Ethics! One word often assumed to be understood by all. Each of us is certain we have a proper understanding of it, but do we really have a proper grasp of the weight this word carries in finance?
The Business Confidence Index reported that the SA Chamber of Commerce and Industry (SACCI) shed 2.5 points in December 2014, declining to 88.3 from 90.8. There are a number of reasons that contribute to this; the question though is how much of this tumble is due to a lack of ethics in business?
CFOs and other business managers have a new challenge on their hands. The customer’s perception of the business world has been tainted. The common man on the street is asking: can businesses be trusted with their money? An innovative young man, Robin Cosgrove that was based in the UK, established an Annual Prize supported by ACCA , the Ethics in Finance Robin Cosgrove Prize, seeks to restore ethics and integrity in the finance industry. He believed passionately that the lack of integrity and ethical practice in banking and finance could be a major barrier to sustainable economic development. Though only 31 when he passed on, his vision was prescient in nature.
“CFO’s would need to factor in and solve social economic challenges in order to overcome negative perceptions” –Karen Smal, Acting Head of ACCA South Africa. This means that CFOs would have to look beyond their regular duties and refine their strategies to combat the challenges brought on by doing business in a new age.
The truth is the lack of confidence in our business systems does not only prevent organisations from meeting their sales projections, but it chases away investments that may bring well-needed change in our society.
“Moral principles, as of an individual”, is how Dictionary.com explains this word. If this definition were to be used, it would suggest that businesses have to invest more in educating employees on ethics and integrity. In trying to meet this end, business managers would need to take into consideration the different backgrounds that employees come from; a simple poster on the wall will not do. The media is inundated with stories of fraud and corruption that do not shock us anymore; this is alarming, because the employees are the face and point of contact of the business. If their ethics and values are not enough to stop them from defrauding the company that remunerates them, what hope do we have that they won’t steal from faceless accounts that they have access to?
Business management is all about solving challenges and maintaining prospects and existing clients’ positive perceptions; this end can be met by more and more CFOs allocating portions of their budgets to activities that help in instilling proper ethics to their personnel.