Corporate governance is (mainly) focused around ensuring employees and managers behave in the best interests of their shareholders. Cynics could argue that there is a difference between this and acting ethically. But it does not have to be the case.
Granted, the current uncertainty in the South African market with several scandals across political and economic spheres do nothing to help assuage these perceptions. And while issues like these are as old as business itself, the more connected world in which we live are resulting in them coming to light faster, and being resolved quicker than in the past.
Technology and the digital landscape have led to a constant evolution of regulatory requirements. For example, the Protection of Personal Information Act (Popi) that kicks in from next year has ostensibly been designed to ensure the safeguarding of personal information. This has been done to ensure companies do not misuse customer data for things other than which has been expressly given permission for.
Right and wrong
Business ethics can be defined as the moral guidelines for the conduct of business based on notions of what is right, wrong, and fair. According to accepted wisdom, most business people rely on their own consciences to make these decisions falling back on their moral and religious backgrounds for guidance.
This is where the culture of the business has a significant role to play. Management (through their actions) play a major part in influence this organisational culture. How this is then perceived not only from internal stakeholders, i.e. staff, but also external ones, the customers, can potentially drive the success of the business if it is on the right path.
Regulatory affairs and compliance measures are increasingly instrumental to help drive this more positive direction. While it does add to the complexity of the business environment, these processes are important as a way of supporting business ethics.
Trust will always be a fundamental part of any business relationship more so when ethics are involved. Current conditions see a renewed focus on this aspect and looking at working with companies that share similar values.
While ethics, as such, do not have to be adopted, the way business is done needs to be made in accordance to the regulatory environment and unique challenges of a country.
Ethics, trust, responsible business practices, all point to having a structure of good governance. It promotes stakeholder confidence by giving people a sense that business (through government) will be operating with the aforementioned best interests at heart.
Importance of governance
Of course, compliance can also result in better decisions being made as they are based on good quality data. With a regulatory environment that is focused around the integrity of the data being stored, companies can remain focused on delivering business value.
In a compliant environment, there will be less temptation to break the rules or to adopt shortcuts. Yes, the focus on regulatory affairs might be a strenuous one, but if trust is to remain a focus area in the digital environment, it is essential to embrace.
By Stuart Scanlon, managing director of epic ERP