Ethics may be defined as the standards that govern our behaviour. An ethical person is usually someone who eschews selfishness and remains mindful of the needs of others. Similarly, an ethical business conducts its affairs honestly and fairly, treating employees, customers and suppliers with their interests in mind. Ideally, it also monitors these actions to ensure they are carried out consistently.
It is useful at this stage to distinguish between ethics and the law. Both focus on what is right, but while the law achieves this through legal processes, ethics emanate from personal values. The law alone cannot guarantee high moral standards, because legal does not always equal ethical, as apartheid so clearly showed. It is up to the community to institutionalise morals to sustain civilised standards.
Ethics within a company
Ethical standards should apply to a company’s management, financial reporting, compliance with legislation, and protection of the rights of shareholders, employees and consumers. They should also permeate broader aspects such as a company’s social responsibility practices, health and safety measures, and attitude towards the environment. The exact opposite of this altruistic approach is the egotistical business culture, which places value only on maximising profit.
While all companies need to make profit, it’s imperative to strike a balance between people and profit. Few would argue with the precept that what is good for the business must be good for society. These principles are recognised by the world’s major economies. While steadily removing trade barriers, they have pushed for global governance standards that aim to dictate and standardise business ethics.
South Africa, like other countries, has been compelled to upgrade its regulations to fit world standards. The reports from Judge Mervin King and the changes to our Companies Act and Consumer Protection Act are a direct result of adapting our regulations to fit global governance standards.
Agricultutre: It’s not so simple
Ethics and fairness were raised frequently during the recent turmoil that led to an increase in minimum wages for farm workers. Unfortunately, unions and politicians, intent on short-term gain, refused to acknowledge elementary economic facts and the experience of other countries. While it is true that workers should receive a fair wage, it is equally true that consumers (which include the workers themselves!) must pay fair prices and the producer must receive a fair profit for taking a risk to establish the business.
The new minimum wage, because it affects consumers and producers so drastically, is actually unfair to all. Zambia provides a stark lesson. According to the UN, the increase of the minimum wage for Zambian farm workers last year from R443 by 350% to R1 949 has increased the median cost of food by between 50% and 100%. Is this fair to the consumer?
It is also important to remember that our agricultural producers have to compete against countries such as Chile, where the minimum wage is R77 per day.
If our production costs rise due to increasing labour costs, our agri sector may be unable to compete globally, which could change South Africa to a net importer of produce. Who will be the winners and losers? Aristotle believed that all virtue can be summed up in two words: deal justly. In the case of the agri sector, this means making sensible, carefully planned decisions to ensure long-term sustainability, rather than taking expedient short-term actions.
In sum, the sector has to be fair to all participants – producers, farm workers, consumers and the environment. If it is not, the problems will return again and again until the lesson is learnt and applied. As CJ Langenhoven so wisely stated, nothing will ever be final that is not fair.
André Diederichs is the author of People versus Profit and director of the Family Business Association of SA. Contact him on 082 453 3288 or at [email protected].
The views expressed in our weekly opinion piece do not necessarily reflect those of Farmer’s Weekly