ETHICS RECOVERY – WITH A STATE CAPTURE HANGOVER

Prof. Deon Rossouw

The decline of ethical standards in organisations in South Africa has been thoroughly lamented over the past decade. The lamentations raised to a crescendo as revelations about corrupt practices were revealed before the Zondo Commission of Inquiry into State Capture.

There could be no doubt that the period of state capture seriously damaged the moral fibre of organisations in the private, public, and state-owned sectors. It is unlikely that, in our history as a democracy, there have been so many cries for the restoration of ethical leadership in our organisations.

But there may be hope that the corner has been turned – at least in the private sector in South Africa.

The Institute of Business Ethics, based in London, recently published their annual Ethics at Work survey report. Data for this survey was collected by an independent research agency and included the perceptions of more than 10 000 employees from 13 countries. For the first time in the history of this well-known survey, South Africa was included in the 13 countries that participated in the survey. The other 12 countries that participated in the 2021 Ethics at Work survey were: Australia, France, Germany, Ireland, Italy, the Netherlands, New Zealand, Portugal, Spain, Switzerland, the United Kingdom, and the United States of America. The Ethics Institute, based in South Africa, was the South African partner in this multi-country survey.

When South Africa is compared with the other countries that participated in the survey, we did remarkably well – at least in some of the aspects regarding organisational ethics that were covered in the survey.

The one area where South Africa outperformed all other countries was in terms of ethics management interventions. Four aspects of ethics management in organisations were covered in the survey. In three of these aspects South Africa were ranked first among the 13 countries; namely, the adoption of written standards of ethics, the provision of facilities to report unethical conduct confidentially, and the offering of advice to employees who are seeking advice about behaving ethically at work. On the fourth aspect (the provision of training on ethics) South Africa was ranked second – only one percentage point behind the USA. Overall, it is thus quite clear that South Africa outperformed all other countries when it comes to introducing formal ethics programmes in business. No small feat!

Should one start speculating about possible reasons for South Africa’s stellar performance in managing ethics in business, another recent survey that was published at about the same time might shed some light. In November 2021, the second Social and Ethics Committee Annual Trend Survey was jointly released by the Institute of Directors in South Africa and The Ethics Institute. In this survey it was found that ethics management is the topic that receives most attention in meetings of Social and Ethics Committees. Social and Ethics Committees were first introduced in 2012 in South Africa as a mandatory statutory board committee in all listed, state-owned, and public interest companies. This finding indicates that organisational ethics do indeed enjoy considerable attention at governance level in South African businesses.

It is, however, not only on governance level that ethics management is enjoying support in South Africa. In the Ethics at Work Survey, South Africa also outperformed all other countries as far as management support for ethics is concerned. South Africa ranked first for both the seriousness with which senior managers attend to ethics, and for the support that employees receive from middle managers in following the ethical standards of their organisations.

However, there was not only good news in the 2021 Ethics at Work survey. There were also several rather disconcerting findings. I would like to highlight three of these.

Firstly, South Africa ranked first for employees being aware of misconduct in their organisations. Thus, despite high levels of awareness of ethics standards in South African businesses, and despite leadership and middle management support to do the right thing, unethical behaviour and practices still prevail. One mitigating factor in this regard may be that it is exactly the high levels of awareness of ethical standards that make South Africans more sensitive to observing misconduct in their organisations. It was also encouraging to see that South Africans were quite willing to report the misconduct that they observed via their internal and external reporting mechanisms. In fact, South Africans ranked second highest for their willingness to report misconduct in their organisations.

Secondly, and much more worrying, was the finding that South Africa ranked second highest for employees feeling pressured to compromise the ethical standards of their organisations.

Thirdly, and equally concerning, was the finding that South African employees felt – more than in any of other countries that participated in the survey – that honesty is not practiced at work.

This leaves one with the troubling question: How can South African businesses do so well with their ethics management programmes, but perform so poorly when it comes to the actual prevalence of misconduct and to compromising ethical standards and honesty in the workplace?

The explanation to these seemingly contradictory findings might be related to a hangover from the era of state capture. South Africans might have become so used to the unethical practices associated with the era of state capture, that old bad habits still prevail and are actively endorsed as part of the ‘way we do business here’.

There is, in fact, some evidence in the findings of the Ethics at Work Survey that indicate that South African employees have a higher tolerance of unethical practices compared to employees in other countries. When asked to respond to statements related to tolerance for unethical behaviour, South African employees ranked first for indicating that minor breaches of rules are inevitable in modern organisations, as well as for indicating that if an organisation should crack down on every minor breach of rules, it would soon find itself without any staff.

These findings are strong indicators that a certain level of misconduct has become quite acceptable to most South Africans. It is not regarded as serious.

As long as this attitude prevails, one should not be surprised to see a discrepancy between excellent ethics management programmes, but high prevalence of – and tolerance for – minor unethical misconduct in our businesses.

 

Deon Circle

Prof Deon Rossouw is CEO of The Ethics Institute, a Chartered Director, and Extraordinary Professor in Philosophy at Stellenbosch University.