Myth busting in the ethics, morality and values realm
Behaving ethically goes beyond just following the law; it involves navigating tricky situations where doing the right thing might not always align with the rules. The good news for financial and risk advisers and their clients is that there are fewer opportunities in the financial services realm for such obfuscations. Why? Because South Africa boasts a no-nonsense, principles-based regulatory framework that does not tolerate the blurring of lines between ethics, morality and values.
“The concept of ethics does not change as one’s desires or motivation changes; ethics is not relative to a situation but is immutable and unchanging,” said Advocate Jan Dijkman during a recent presentation to the South African Underwriting Managers Association (SAUMA) 2024 Conference. The legal and ethics consultant set out to answer an open-ended question: Does business ethics matter? Your writer was so impressed with his delivery that he penned two pieces covering the event: the first a newsletter titled ‘Right versus wrong in ethical financial decision making’, and the second, today’s piece, which aims to dispel a number of myths on the ethics topic.
Understanding ethics, law, morality and values
An understanding of the subtle differences between ethics, law, morality and values is a good starting point for today’s discussion. According to the advocate, ethics and values are not the same; nor are ethics and law. “Values are basic, fundamental beliefs that guide or motivate actions or attitudes; they are concerned with how a person behaves in certain situations and are based on personal beliefs that may or may not be ethical,” he said. “Ethics is concerned with how a moral person should behave in order to be considered ethical.” In the law-abiding context, he explained that while ethical people strive to be law-abiding, there are instances where a sense of ethics may supersede the law.
To explain away the next ethics-related misconception, the discussion unpacked the phrases ‘ethical relativism’ versus ‘situation ethics’. The former phrase, explained Dijkman, “is a philosophical view that what is right or wrong and good or bad is not absolute, but variable and relative according to the situation, person or circumstances”. In colloquial English, you might say ‘when in Rome, do as the Romans’ to explain different cultural approaches to ethics. This philosophical view is rejected by most ethicists who hold that notwithstanding different cultures, fundamental moral principles apply universally.
Ethics in business
Situation ethics is described variously as evaluating the morality of an action based on context and likely outcomes, with its practitioners arguing that what is right depends on the situation rather than fixed rules. It would appear that many South Africans struggle with this concept, using situation ethics to justify their behaviour when paying bribes for road traffic offences or to facilitate business transactions. Redirecting the conversation towards ethics in business, the advocate noted that “the extent to which ethics is embraced within a business affects both the perceptions of its stakeholders and the performance of the business; the confidence of investors in organisations; the loyalty of customers to companies; and the willingness of talented individuals to offer their skills to the organisation”.
If only it were this ‘cut and dried’. In reality, there are many schools of thought on the integration of ethics in the business world. Dijkman noted that despite ethics being prominent in the modern business environment, there are many who argue that the very nature of capitalism excludes a concern for ethics. “There are those who do not regard capitalism as excluding ethics but are nevertheless sceptical about being able to run a financially successful business whilst adhering to decent, ethical standards,” he said, before singling out six ethics-related myths that are blighting the 21st-century business landscape.
Debunking those pesky ethics-related myths
The first myth was introduced as dog-eat-dog in acknowledgment that the business environment is hostile. “You need to trample on others or be trampled yourself, and it is a sign of weakness to take the interests of others into consideration when weighing up matters of business,” the presenter said. The truth is that businesses are relational and social and that “a balancing of interests” is necessary to achieve sustainable success. Enter the second myth, survival of the fittest, which holds that only the toughest will survive in a competitive environment. The advocate contended that instead of ‘win at all costs’ business should strive to be competitive within the rules.
“There is nothing wrong with healthy competition as it can improve the quality of the product or service being provided,” Dijkman said, before shining a spotlight on the third myth, being that unethical conduct is not serious. Here the argument goes that “although unethical conduct is wrong, it is not really harmful to society and may even benefit society by a redistribution of wealth or stimulation of economic growth ... [in addition] it does not lead to a loss of life”. The ‘does no harm’ argument was quickly dispelled with reference to the financial and personal hardships in the wake of South Africa’s Fidentia, Masterbond, Steinhoff and BHI Trust scandals.
The fourth myth returned the audience to the ‘when in Rome’ argument that it is counterproductive to push against the tide of unethical behaviour. “If unethical behaviour in business is the norm, simply accept this as the way business must be done; one person’s efforts will not make a difference,” Dijkman offered, playing devil’s advocate for a second. He suggested that ‘going with the flow’ often appealed to our senses of accepting the will of the majority before countering that the majority does not always know best. “Just because the majority is doing it does not make it right,” he said.
Should we forget the bottom line?
The fifth and sixth myths, being ‘all that matters is the bottom line’ and ‘nice people come second’ were easily countered too. It is a myth that business is only about profit and that anything that impacts positively on the bottom line should be encouraged and all else discarded, the presenter fumed. Yes, your business must make a profit; but profit cannot be its sole purpose. “To operate as a legitimate business, a company must be seen to be providing products and services that are not harmful to society; a narrow financial focus can harm a business; and by only focusing on [profit you risk] devaluing all the other values of your business,” Dijkman said.
Being ethical is not easy, and being committed to your values takes moral strength. “Business ethics might come at a price; but recent studies are beginning to show that ethics is a prerequisite for sustained success [and] that more and more investors are choosing ethical companies to invest in and avoiding those perceived as unethical, or involved in unacceptable activities,” he said. When your business needs to make an ethical decision, he suggested asking: Is it legal? Does it meet company standards? Is it fair to all stakeholders? And can the decision be disclosed?
For a fitting conclusion, the audience was left with words by businessman, philanthropist and self-help book author W. Clement Stone who said: “Have the courage to say no, have the courage to face the truth. Do the right thing because it is right. These are the magic keys to living your life with integrity.”
Writer’s thoughts:
Conflict of interest (COI) is among a handful of damaging, unethical phenomenon that South Africa’s financial sector regulators have taken a no-holds-barred approach to. Do you still encounter financial conflicts that affect ethical decision making in your advice practice? Please comment below, interact with us on X at @fanews_online or email us your thoughts editor@fanews.co.za.
