MIDLANDS STATE UNIVERSITY
FACULTY OF BUSINESS SCIENCES
GRADUATE SCHOOL OF BUSINESS LEADERSHIP
GROUP ASSIGNMENT 1
NAME
VONGAI MATINGWINA (R2312007V)
BRYAN MATINGWINA (R2312969T)
ARTHUR MATENGO (R2311218P)
FAITH PHIRI (R151865Y)
KEVIN MAKUVARO (R2312213Y)
MODE OF ENTRY
BLOCK RELEASE
MODULE CODE
MBA738
LEVEL
1:1
LECTURER
DR G. MAIBVISIRA
Question Team 1
Your team of management has been invited to a business forum to make a
presentation on contemporary business ethics challenges being faced by
Zimbabwean organizations and the extent to which business performance has
been affected and to make recommendations. (60marks)
1. Introduction
Business ethics refers to a set of standards for morally right and wrong conduct in
business, these are premised on principles of truthfulness, objectivity, thoroughness,
and relevance. Law partially defines the conduct however business ethics enhance
the law by outlining acceptable behaviors beyond government control. Business
ethics are beneficial to operations for , attracting new talent, building positive
relationships with customers, and attracting new investors.
An organisation's approach to business ethics is the foundation upon which its brands
are built, maintained, and grown. While business ethics are common in all
organisations, the quality and implementation vary, which distinguish the
organisations from each other even within the same sector for example Econet and
Netone. Compromising of business ethics has resulted in bankruptcy of big
organisations like Enron’s Energy and WorldCom companies in USA.
From country to country, business ethics and related challenges also vary depending
on the economic environment, political stability and rule of law and Zimbabwean
companies have their own generic challenges as seen in the rise in corruption,
corporate scandals and poverty . A lot of organisations have closed or downsized due
to challenges associated with business ethics especially parastatals like ZISCO, NRZ,
Wankie Colliery and Shabani mine. everal companies have faceddifficulties
associated with corporate governance flaws in Zimbabwe. Other companies of note
are companies such as Air Zimbabwe, Premier Service Medical Aid Society (PSMAS,
Zimbabwe BroadcastingCorporation (ZBC), African Renaissance Bank (AFRE),
United Merchant Bank (UMB), ENGCapital and Barbican Bank
This report is an outline of the contempory business ethics challenges being faced in
Zimbabwe and outlines recommendations on how businesses can enforce them. The
contemporary business ethics include honesty, fairness, leadership, integrity,
compassion, respect, responsibility, loyalty,
law-abiding, transparency, and
environmental concerns.
2.1 Leadership:
Leadership influences the employees to achieve desired goals, sets vision,
standards, morals, and norms of any organization. It consciously puts effort to adopt,
integrate, and emulate the business ethics principles to guide decisions and behavior
in organizations. In Zimbabwe, organizations mainly parastatals collapsed due to
poor leadership. Leadership appointments have been made weighing heavier on
political affiliation rather than competency. The leadership influenced a lot of unethical
business practices to take over organizations and they collapsed. The appointment
of leadership was violating business ethics of hiring and screening. At PSMAS,
although leadership was competent, the company collapsed due to corruption and
selve serving interests by the leadership. The leadership was neglected its fiduciary
duties due to corruption and political influence. The problem of leadership in
Zimbabwe stems from bad recruitment practices especillay in parastatals where
political affiliation is considered ahead of competency. This has been the root cause
of the demise of ZISCO, NRZ and many other parastatals. in 2000 Zisco was
capitalizing blast furnace 4 and the sinter plant. Whilst these projects were meant to
steer ZISCO to higher and more efficient production levels, Poor integration and
management resulted in mass value loss as downstream processes were
mismatched to the new production level. Due to poor management, the furnace life
was reduced by about 50% to only 4years. Zisco was thus unable to service its debts
and permanently shut production in 2008. During the same period, ZISCO was also
running without BOD which was highly unethical. Whilst power cuts in the early 2000
also aided in the downfall of Zisco, the risk was within the control of the leadership to
predict and to manage. An article in the Newsday in 2008 summarized the collapse
of Isostere, as one due to gross mismanagement, poor business ethics and a failure
by the state-owned firm to upgrade and manage its equipment.
Despite the global campaign against asbestos, AA mines had different type of
asbestos characterized by longer fiber strands and considered safer than types found
for example in South Africa. The leadership of Mutumwa Mawere, was unable to
capitalize on this advantage but would run down the mine through wrong investment
decisions. After takeover by the government, the current leadership has been
satisfied by surviving on non-core activities despite going through a period of record
high prices around 2017.
Making business ethical decisions requires competent leadership and business ethics
should be integrated in hiring. Hiring and screening of employees especially leadership
should be diligent, fair and should attract best talent and qualification. Leaders should
lead by examples and hired based on competency to influence proper hiring and
screening of all other employees. Leaders should be stewards of the organisation,s
values, standards, morals, and norms. This will help built optimal business ethics
across the organisation, hence improved productivity. According to the 2018 Global
Business Ethics survey, employees are more likely to apply ethical reasoning when
their company clearly demonstrates why business ethics is important. Ninety-nine
percent of U.S. employees who experience a strong ethics culture said they’re
prepared to handle ethical issues. Companies that advocate for business ethics
motivate their employees to perform their roles with integrity.
2.2 Accountability
Accountability means businesses taking full responsibility for their actions or practices,
thus holding yourself responsible for your actions. This includes any bad decisions
taken or unethical business practices. It means commitment to following ethical
practices and ensuring others follow ethics guidelines.
After the land reform in 2000. Zimbabwe experienced unprecedent economic turmoil
peaking around 2007-8. This coupled with poor government fiscal policies, and
sanctions has made Zimbabwe business environment uncompetitive. In the political
arena, the downturns have been controversially attributed to economic sanctions.
Meanwhile in the above leadership failures in parastatals, there has been no
accountability as blame is passed to fellow parastatals and in most cases the
sanctions. Despite huge demand for coal in Zimbabwe, parastatals such as Hwange
colliery have shrunk in size as management is accountable to the Minister who
appoints them rather than the parliament fuelling corruption and destroying
accountability. The attitude is "you be tolerant of my way of doing business, I will be
tolerant of yours. You do your own thing, I will do mine. To each, his own. There are
many ways to go and each way is right, nothing is wrong. There is no sin and no
wrongdoing anymore. Long term plans have not been implemented as every 5years
each new minister of Mines sets up a team of his own to run for 5years, Parastatal
have been unable to run profitably and to grow since they save the ruling party whose
interests are deviant to business goals. In the private sector as well, in the mining and
all other export industries, government retains up to 25% of export earnings which it
remits in local currency to the exporter. With up to 50% difference between the official
and parallel market exchange rate, businesses are effectively losing 12,5% of their
earnings as all local services are charged at the parallel market rates. This situation
makes it difficult to hold mangers accountable when businesses perform badly as
they attribute poor performance to government policies.
Accountability should be enforced across the organizational structure from top to
bottom. The responsible authority should be made accountable. The organization
should follow its defined core values and implement them in every business decision,
situation, and activity. Organizations should establish an independent board to audit
them.
2.3 Integrity
Incorporates other principles such as honesty, trustworthiness, and reliability.
Someone with integrity consistently does the right thing and strives to hold
themselves to a higher standard.
In an article written by John Chikura, 2004, in Harare, he said, ‘MORAL and ethics
breakdown today has reached alarming proportions. Society, including the business
community, are in an ethical and values vacuum’.
Due to political polarization, the influence of the ruling party in business decisions is
also felt in the private sector where they expect leadership to support party activities
and corruptly
influence who the companies do business with.
In the end
organisations lose integrity as they go against internal policies not to be involved in
political support activities and sometimes even go against their tender and
procurement policies to accommodate politically backed suppliers and service
providers. Whilst in the private sector the impact has been mostly on quality of
services supplied, in the public sector this scenario also influences the prices at which
services are offered as these are almost always inflated. In a global market, this has
made Zimbabwean businesses uncompetitive and is one of the causes of the demise
of the manufacturing sector, imported goods are always cheaper. Even in the
agriculture sector where there is huge support from government to farmers, a tonne
of imported maize from Zambia or South Africa is cheaper than from GMB. Outside
the political influence, the low economic activity in the country means that there is stiff
competition for both employment and business opportunities. This has paved way for
rampant nepotism and corruption in organisations. The price of integrity is costing the
country a lot of money especially in the procurement and tendering processes.
The politicians need not to interfere with business whether private or public. The
government policies should be clear and support organizations to maintain integrity.
2.4 Respect for others
Mutual respect must be maintained between business owners, employees, and
customers. Businesses need to ensure a safe working space for the employees and
encourage a respectful relationship between all stakeholders. To foster ethical
behaviour and environments in the workplace, respecting others is a critical
component. Everyone deserves dignity, privacy, equality, opportunity, compassion,
and empathy. The involvement of politics in shaping the general direction of
organisations in both the public and private sectors has fueled internal politics in
organisations. The groups aligned to the ruling party naturally derive their arbitrary
power from their position and their goals tend to differ from organization. Due to their
self-serving nature, their decisions tend to be irrational when from the organisational
perspective. This tends to create cliques/camps within the organisation fuelling
conflicts which generally manifest as groups where people disrespect each other,
lose compassion and empathy amongst themselves.
The organization suffers in production, raised cost of production, unaccounted loss of
production time, crippling organization in attaining its goals. The organization should
try to separate from politics. Also, organizations should craft values, norms or
standards that is inclusive of everyone to create ownership and respect of each other.
2.5 Honesty
Truth in all matters is key to fostering an ethical climate. Transparent and truthful
communication between business owners and employees is much desired. This
characteristic helps build trust and establish a relationship between employees and
the business.
Partial truths, omissions, and under or overstating don't help a business improve its
performance. Bad news should be communicated and received in the same manner
as good news so that solutions can be developed. In an environment where
corruption, nepotism, political interference
is rife, it is inevitable that organizations
window dress operations and are negatively affected in terms of performance.
Managers tend to protect themselves telling partial truths, deliberately omitting certain
information during communications, overstating facts as acts of dishonesty.
The power situation in Zimbabwe is one characterized by dishonesty. Towards
elections, the government through ZESA overstated the power situation by telling the
electorate that power problems were now history in the country. The government
deliberately overused its water allocation to generate more than 800MW against a
budget of just below 400MW, the impact of that move is that less than 3months after
the elections, ZESA is unable to generate enough power from Kariba as it has
exhausted bits water allocations, in the meantime the power plants 7 and 8 at Hwange
are not yet fully operational. The result is the current massive loadshedding in the
country and ZESA was dishonesty when they said power challenges were over. When
you read newspaper reports around the time ZISCO and AA mines were closing,
management will do press statements around positive issues that were happening
within the organisation as propaganda that the organisation were still running and
would not talk about the challenges, they were facing which eventually led them to
closure.
Organization should create and implement a culture of openness and truthfulness.
Also, organizations should practice their core values, standards in every business
decision, situation, and activity. The truth will set organizations free of hiding loses
and prevent huge damages to their brands.
2.6 Respect for laws
Ethical leadership should include enforcing all local, state, and federal laws. If there
is a legal grey area, leaders should stand on the side of legality rather than exploiting
a gap. The current economic environment in Zimbabwe is characterized by massive
corruption, high inflation, distorted exchange rates and high business taxations. This
coupled with perceived selected application of the laws has fueled criminal activities
in business, most small-scale enterprises evade tax payments to spur profitability.
Most politically aligned organizations are known for not paying taxes and this has sort
of encouraged other businesses to do the same either by bribing Zimra officials or
under declaring business activities.
This has resulted in the country losing a lot of money through evading taxes and
overtaxing the abiding organizations crippling their production. The law should not be
selective. Ethics enhances laws if laws are selective so does business ethics. The
parastatals should lead by example paying their dues and practicing the business
ethics.
2.7 Responsibility
Promote ownership within an organization, allow employees to be responsible for
their work, and be accountable for yours. As managers fail to be accountable, to be
honesty and as they fail integrity heuristics as highlighted earlier, they in turn stifle
autonomy within teams. Autonomous teams take responsibility for their actions and
in turn would expect managers to be accountable for their actions.
A level of personal responsibility is expected from business employees. This
responsibility may be in completing an assigned task, reporting to work at the expected
time, or being honest in the workplace. Employees are also expected to own up to
their mistakes and work towards correcting them. Businesses should honour their
responsibilities to their employees, partners, and customers. They need to respect the
interests of all parties involved with the business. These interests may take the form
of written contracts, verbal agreements, or legal obligations.
The massive strikes some of them fatal, as in the case of ZISCO and Shabani are
testimony to this where employees believe that managers could have done better, or
that managers were living large at a time the companies were collapsing. These are
epic cases of employees taking responsibility while trying to make mangers
accountable. This was the same case at Hwange colliery in 2017 and at Zimasco in
2009 where workers forced the reassignment of the General Manger at the Kwekwe
smelter.
Organizations should craft values, standards and norms that are inclusive of everyone
to create ownership. Also create a culture of openness and welcoming to enable twoway communication between management and employees. Amidst growing scrutiny
of business practices, it’s more important than ever for companies to carry out work
the right way. Ethics programs are an exceptional tool for promoting moral conduct.
Organizations also need employees dedicated to ethical decision-making.
2.8 Transparency
Stakeholders are people with an interest in a business, such as shareholders,
employees, the community a firm operates in, and the family members of the
employees. Without divulging trade secrets, companies should ensure information
about their financials, price changes, hiring and firing practices, wages and salaries,
and promotions are available to those interested in the business's success. When
there is political interference and toxicity in organisations, they become amoral.
Organizations engage in immoral things not because they are immoral but because
it may be the things to do for survival. To make sure that politically connected
organisations get awarded tenders for example, tenders and job opportunities will not
be openly advertised so that preferred organisations and candidates emerge as
deserving the opportunities. Important information disseminated among a business's
customers, employees, or partners is to be provided comprehensively. This includes
both positive and negative information, terms and conditions, or any other crucial
information, as it is against business ethics to withhold or hide relevant facts.
This deprives the organizations of best service providers or best employees. In such
organizations it will not be made clear how for example do employees get promoted
or how they get salary increases. Transparent communication between business
owners and employees is much desired. This characteristic helps build trust and
establish a relationship between employees and the business.
Organizations need to create and practice open cultures also establish an
independent board to audit organizations. Also, in hiring and promotions technology
can be used to carry out comprehensive screening of candidates and these include
psychometric test.
2.9 Compassion
Employees, the community surrounding a business, business partners, and
customers should all be treated with concern for their well-being. In highly politicized
organizations as in Zimbabwe, political groups and individuals are self-serving, they
support decision which do not necessary support business objectives, but which
support them as cliques or individual, due to the varying values, goals and interests
of such individuals /groups, one has to lose compassion in order to advance their
interests ahead of others.
This explains why in the case of parastatals, every new minister comes with their own
BOD and management teams. In the current environment where perception is that
Chinese firms are getting their way into business through corruption and political
assistance. They have shown less compassion to the surrounding communities
where they have demonstrated very little or any Corporate Social responsibility. Their
disregard for communities, environmental protection and surrounding business
communities is unprecedented. Under such circumstances, other organizations start
feeling less compelled to do acts of compassion and government loses moral power
to enforce them. Polices and values proper implementation should be enforced to
protect community’s environment and employees.
2.10
Fairness
Everyone should have the same opportunities and be treated the same.
Organizations must ensure a fair chance for everyone and boost their growth and
empowerment. If a practice or behavior would make you feel uncomfortable or place
personal or corporate benefit in front of equality, common courtesy, and respect, it is
likely not fair. As highlighted above due to limited opportunities, corruption, and
nepotism.
Employees in both the private and public sector are unable to treat each other fairly
and to enforce policy thereof. This results in underground conflicts in organizations
which reduce production and increase production costs. Organisations has lost talent
and good employees. According to a Bentley University study, 86% of millennials
consider it a priority to work for a business that conducts itself ethically and
responsibly. The organization leadership should practice the values and norms of the
organization and influence another employee. Business with great employee fairness
attract the best talents, also great fairness improves productivity and convinces
employees to be loyal.
2.11
Loyalty
Leadership should demonstrate confidentially and commitment to their employees
and the company. Influencing loyalty in employees and management ensures that
they are committed to best practices. Due to the conflicting political and business
interests, management has had to divide its loyalty between politics, organization,
and employees. Currently politics is prevailing over business and people interests as
shown by the continued stay in power of the ruling party in an environment where
companies are performing poorly, in some cases closing and where employees are
continually protesting low salaries and poor service conditions. There are no
convictions even as organizations such as NSSA where abuse of office was
unearthed speaks to why rampant immorality and split loyalty has been detrimental
in parastatals.
These has created a lot of conflicts in organizations, loss of production time when
employees engage in other activities while at work. Organizations especially leaders
should practice and implement values and norms that to create brands that everyone
wants to be part of it.
2.12
Environmental concern
In a world where resources are limited, ecosystems have been damaged by past
practices, and the climate is changing, the coming in of the Chinese to do business
in Zimbabwe has changed the environmental concern perspective amongst
organizations. Their disregard for environmental protection concerns is evident along
the great dyke where chrome pits are not rehabilitated after mining, emissions from
smelters are not monitored and recently in Boterekwa where there is rampant
destruction of flora. In Boterekwa, they are also processing the gold using leaching
method which in other countries is banned because of its effects on ground water
bodies. Whilst corruption is partly to blame, the government is unable to move with
time to legislate and enforce environmental protection instruments. In its bid to get
to $12b mining economy by 2030, the government has turned a blind eye to the
environmental degradation and use of heavy chemicals in processing being done by
small scale miners, this in turn has discouraged good corporate citizens from
protecting the environment and in a way disempowered the EMA to enforce
Environmental Management policies.
Local authorities have not been spared either, as they struggle to maintain civil
infrastructure under the current economic environment, every town is now
synonymous uncontrolled sewer discharges into the environment. It is now impossible
for them to enforce safe industrial discharges and deviant factories are taking
advantage of that.
It is of utmost importance to be aware of and concerned about the environmental
impacts a business has. All employees should be reencouraged to discover and
report solutions for practices that can add to damages already done.
3 Conclusion
Due to the above business ethics challenges, Zimbabwean companies have also
failed to reap benefits associated with good ethical practices. The benefits of business
ethics include gaining a competitive advantage, improving the brand image, motivating
employees, and saving businesses from future legal action. In the cases of ZISCO
and AA Mines, not only have they closed but they also have been unable to attract
investors despite having very attractive business cases on their tables.As for most
parastatals, they got more and more involved in scandals, reputations nose-dived,
and they have been unable to attract talent and good employees to run their
organizations. The government has also lost significant income from organization due
to unethical business practices in both public and private sectors, rather individuals
are benefiting at the cost of the country.
As environmental issues take center stage on global markets, it is likely that
Zimbabwean firms which disregard environmental issues will lose customers in future.
On paper the values, standards and norms of most public and private organisations
are excellent it is the practices and implementation that need to be enforced to
maintain and grow the organizations also to attract investors. In addition to
establishing formal programs, organisations should create ethical workplaces by
hiring the right talent. “High integrity and honesty” are the second-most important skill
for business leaders, according to a recent survey. Today’s business professionals
must understand the link between business ethics and business success. Also,
educational institutions also play a fundamental part in shaping ethical leaders.
Learning from past successes and mistakes can enable organization to improve in
ethical decision-making.
REFERENCES:
1. https://www.investopedia.com/terms/b/bBusiness ethics - Wikipedia
2. en.wikipedia.org/wiki/Business ethicsusiness-ethics.asp
3. Karisa Schroeder 18 Reylands Business and society Blog October 2021
4. Ethisphere, The 2022 World’s Most Ethical Companies® Honoree List,
https://worldsmostethicalcompanies.com/honorees/#
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6. Asian Economic and Financial Review, 2015, 5(1):167-178