Trust Betrayed

How many of us really think that businesses are behaving ethically? Not me. You? The mistrust that many of us have of businesses is deepening and widening. As a house buyer, while waiting a couple of years for the house to be built, you have numerous nightmares of the developer running off with your money. I know because when I bought a house, I used to go to the site and comfort myself that the project was still in progress. As an employee, you are often caught in a no-win situation. Your boss orders you to do some "magic", to bend the rules. If you follow his orders, you are breaking the law. If you don't, you end up being kicked in the you know where. Throughout the history of commerce, businesses have depended on trust in order for trade to flourish. Businesses must be conducted in an open and transparent manner. Yet, so very often, the trust upon which businesses depend for survival, is betrayed. Why then, do businesses engage in unethical practices, which may well jeopardize their very survival?

Often cited as one of the main reasons for ethical problems in business organizations is personal gain and selfish interests. The human factor you may say. Almost every sinful action can be traced back to a selfish motive. These people put self-interest above the interest of the organization. They will do whatever is necessary in order to achieve their own personal goals. Take for instance, a salesman who gets rewarded for high sales although he may have used unethical tactics on his customers. He is thus motivated to propagate his activities. Other salesmen may be tempted to do likewise considering that rewards are based on the level of performance. Ethics? Who cares about ethics? In the short term, it seems that both the individual and the organization gain. But, persistent and continuous use of unethical sales methods may expose the business to being sued by customers and this will hurt the organization, sometimes fatally.

Another reason for behaving unethically is the constant pressure to increase profits. This results in companies trying to outdo each other, or collude with each other. Competition in the market place is great. It increases productivity and efficiency. Problems occur, when in the heat of competition, companies turn a blind eye to ethical practices and breach the law. Companies resort to misleading statements about their competitors, products and services. Such actions result in disdain from competitors and consumers. Companies may also collude with each other to form a cartel and engage in price-fixing. This is a form of unfair pricing whereby customers have to pay more than if the price is set by market forces. In a statement on 6th September 2013, the Malaysia Competition Commission said that low cost airline AirAsia and Malaysia's national carrier Malaysia Airlines have been found guilty of price-fixing on certain routes from August 2001 to April 2012 and have each to pay penalties. Ethics? Fairness? They are out of fashion. 

Yet another reason for ethical problems arising in business organizations is the conflict between personal values and business goals. The organization may pursue goals which are against the personal values of individuals. Such divergence of directions bring about job dissatisfaction, lower productivity and higher staff turnover. Being employees, we may expect the company to provide equal opportunities to all, regardless of race, sex or religion. If it so happens that nepotism is practiced in the organization - a person is promoted because he's the nephew of the boss while another more capable person is overlooked - a feeling of despondence will pervade the working environment. This will sow the seeds of discontent and the occurrence of undesirables such as poison pen letters, backstabbing and whistle-blowing.

Finally, cross-cultural contradictions may result in ethical problems. This is particularly so in international business where ethical standards are different. Due to the higher labor costs in developed countries, it is the norm nowadays to outsource manufacturing to third world countries where labor costs are much lower. Working conditions, considered to be normal in the manufacturing country, are sweatshops. In South American countries, payments to government officials to expedite business transactions are normal. Elsewhere, it's bribery. International business ethics have become more crucial due to the increasing globalization of business transactions. Nevertheless, there is no global consensus as to what is morally correct.

Forget ethics. When ethics and economics conflict, economics always win. Better yum cha!!