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BUSINESS ETHICS: LESSONS LEARNED & LOOKING AHEAD Dr. Winifred Tarinyeba Kiryabwire Associate Professor of Law School of Law Makerere University

BUSINESS ETHICS: LESSONS LEARNED & LOOKING AHEAD · BUSINESS ETHICS: LESSONS LEARNED & LOOKING AHEAD ... -unethical business & political ties ... tax practices, inclusive business

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Page 1: BUSINESS ETHICS: LESSONS LEARNED & LOOKING AHEAD · BUSINESS ETHICS: LESSONS LEARNED & LOOKING AHEAD ... -unethical business & political ties ... tax practices, inclusive business

BUSINESS ETHICS: LESSONS LEARNED & LOOKING

AHEAD

Dr. Winifred Tarinyeba KiryabwireAssociate Professor of LawSchool of LawMakerere University

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Outline

�Introduction

Business Ethics

�Ethical Failures in Business

Failures & Interventions

�Lessons for the Future

�The Future of Business & Implications for Business Ethics

�Re-thinking Business Ethics

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Business Ethics

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Business Ethics�Application of ethical values to business behavior (IBE)

�The application of ethical values to doing business

Fairness Reliability

Respect Integrity

Responsibility Honesty

Commitment Equity

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Ethical failures in business

Global

Systemic

Community

Organization

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What Happened?�Ethical failures in business

-Ethical leadership challenges??

�Ethics on the sidelines of business despite business case for ethical business

-Business Performance Driven by Financial Outcomes

� Ethical challenges in the era of de-regulation & free markets

-Excessive risk taking, greed, accounting frauds, tax shelters

�The gatekeepers failed us too!

“ we knew we were the custodians of public trust but our focus was on profits”

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The Interventions�Ethical Leadership

-Standards on ethical leadership, leadership training

�Ethics Standards Codes

-GRI, EITI, UN Global Compact……

� Compliance & Accreditation Programs

-Heavy investment in these processes

�Professional Conduct

-Ethical standards for professionals

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And it goes on & on….�The extractives industry�Enron etc…opened our eyes�The Pharmaceutical Industry�Lehman Brothers etc….global crisis�The Automobile Industry�The Financial Institutions�The Gupta Scandal� Tax Practices of Multinationals�Panama Papers�Paradise Papers

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Lessons Learned�The consequences of unethical conduct (Organizations…individuals….

Society) VW- 1.3bn loss in 2015 largely attributed to 16.2bn provision for emission scandal

�Focus on ethical leadership & ethical formalism (Tone at the top & ethical decision making + Ethics codes, values)“Numerous scandals that have occurred in the new millennium have damaged our

confidence in our businesses our leaders. Under pressure to become more ethical,organizations & financial institutions have undertaken efforts aimed at improving &enforcing ethical behavior…They have spent millions of dollars on corporate codes ofconduct, value-based mission statements, ethical ombudsmen, ethics & compliancemanagement strategies…the results of these strategies have been decidedly mixed.(Bazerman & Tenbrunsel)

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Lessons Learned

�The gap between values and how we do business – “The corporate sector is replete with examples of firms that profess strong ethical cultures on paper but become unraveled by corrupt behavior. Having a strong sense of ethics is not a guarantee that a company will always do the right thing. J.D. Sullivan

What actually influences how we act? Are these influences aligned with our values?

�From Enron to Lehman- the limits of legislative approaches

“A narrow focus on anti-corruption, fraud prevention has proved insufficient & companies must broaden their approach to building cultures of integrity.” OECD

�Corporate governance and ethics - IoD CG rankings

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Looking AheadThe Business Environment

� IT driven - Ethical issues in technology driven businesses

�Doing business in an era of rising nationalism & democratic recession - unethical business & political ties

� Increased transparency - Beyond communication & brand management

�From narrow “financial outcome driven decision- making” to broad-thinking—

safety don’t sell- Ford Pinto-‘’long term sustainability, stakeholders”

�From CSR to sharing value - Local investments, tax practices, inclusive business

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Looking AheadIntegrated Approach to Business Ethics

�Ethical Leadership still important- clear direction from the top

�Integrated approach to business ethics• Ethics and strategy – good strategies are firmly grounded in good ethics

• Integrate ethics into all aspects of operations

• Ethics & HR - The role of HR in driving a culture of ethics- not just implementers of ethical standards from the top; HR role-alignment between personal and organisational values

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Looking Ahead• Compliance and Ethics – strong ethical policies that go beyond compliance; also

key for stakeholder alignment, crisis management • The role of finance professionals in promoting ethics

-Recent calls for stiff penalties

-Critical in driving shift from short term to sustainable long term

-Sustainable performance measurement

-Robust ethical standards (periodic review of threats & context)

�Periodic review of ethical threats – business environment factors, decision making processes etc

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Conclusion �After the scandal –Some die, others struggle/slip into oblivion, more scandals,

few regain their position (Lessons)

�Integrated approach to Business Ethics – strategy, HR, Operations, compliance, Finance

�Ethics & culture -Despite a growing focus on organizational culture, many companies still compartmentalize their efforts to build cultures of integrity….No single department can own responsibility for installing and maintaining an ethical culture in an organization.” Business for Social Responsibility

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Thank you!Dr. Winnie T. Kiryabwire

Associate Professor of LawMakerere University