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UWI lecturer: Businesses view ethics as constraint to profits
Since the commencement of the commission of enquiry into the Colonial Life Insurance Company Ltd (Clico) and the Hindu Credit Union started in 2011, debate about ethics in businesses have been circulating in the public domain.
Exactly how important is the issue?
Prof Surendra Arjoon, business ethics and quantitative analysis lecturer at the University of the West Indies, St Augustine campus, said there is a misunderstanding of what ethics is and it is often viewed as “a constraint to our behaviour, a constraint to profits.
“It is like a horse race with blinders. All you have to do is make that profit, make the target. The whole host of other things in society—employee concerns/sufferings—we are just blinded to it.”
Arjoon said there is need for society and the business community to wake up to reality.
“Businesses have to go from being individuals to being social. In other words have a corporate personality, it is not happening. The challenge needs to be taken up by business leaders.”
Referring to the 2008 global recession, Arjoon said the lessons haven’t yet been learnt from it and those same mistakes are being repeated. Business leaders play a pivotal role in creating a culture of ethics in a company.
“When these crisis happen, ethics is a very sexy word. We like to talk about ethics, but we really don’t understand (it). It is about building community. It is about building society.”
Is there need to have further legislation on corporate governance so the business community can perceive ethics seriously? Arjoon does not believe legislation alone is good enough to maintain ethics in business.
“You can have all the regulations. If it is not lived, then people know you are hypocrites. Employees are not foolish, unfortunately, they see the hypocritical behaviour.”
During the Clico enquiry, auditors shot into the spotlight for their roles and responsibilities in analysing Clico’s accounts. Commenting on the general role of auditors, Arjoon said: “It is a collective responsibility—this whole thing of absolving themselves; one has to look at oneself and accept the responsibility, accountability is another issue.”
Arjoon said the ethical compliance aspect of corporate governance is often ignored.
“People generally obey law simply to avoid wrongdoing. They (companies) don’t understand the reason why law should be followed. You cannot make a link between regulations or any human activity and their own development.”
Mathematics and ethics
Arjoon holds a degree in mathematics from the University of Waterloo, Canada, and his research interest lies in areas of the application of natural law ethics to education. Asked why he moved from Mathematics to ethics he said: “There is a view that we can explain the whole world by mathematics. Of course, there is something called human freedom that we cannot model, no mathematical model could model a human’s behaviour. I think social sciences do not understand that, that’s why surveys don’t bring out the reality, that led me to the field of ethics.”
He said math and ethics are decision-making sciences, but the “advantage of ethics is that you can use the methods of math and sociology to prescribe policy decisions, but these models themselves, what we use in social sciences cannot model human freedom.”
2008 mistakes being repeated
Dr Ronald Ramkissoon, senior economist, Republic Bank Ltd, said the majority of businesses in T&T comply with regulations.
“It is my view that most well run businesses in T&T observe proper rules and regulations and encourage their staff so to do. This is so especially for public companies that have demanding stakeholders to account to and which face relatively efficient regulators. Having said that, however, I have no doubt there have been slippages and that much more needs to be done,” he said.
Ramkissoon said need for the conversation on ethics to be ongoing in the business community since universities and companies all over the world have been talking more on the subject.
“Poor ethics and poor social and economic responsibility can camouflage serious risks to organisations. Disclosures in the media in T&T today clearly point this out. We must learn from the mistakes of others.”
Episodes of shame
Gregory Aboud, president of the Downtown Owners and Merchants Association (DOMA), said good ethical practices are being used in the operations of businesses.
“While there are episodes of shame with respect to the ethical conduct of businesses, the great majority of businesses in T&T have conducted wholesome operation and have dealt fairly with those with whom they transact business and with those who participate in the operations of the business,” Aboud said.
“One of the crucial indicators with respect to ethical conduct is longevity. In the case of unethical operations, businesses usually collapse quickly.
“The large number of businesses which have survived many years in business and which continue to flourish is an indication that ethical conduct is part of their business philosophy. Dishonest dealings and unfair practices are simply bad for business not only in the poor relations that result but, ultimately in their failed performance in an environment where people are looking for value and for trust.”
Daphne Bartlett, president of the San Fernando Business Association, said whether or not there is legislation to prevent unethical behaviour, it is dependent on the individual.
“Whether you are a business person or you are a worker in a government office, it boils down (to the individual).”
Meanwhile, Hugh Howard, president of the American Chamber of Commerce of T&T, said ethics must be practised by the entire nation and not just one sector.
“The country needs a proper purging of the attitude of getting rich-at-all-cost, we must begin to think about our fellow men. We must begin to think about the legacy we will be leaving.”
He said leaders play a pivotal role in creating a culture of good ethics since everyone looks to their leaders whether it is a business leader, religious leader or a teacher or even a political leader.
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