BUSINESS ETHICS: Why they are important in SME development

By: Mduduzi Lokoftwako

Owning a business means having to deal with the human aspect and all that comes with it. Often business are faced with difficult situations that they do not know how to handle. When running a small business, some of the challenges involve handling confidential information; controlling behaviour with both internal and external customers; and abiding to the law and legislation.

Therefore, ethical principles are ground rules for decision making in a business – not just factors to consider.  In simple terms, ethics are defined as a code of values which guides our choices and actions and determines the purpose and course of our lives (Ayn Rand). Ethically, it is preferable to lose than to lie, steal, or cheat in order to win. People who are unwilling to lose are often willing to do whatever it takes to win, i.e. to act an unethical manner. However, this approach to dealing with difficult situations can destroy a business for good.

Today, the importance of business ethics is on the rise across the world and many companies realise that in order to succeed, they must earn the respect and confidence of their customers. Like never before, companies are being asked, and encouraged, to improve their business practices to emphasise legal and ethical behaviour.

Companies, both large and small, and sole-traders, are held increasingly accountable for their actions, as demand for higher standards of social responsibility in business. Society needs to work hard at producing a culture of ethical behaviour, accountability and norms which will benefit the entire society. Business thrives when society thrives.

To portray good ethics, one should make ethics a part of their everyday business. Good ethics could also mean helping others make good choices be a role model and most importantly, play by the rules. Business ethics in the workplace is about prioritising moral values and ensuring behaviours are aligned with those values. However, most of the ethical dilemmas faced by an entrepreneur are highly complex.

When the topic of business ethics comes up, people are quick to speak of the Golden Rule; “Do unto others as you would have them do unto you”. But when presented with complex ethical dilemmas, most people realise there is a wide “grey area” when trying to apply ethical principles. Business problems are often complicated. Gross violations such as fraud and theft can easily be judged and dealt with, but more subtle issues, such as misleading consumers, are far more complicated and require a great deal of discretion on the part of the business owner.

Developing a code of business ethics and conduct will not stop unethical behaviour, but will give people something to think about, a measurement against which to assess their behaviour. The code of ethics will serve as a framework for decisions you make, as well as to guide your stuff. The code can help business in the following ways:

Ø  Define accepted/unacceptable behaviours;

Ø  Promote high standards of practise;

Ø  Provide a benchmark for staff to use for self evaluation;

Ø  Establish the identity of your business; and

Ø  Establish a framework for professional behaviour and responsibilities.

Businesses can develop a written code of business ethics that guides the decision making and actions in your company. The reputation and track record for ethical behaviour and integrity are vital for establishing the trust that is the basis for all successful relationships – with customers, employees and the community.

Individuals acting in a professional capacity take on an additional burden of ethical responsibility. Professional associations have codes of ethics that prescribe required behaviour within the context of a professional practise such as medicine, law, accounting, or engineering.

Ethical business practices include assuring that the highest legal and moral standards are observed in relationships with people in the business community. This includes the most important person in one’s business – the customer. Short term profit at the cost of losing a customer is long term death for business.

A reputation for ethical decisions builds trust in a business among business associates and suppliers. Strong supplier relationships are critical to a successful business. As a result one has to consider the problems that may arise if from failure to supply what the customer needs at the time that they need it. 

Entrepreneurs and Managers as Role Models

You, as the entrepreneur and manager, are the role model for your staff. If your behaviour includes lying to customers, taking money out of the cash register, taking home some of the inventory of supplies, or even bribery, you should not be surprised if your employees follow your lead. Your value system affects your actions, which in turn influences others.

Therefore, entrepreneurs and managers have to understand and adhere to business ethics in order to secure long-term relationships with suppliers, customers and employees. It is from this point of view that the FSE&CC provides capacity building for SMEs to help them reflect on their values and belief systems and see how they influence their behaviour; see how their business ethics impacts on others; behave ethically in business; and deal with situations where their values and ethics are in conflict.

Reference: The Swaziland SME business Toolkit by the Federation of Swaziland Employers & Chamber of Commerce (FSE&CC).

The writer is the Business Development & Training Officer of the Swaziland Employers and Chamber of Commerce. Comments on this article may be sent to fsecc@business-swaziland.com