Business ethics through training

Monday November 12, 2012

By NG BEI SHAN

Education has a role to play in transforming framework for analysing problemsKUALA LUMPUR: While ethics in business decision-making and corporate governance could be contextual, it could be instilled through training or simulation, said Iclif Leadership and Governance Centre faculty member Youssef Nasr. Youssef said the debate stemmed from whether ethics could be taught. He told StarBiz that people developed a framework in analysing problems as they dealt with ethical issues throughout their upbringing.

“That business ethics education has a role to play in transforming the framework which would affect the outcome of decision-making when facing challenging situations,” he added. Iclif managing director of corporate governance John Zinkin said directors did not have the option of not making a choice, hence it was crucial to teach them to face such dilemma especially when the issues were complicated.

“What seems right at one level in business may be absolutely wrong at the top level of the business. “As a child, we were taught that snitching is wrong but in corporate governance, top management relies on whistle-blowing policies,” he said. Zinkin noted that ethics became a tricky issue when people from various levels in an organisation understood it differently while top management needed information from the lower levels in making decisions.

Youssef also said decisions made should take long-term implications into account. “A number of high-profile ethical issues were done when things were considered still under control but with hindsight, it became a problem years later.” When it came to cross-border decision-making, Zinkin said regulators of different countries had different requirements and the directors had to decide which rules to comply with.

Zinkin said much could be done to improve the corporate governance culture in Malaysia from public-listed companies to small and medium enterprises. According to the latest Corporate Governance Watch report, corporate Malaysia scored 39% for corporate governance culture. “Only 10% of corporate Malaysia was serious about corporate governance, while 20% wanted to be good,” Zinkin said.

Both Youssef and Zinkin agreed that prompt and accurate reporting was vital in improving corporate governance. “Another issue would be approving minutes via telephone, as negligence could happen,” Nasr said. He suggested that minutes be written and passed back to directors for approval within 24 hours so that details of discussion were still fresh in memory.

Zinkin said through Corporate Governance Blueprint 2011, the Securities Commission aimed to have professional directors by 2016. According to the blueprint, “Continuing development will equip directors to best serve the interests of the company. The mandatory Continuing Education Programme for directors will be reintroduced.” Zinkin said it was important for directors to continue learning as there were new developments in corporate governance from time to time, adding that there was a need to keep up with the global corporate governance development as it would hit the local shores too.

He also said it was essential for directors to keep up with the latest knowledge such as accounting standards, as the central ruling required them to understand the documents that they signed. “The standards (expected) of directors have been raised by the regulators and public from time to time,” he said.

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