is prepared that describes the strengthening of the entity's values, code of conduct and ethical practices in the unit
2. The role and responsibilities of the manager are described in terms of decision making to strengthen the values, code of conduct and ethical practices in a unit and the entity
3. The communication activities for promoting the entity's values, code of conduct and ethical practices are outlined in the plan, with role allocation and time frames
4. The process for monitoring and evaluating improvements in relation to the entity's organisational values, code of conduct and ethical practices in a unit is described with role allocation and time frames
4.1 Implementation of effective conduct (SO4, AC1) There are indeed several measures that can be taken to reduce or confine unethical practices in the workplace. It is important to realise that unethical behaviour amongst employees with an inadequate stage of moral development can be reduced by good management.
On the other hand, employees with a better developed sense of morality may fall prey to unethical practice if there is insufficient control in the workplace.
▪ Involve all the stakeholders
In order to effectively implement an ethics compliance programme, it is important that all the stakeholders are involved. This means that you will have to consult with all the stakeholders in your team/section/department about the goals, objectives and overall purpose of the program.
▪ Proper management
Management must set a good example and the code of conduct should be controlled in the workplace.
▪ Democratic principles
Upholding democratic principles allows for unethical office holders to be removed from office through the general election, or local government election, process.
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▪ Training
Employees must receive proper training to ensure that they are equipped with the knowledge and skills to successfully execute their responsibilities. Specific training in what it means to be ethical must also be included.
▪ Secrecy
Get rid of excessive secrecy in the workplace. Only that information which could threaten the security of the country needs to be kept secret. Government must be transparent in its dealings with the people.
▪ Leadership
By demonstrating good leadership, you can consistently communicate the organisation’s values and behavioural expectations as identified in the compliance and ethics program.
▪ Accountability and ownership
Accountability and ownership from all the stakeholders in your team/section/department. For the compliance and ethics program to make a difference, it should place responsibility on individuals for their actions. You should also ensure that employees have appropriate training and information.
▪ Culture
Provide an open culture so that issues and problems can be investigated and proactively managed to resolution. Make sure that unethical or illegal behaviour is addressed promptly. Employees must be required to raise and resolve violations of compliance or ethics standards. To do so, they must feel confident that they can take action without fear of retaliation
▪ Measure performance and results
Compliance and ethics processes and results should be monitored and measured. The results of evaluation should provide the basis for continually improving the program
You will also have to integrate compliance and ethics into business procedures. For some companies this means making a breach of company policy as serious as breaching laws, resulting in “internal” standards being as important as “mandatory” standards. This means you have to put procedures in place that have to be followed when the code of conduct is breached.
▪ Foundation for a code of ethics
The cornerstone for ethical behaviour in an organisation should include the following:
✓ Preparing an implementation plan
In the implementation plan you must specify and explain clearly WHAT has to be done, WHY it must be done, WHEN it should be done, WHO must do it and HOW it should be done
A plan is like a map that you will use to find out if things are being done the way you want it done.
Respect other people
Equity and Equality
Ownership of professional and personal responsibility
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You have to refer back to your plans regularly to find out if you are still on track. When something on the plan is not working out the way you want it to, do not despair – there is no failure, there is only feedback. If things go wrong, don't wait for others to change –start the change with yourself – what can you do differently to get back on track. If what you're doing isn't working, do something different. Learning from feedback means that you are improving your skills, knowledge and action all the time.
So, analyse the plan, do a problem-solving exercise to find out why you are not on track, take corrective action and then change the plan to include the changes.
The plan should include:
▪ How and when you will consult with stakeholders
▪ How and when training will take place
▪ Exactly what is required of employees, including values, code of conduct and ethical practices in the unit
▪ How the organisation’s values, code of conduct and ethical practices will be communicated to the team/section/department, who will be responsible for the communication as well as the time frames within which the communication will take place
▪ How the implementation will be monitored and evaluated
▪ How and when feedback will be provided
▪ How and when recommendations can be made in order to strengthen the organisation’s values, code of conduct and ethical practices
▪ Communication activities
4.2 The role and responsibilities of the manager (SO4, AC2)
Your plan must also describe the role the manager will play in order to strengthen the values, code of conduct and ethical practices, for example setting a good example and applying democratic leadership.
Responsibilities of the manager will include:
▪ Exercising control over the team, section or department regarding ethical business practices
▪ Establishing and implementing procedures for reporting of unethical business practices
▪ Getting rid of excessive secrecy in the workplace
▪ Requiring accountability and ownership from all the stakeholders
▪ Providing an open culture where reporting of unethical behaviour can take place without fear of retaliation
The manager will be required to make decisions regarding ethical practices, for example in terms of the procedures that have to be followed when the code of ethics is breached.
The manager will also be required to consider suggestions for improving the code of conduct and make decisions regarding implementing these improvements.
✓ Procedures
The question is how do we act towards those who are unethical in the workplace? Let’s look at different situations. The answers are provided next to each situation.
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Harassment
The organisation must have a policy against any form of harassment. What is harassment? Harassment in such forms as sexism, racism or bullying others. This is also when someone denies respect for the rights of employees or managers. Harassment can be harmful to organisational effectiveness and may also be unlawful.
What do I do in a situation like this?
Go to your supervisor or manager. Ask them to inform the Human Resource Management Department. The Human Resource Management Department should provide you with a copy of the policy which prohibited employees or managers to participate in such activities.
Discrimination
Organisations should prohibit anyone who discriminates. Organisations must implement structures that are free from direct or indirect discrimination on the grounds of sex, marital status or pregnancy, race, age, sexual preference, religious or political beliefs, impairment, family responsibility or family status.
What do I do in a situation like this?
Discuss this with your supervisor or manager first. Seek for advice from the Human Resource Department and they should provide you a copy of their policies.
There has to be a procedure through which unethical behaviour can be reported:
▪ When the code of ethics is breached
The process to be followed when the code of ethics is breached:
There are specific processes to follow when the code of ethics is breached in an organisation. Each organisation or business strives to implement different codes of ethics to suite their organisational needs. The following steps may be followed in serious offences e.g. Discrimination, fraud, bribery, theft etc.
1. Determine the nature and extent of the breach of ethics.
2. Determine what penalties, if any, have been incurred.
3. Decide whether the breach of ethics could constitute a criminal, delictual (Law term) or labour offence.
4. Seek legal advice as to the best remedy for the situation.
5. Implement appropriate legal proceedings.
▪ Another process to be followed BEFORE the code of ethics are breached
Organisations or businesses should provide more ethics training to strengthen their employees' personal ethical framework. Organisations must devote more resources to ethics training programs to help its members clarify their ethical frameworks and practice self-discipline when making ethical decisions in difficult circumstances. What follows is a useful seven-step checklist that organisations should use to help their employees in dealing with an ethical dilemma (Schermerhorn, 1989; Otten, 1986):
1. Recognize and clarify the dilemma.
2. Get all the possible facts.
3. List your options-all of them.
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4. Test each option by asking: "Is it legal? Is it right? Is it beneficial?"
5. Make your decision.
6. Double check your decision by asking: "How would I feel if my family found out about this? How would I feel if my decision was printed in the local newspaper?"
7. Take action.
4.3 Outlining communication activities within the plan (SO4, AC3) Communication activities are activities that will take place in order to promote the values, code of conduct and ethical practices required by the unit. These can include:
▪ Regular meetings
▪ Performance appraisals
▪ Training activities
▪ Regular memo’s and/or e-mails
▪ Reporting procedures
▪ Feedback procedures
Make sure that you also state who will be responsible for the various communication activities and by when these activities should take place. People responsible for these activities may often involve persons of a top or middle management level as well as his/her department team members. In some cases, these activities may take place between just 2 people e.g. in a performance appraisal.
4.2 Monitoring and Evaluating Improvements (SO4, AC4) The implementation plan should also include the process for monitoring and evaluating improvements of ethical conduct within the workplace. This process should involve general staff, so as to prevent any potential misunderstandings with regards to acceptable behaviour in the workplace as well as current offenders.
Regular performance reviews, training activities and reporting procedures can be put in place to monitor improved behaviour. These meetings and methods of correspondence need not be lengthy, however should no improvements be evident then longer procedures such as coaching sessions may be put in place.
Formative Assessment 6