The business of ethics

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Changing the way we do business – and changing our communities and our world in the process

 

By: Robert Sussman

Can the way we do business make a difference in our communities and even to our world?

It’s just such an idea that led to the creation of the Ethics and Governance Think Tank at the University of Pretoria’s Gordon Institute of Business Science (which is ranked as Africa’s leading business school) and sponsored by Sasfin Bank, PwC, Liberty, Standard Bank, Discovery, Imperial, and SA Taxi.

As the founder, Rabbi Gideon Pogrund, explains, “[The Think Tank] came about as a response to the widespread ethical challenges in the country. It’s easy – and wrong – to say that we have these huge problems around us and that there’s nothing we can do about them, so let’s do nothing. It’s likewise wrong to say that if we can’t do everything, then we should do nothing. We should look to do something and not succumb to frustration.” Rabbi Pogrund sees this focus on ethics as a way for businesses to build trust and, through that, establish a more successful and sustainable future for those businesses, as well as for the whole country.

Since when do businesses care about ethics?

“The historic understanding of the purpose and role of the corporation was probably best articulated by Nobel Prize winning economist Milton Friedman, who said, ‘The business of business is business,’ meaning that the sole purpose of business is to focus on the maximisation of shareholder wealth within the parameters of the law. Put more simply: make as much money as you can without breaking the law. But, over the last couple of decades, we’ve seen a transformation of that view. Increasingly, a broader set of questions is being asked of companies: What’s our purpose? What values should guide our behaviour? What do we owe others – of course our shareholders, but also other stakeholders such as our customers, our employees, our suppliers, the larger communities in which we operate? In other words, the corporation has shifted from an amoral entity to a moral protagonist.”

 

“I think that these expectations have been driven by the growing power and influence of corporations, as the sales turnover of many large multi-national corporations has come to rival and even surpass the gross domestic product of many nations. With power and influence comes responsibility – and this has resulted in a growing emphasis on business ethics. In South Africa, that shift has come with a greater sense of urgency because ethical failures and social problems endanger our future. Not everyone has bought into this shift – there is still much resistance – but this is unquestionably the direction in which business is moving.”

So what exactly do we mean by ethics?

“The term ‘ethics’ gets tossed around a lot – and can wind up becoming vague and amorphous as a result. The definition I use is choosing between good versus bad, right versus wrong, and there are diverse practical applications. For example, in terms of ethics within a company – getting employees to behave more ethically; or in terms of how companies engage with society at large – focusing on issues like fighting corruption, economic inequality, and other social problems. Within companies, we’ve seen ethical failures (fraud, etc.) which can be very costly, both financially and in terms of reputational damage. But being ethical isn’t only about the negative – ie. reducing these risks – it’s also about the positive – ie. building trust and strong long-term relationships, and achieving competitive advantage. The Think Tank aims to accomplish its goal through working closely with senior leaders from business and other areas as well as with GIBS faculty. It arranges public forums as part of a high-level national conversation about ethics; organises private dialogue sessions to promote understanding and trust between diverse societal stakeholders; engages in research, writing, and lecturing; and collaborates with international institutions (including Harvard Business School). It works to shift public perceptions and attitudes as well as to sensitise people to the vocabulary of ethics, and it aims to help make ethics an integral part of organisational decision-making.”

Some practical applications

“There is widely held belief, which is not a Jewish one, that religion belongs in a place of worship, but not in the market place.” Citing an idea from Rabbi Eliyahu Dessler, ztz”l, Rabbi Pogrund explains how he tries to use Torah sources as a framework within which he gives context to current business events and case studies, helping the timeless ideas of the Torah resonate with people. Rabbi Dessler famously taught how the battle lines regarding the issues we face can shift. After succeeding in making the right choice, making that choice again is not as difficult the second time, as the territory where that internal struggle took place has been acquired, shifting the battle line to a new point of choice facing us and making what was once a difficult choice no longer a challenge. Rabbi Pogrund compares this to cultural shifts within an organisation, what he calls the “creation of a new normal”, with the point being that corporate interventions can promote behavioural change.

He combines this with an idea from Dan Ariely, Professor of Psychology and Behavioural Economics, who teaches that behaviour, both ethical and unethical, is contagious. “Behaviour that was, at one point in time, unthinkable can become possible and even endemic – which is a big danger in SA at the moment in terms of unethical behaviour, such as paying bribes and committing fraud. But, ethical behaviour is also contagious, and just as the one presents a threat, the other presents an opportunity. People infect each other and leaders have a greater capacity to influence others, what’s commonly referred to in business parlance as “the tone at the top”. Case in point: Enron. “Why did the junior employees of Enron choose to engage in behaviours that they knew were wrong? After its collapse, these employees were asked why they didn’t speak out and they answered, ‘We wanted to be loyal, we wanted to fit in’.”

Rabbi Pogrund points to a gemara that was shown to him by Rabbi Levi Weinberg which notes the tenuous distinction between private and public responsibility. The gemara (Bava Kama 50b) teaches that a person must not throw stones into the public thoroughfare. It then tells of a case where someone did just this, removing stones from his own property and depositing them into the public domain. A man rebuked him for doing so and said, “Why are you throwing stones from a domain that is not yours to a domain that is yours?” The person throwing the stones scoffed at what the man had said. Time passed and the man needed to sell his field. He was walking in the public thoroughfare and he tripped over the very stones that he himself had thrown there! He then realised that the man, who he had scoffed at, had actually spoken accurately.

“This gemara helps to illustrate that the idea of the private/public distinction being so clearly delineated is wrong – it’s much more blurred; we’re all interconnected. South Africa is a wonderful place to live and, Baruch Hashem, the Jewish community has constructed this tremendous infrastructure. But sometimes I feel we are not sufficiently sensitive to, or aware of, what’s going on around us. We are surrounded by many people who live in desperate poverty and we have one of the highest Gini coefficients (used to measure levels of inequality) in the world. There are huge social problems. For example, many people spend as much as 40% of their wages along with hours every day just to get to work. This is clearly not a sustainable situation, and provides fertile conditions for the spread of the dangerous agendas of populist politicians. Increasingly, South African business is responding to these challenges in broader, more imaginative ways – and this is a process to which our Think Tank aims to contribute.”

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