CHAPTER 6 - ETHICS, PROFESSIONALISM & SOCIAL RESPONSIBILITY
CODE OF ETHICS: SET OF GUIDELINES AND RULES THAT WILL ENHANCE BUSINESS
HONESTY AND INTEGRITY
1. THE RELEVANCE OF PROFESSIONAL CODES
- Aim to regulate behavior of people in profession.
- Profession = occupation/job requiring tertiary education.
- If someone registered with professional body = abide by professional code of
organization. If code is contravened = fined/suspended/disbarred.
- Eg. Law, education, medicine etc.
2. GOOD BUSINESS PRACTICE
Refers to standard of professionalism, ethics, accountability etc. conducted.
Professional behavior guided by professional codes = stipulate predetermined consequences for
professionals that don’t act in the right way.
Doesn’t belong to organization = not clear what’s regarded as unethical.
Complications:
o Unethical not necessarily illegal.
o BUT all illegal actions = unethical.
Ethical theories:
o Principle-based theory – Persons principles, values, morals will determine if
person sees unethical or not.
o Consequence-based theory – The outcome determines ethical or not.
o Utilitarian theory – Based on what is best for the most people.
3. ETHICAL BEHAVIOUR IN PRACTICE
- CONFLICT OF INTEREST
o A person in authority making a decision that will benefit themself more than the business.
o Recruitment panel, knowing someone applying = friend/family.
- BRIBES AND CORRUPTION
o Bribe if someone offered reward to give unfair advantage to someone, not always
money. If money = smoothing/facilitation payment.
o Corruption = someone in position of power abuses power for personal gain. Eg.
Misappropriating funds.
- UNAUTHORISED USE OF FUNDS
o Using business funds that aren’t authorized = same as theft.
o People in offices have more opportunities to get involved in white collar crimes
than manufacturing department.
o Eg. Manager having expense account to take wife for lunch and claiming as business
expense.
o Spending money not intended for that specific purpose.
- INNAPROPRIATE GIFTS
o Most businesses make employees declare gifts received.
o Could be interpreted as form of bribery, or strings attached?
- SEXUAL HARRASSMENT
o Criminal offence (Labour Relations Act – Section 2)
o Eg. Unwanted physical contact, whistling, sex life?, jokes, sexual gestures, exposure,
unwanted explicit photos, offer of reward in return for sexual favours.
o Businesses should have clearly defined policy on sexual harassment, including
procedure to follow, and penalties if guilty.
, - UNFAIR ADVERTISING
o Covered in chapter 7
- EMPLOYMENT/LABOUR ISSUES
o Employees abusing sick leave.
o Abuse of internet/email (porn sites, exposure of confidential info, spreading of rumours,
being on social media, personal emails, taking stationery home, verbal abuse).
- PRICING OF GOODS
o Price fixing = competitors agree to charge buyers predetermined price. If businesses
collude to fix prices = unethical and illegal, Competition Board can impose hefty fines.
o Can be charged in personal capacities (jail).
o CPA makes it illegal to charge more in rural areas without justification.
- “INSIDER TRAINING”
o Someone trades shares on JSE based on confidential knowledge.
- PIRACY
o Illegal use/reproduction of somebody’s work if protected by patent or
copyrights.
- COUNTERFEITING/BOOTLEGGING
o Counterfeiting
- Someone fraudulently imitating another’s work and pretending its
original. E.g. designer clothing.
o Bootlegging
- Illegal production/distribution of a product.
- E.g. shabeen without liquor license
- TAXATION
o Tax avoidance
- Legal and ethical
- Business finds legal ways to reduce their tax burden.
o Tax evasion
- Illegal and unethical
- Business does not declare all of its income/lies about expenses to pay less tax.
- WHISTLE-BLOWING
o Someone who exposes unethical behavior, fraud, health violations etc.
o They are protected by law.
o Illegal to fire employee for whistle blowing in SA, as it is the right thing to do to fight
corruption.
CODE OF ETHICS: SET OF GUIDELINES AND RULES THAT WILL ENHANCE BUSINESS
HONESTY AND INTEGRITY
1. THE RELEVANCE OF PROFESSIONAL CODES
- Aim to regulate behavior of people in profession.
- Profession = occupation/job requiring tertiary education.
- If someone registered with professional body = abide by professional code of
organization. If code is contravened = fined/suspended/disbarred.
- Eg. Law, education, medicine etc.
2. GOOD BUSINESS PRACTICE
Refers to standard of professionalism, ethics, accountability etc. conducted.
Professional behavior guided by professional codes = stipulate predetermined consequences for
professionals that don’t act in the right way.
Doesn’t belong to organization = not clear what’s regarded as unethical.
Complications:
o Unethical not necessarily illegal.
o BUT all illegal actions = unethical.
Ethical theories:
o Principle-based theory – Persons principles, values, morals will determine if
person sees unethical or not.
o Consequence-based theory – The outcome determines ethical or not.
o Utilitarian theory – Based on what is best for the most people.
3. ETHICAL BEHAVIOUR IN PRACTICE
- CONFLICT OF INTEREST
o A person in authority making a decision that will benefit themself more than the business.
o Recruitment panel, knowing someone applying = friend/family.
- BRIBES AND CORRUPTION
o Bribe if someone offered reward to give unfair advantage to someone, not always
money. If money = smoothing/facilitation payment.
o Corruption = someone in position of power abuses power for personal gain. Eg.
Misappropriating funds.
- UNAUTHORISED USE OF FUNDS
o Using business funds that aren’t authorized = same as theft.
o People in offices have more opportunities to get involved in white collar crimes
than manufacturing department.
o Eg. Manager having expense account to take wife for lunch and claiming as business
expense.
o Spending money not intended for that specific purpose.
- INNAPROPRIATE GIFTS
o Most businesses make employees declare gifts received.
o Could be interpreted as form of bribery, or strings attached?
- SEXUAL HARRASSMENT
o Criminal offence (Labour Relations Act – Section 2)
o Eg. Unwanted physical contact, whistling, sex life?, jokes, sexual gestures, exposure,
unwanted explicit photos, offer of reward in return for sexual favours.
o Businesses should have clearly defined policy on sexual harassment, including
procedure to follow, and penalties if guilty.
, - UNFAIR ADVERTISING
o Covered in chapter 7
- EMPLOYMENT/LABOUR ISSUES
o Employees abusing sick leave.
o Abuse of internet/email (porn sites, exposure of confidential info, spreading of rumours,
being on social media, personal emails, taking stationery home, verbal abuse).
- PRICING OF GOODS
o Price fixing = competitors agree to charge buyers predetermined price. If businesses
collude to fix prices = unethical and illegal, Competition Board can impose hefty fines.
o Can be charged in personal capacities (jail).
o CPA makes it illegal to charge more in rural areas without justification.
- “INSIDER TRAINING”
o Someone trades shares on JSE based on confidential knowledge.
- PIRACY
o Illegal use/reproduction of somebody’s work if protected by patent or
copyrights.
- COUNTERFEITING/BOOTLEGGING
o Counterfeiting
- Someone fraudulently imitating another’s work and pretending its
original. E.g. designer clothing.
o Bootlegging
- Illegal production/distribution of a product.
- E.g. shabeen without liquor license
- TAXATION
o Tax avoidance
- Legal and ethical
- Business finds legal ways to reduce their tax burden.
o Tax evasion
- Illegal and unethical
- Business does not declare all of its income/lies about expenses to pay less tax.
- WHISTLE-BLOWING
o Someone who exposes unethical behavior, fraud, health violations etc.
o They are protected by law.
o Illegal to fire employee for whistle blowing in SA, as it is the right thing to do to fight
corruption.
