Chapter 6
Ethis, professionalism and social responsibility
1. The relevance of Professional Codes
Professional code: aim to regulate the behaviour of people practising a
particular profession (eg. doctor/patient confidentiality)
A profession: an occupation/job, requiring specialised tertiary education
that qualifies someone to practise as a professional in a particular field.
2. Good business practice
- Refers to standards of professionalism, accountability, ethics and
effective business practice
- Unethical actions are not necessarily illegal (eg low quality, high price)
- All illegal acts are seen as unethical
Ethical theories:
★ Principle-based theory: the persons principles, values, morals/ ingrained
set of rules will determine if person sees the action as ethical or not.
★ Consequence-based theory: the outcome determines if action was
ethical or not
★ Utilitarian theory: based on what is best for the greatest number of
people. (eg BBBEE)
3. Ethical behaviour in practice
1. Conflict of interest : someone in authority has the opportunity to make a
decision that will benefit them rather than the business
- Relative is part of recruitment/selection and fails to disclose this.
2. Bribes and corruption: offered a reward to give a third party an unfair
advantage. (money, gifts, employment, promotion or any favour)
When someone abuses their power for personal gain = corruption
3. Unauthorised use of funds: using business funds that are not authorised.
- Taking spouse to lunch, using bus card for fuel
4. Inappropriate gifts: declare all gifts that are received. Can stipulate that
employee can’t receive a gift greater than certain value (seen as a bribe)
5. Sexual harassment: Sexual harassment is a criminal offence. Cannot
engage in these activities with customers, suppliers or employees.
(unwelcome physical contact, verbal conduct, gestures, indecent exposure,
explicit photos, reward/promotion for sexual favours)
6. employment/labour issues
, - Abusing sick leave
- Abuse of internet (porn sites, confidential info, rumours/damaging info,
work time on social media, time on personal emails, verbal abuse)
7. Pricing of goods: price fixing is unethical & illegal. Can face jail time. CPA
makes it illegal to charge more for products in certain areas
8. “Insider trading”: someone trades shares on the JSE based on knowledge
that is confidential.this is a criminal offence
9. Piracy: illegal use/reproduction of someone's work protected by a patent or
copyright.
10.Counterfeiting / Bootlegging: Counterfeiting: someone fraudulently imitating
another's work or pretending it's the original. (designer clothing, shoes, bags)
Bootlegging: illegal production/ distribution of a product (shebeen without a
liquor licence, selling cigarettes on the black market to avoid import duties/
other taxes).
11. Taxation: tax avoidance: legal & ethical. Legal ways to reduce tax (deduct
legal expenses before taxable income is calculated)
Tax evasion: illegal. Does not declare all income and lies about expenses in
order to pay less tax.
12. Whistle-blowing: someone who exposes unethical behaviour. Right thing
to do in order to eliminate corruption.
4. Evaluate ethical/ unethical behaviour in different
spheres of society
1. Ethical behaviour in the world of Business & Finance
How can we ensure ethical behaviour:
- Code of conduct must be available with the consequences
- Keep reminding employees of the rules
- The code of conduct must be in an easy language
- Employee input
- Managers must lead by example
Code of ethics is important:
★ Communicates the ethical vision of business
★ Creates a common framework to know what is acceptable behavior
★ Correct & desired behaviour/procedures for employees & business
★ Spell out consequences
★ Protects the business
, 2. Ethics in Government
Trying to prevent corruption:
- NACF (National Anti-Corruption Forum)
- National Crime Prevention Strategy
- Code of Conduct for Public Service
- Code of Conduct for Members of Parliament
5. The relationship between management ethics and
social responsibility
CSR: ongoing commitment to behave in an ethical manner by contributing to
economic & social development of employees & community.
Arguments for: Arguments against:
- Improves the surrounding environment - Costly
- Improved reputation - Time consuming
- More investors - Distraction from goals
- Improved standards of living - Governments responsibility
- Less government interference - A lot of pressure
What the business gains from CSR:
★ Media attention & positive publicity
★ Better functioning society
★ Good corporate governance record
What community gains:
★ Healthier environment = healthier people
★ Less unemployment (more skills), less crime, more productive
★ Better control over HIV/AIDS & TB (education & preventative measures)
6. FTSE / JSE Responsible Investment Index (Financial Times
Stock Exchange, Social Responsibility Index)
Indicators of performance
➔ Environment
➔ Society
➔ Governance
➔ Management of climate change
The intent & purpose
Ethis, professionalism and social responsibility
1. The relevance of Professional Codes
Professional code: aim to regulate the behaviour of people practising a
particular profession (eg. doctor/patient confidentiality)
A profession: an occupation/job, requiring specialised tertiary education
that qualifies someone to practise as a professional in a particular field.
2. Good business practice
- Refers to standards of professionalism, accountability, ethics and
effective business practice
- Unethical actions are not necessarily illegal (eg low quality, high price)
- All illegal acts are seen as unethical
Ethical theories:
★ Principle-based theory: the persons principles, values, morals/ ingrained
set of rules will determine if person sees the action as ethical or not.
★ Consequence-based theory: the outcome determines if action was
ethical or not
★ Utilitarian theory: based on what is best for the greatest number of
people. (eg BBBEE)
3. Ethical behaviour in practice
1. Conflict of interest : someone in authority has the opportunity to make a
decision that will benefit them rather than the business
- Relative is part of recruitment/selection and fails to disclose this.
2. Bribes and corruption: offered a reward to give a third party an unfair
advantage. (money, gifts, employment, promotion or any favour)
When someone abuses their power for personal gain = corruption
3. Unauthorised use of funds: using business funds that are not authorised.
- Taking spouse to lunch, using bus card for fuel
4. Inappropriate gifts: declare all gifts that are received. Can stipulate that
employee can’t receive a gift greater than certain value (seen as a bribe)
5. Sexual harassment: Sexual harassment is a criminal offence. Cannot
engage in these activities with customers, suppliers or employees.
(unwelcome physical contact, verbal conduct, gestures, indecent exposure,
explicit photos, reward/promotion for sexual favours)
6. employment/labour issues
, - Abusing sick leave
- Abuse of internet (porn sites, confidential info, rumours/damaging info,
work time on social media, time on personal emails, verbal abuse)
7. Pricing of goods: price fixing is unethical & illegal. Can face jail time. CPA
makes it illegal to charge more for products in certain areas
8. “Insider trading”: someone trades shares on the JSE based on knowledge
that is confidential.this is a criminal offence
9. Piracy: illegal use/reproduction of someone's work protected by a patent or
copyright.
10.Counterfeiting / Bootlegging: Counterfeiting: someone fraudulently imitating
another's work or pretending it's the original. (designer clothing, shoes, bags)
Bootlegging: illegal production/ distribution of a product (shebeen without a
liquor licence, selling cigarettes on the black market to avoid import duties/
other taxes).
11. Taxation: tax avoidance: legal & ethical. Legal ways to reduce tax (deduct
legal expenses before taxable income is calculated)
Tax evasion: illegal. Does not declare all income and lies about expenses in
order to pay less tax.
12. Whistle-blowing: someone who exposes unethical behaviour. Right thing
to do in order to eliminate corruption.
4. Evaluate ethical/ unethical behaviour in different
spheres of society
1. Ethical behaviour in the world of Business & Finance
How can we ensure ethical behaviour:
- Code of conduct must be available with the consequences
- Keep reminding employees of the rules
- The code of conduct must be in an easy language
- Employee input
- Managers must lead by example
Code of ethics is important:
★ Communicates the ethical vision of business
★ Creates a common framework to know what is acceptable behavior
★ Correct & desired behaviour/procedures for employees & business
★ Spell out consequences
★ Protects the business
, 2. Ethics in Government
Trying to prevent corruption:
- NACF (National Anti-Corruption Forum)
- National Crime Prevention Strategy
- Code of Conduct for Public Service
- Code of Conduct for Members of Parliament
5. The relationship between management ethics and
social responsibility
CSR: ongoing commitment to behave in an ethical manner by contributing to
economic & social development of employees & community.
Arguments for: Arguments against:
- Improves the surrounding environment - Costly
- Improved reputation - Time consuming
- More investors - Distraction from goals
- Improved standards of living - Governments responsibility
- Less government interference - A lot of pressure
What the business gains from CSR:
★ Media attention & positive publicity
★ Better functioning society
★ Good corporate governance record
What community gains:
★ Healthier environment = healthier people
★ Less unemployment (more skills), less crime, more productive
★ Better control over HIV/AIDS & TB (education & preventative measures)
6. FTSE / JSE Responsible Investment Index (Financial Times
Stock Exchange, Social Responsibility Index)
Indicators of performance
➔ Environment
➔ Society
➔ Governance
➔ Management of climate change
The intent & purpose
