Human Values for Business Success
In the UK there are 4.5million small and
medium sized businesses that account for 99% of all enterprise, employ 14
million people and together earn a turnover of £1.5trillion.
Big ideas are important but so are the little incremental changes made in our
businesses by employees.
How do you instill an entrepreneural culture in
your business whether public or private sector and make employees feel as passionate about what you are doing
as you are?
Whereas
Integrity, Intelligence and Energy are necessary values for human success in
any sphere they apply particularly to business which involves dealings in
property whether of goods, buildings or land and the finance involved in their
creation and maintenance and with people.
Integrity
requires personal morality and conscience which is often informed by religious
or political example as well as by the principal of ‘do no evil’.
However
religions and some political systems require little or no individual attachment
to property and some distance from people.
All require
some form of belief in the future. So
does business. Belief in the future,
progressive business aims, are the driving force and spirit of business and the
responsibility for this vision of the future rests with the Board of Directors.
Four
principles, justice, love, stewardship and honesty form the moral basis of our
corporate guidelines, policy, conduct of individuals and conduct of directors at
work.
PRINCIPLES
Four key
concepts recur in the literature of faiths and form the basis of any human
interaction, and are applicable to business relationships. They are: justice
(fairness), mutual respect (love and consideration), stewardship (trusteeship)
and honesty (truthfulness).
1. Justice
The first
principle is justice which can be defined as just conduct,
fairness,
exercise of
authority in maintenance of right.
2. Mutual Respect (Love)
The second
principle-mutual respect or love and consideration for others -is
also
inherent in
the moral teachings of religion. What Scripture expresses as love is here
rendered as mutual respect or reciprocal regard that exists between two
individuals. The application of this has come to mean that self interest only
has a place in the community in as much as it takes into account the interests
of others. Of paramount importance in this respect is the employee.
3. Stewardship
A third
principle is that of stewardship (trusteeship).
While this may be readily understood by an owner of a small business or an inheritor
of an agricultural holding, the principle is applicable to anyone who is
entrusted with the responsibility of managing scarce resources. It applies
equally to individual wealth, the long-term viability of a business. Ownership is
not seen, therefore, to be absolute. As such, businesses have an obligation to
use resources for the benefit of the people in society at large as well as for
its stockholders. The New Testament
stresses the accountability of Christians for the way they have used resources.
Jesus summed this up by stating: “From everyone to whom much is given, much
will be required” (Luke 12:48). This
principle provides a longer term perspective for business decisions than is likely
to be found where the concept of absolute ownership predominates. It also
provides the basis for a proper concern for the natural environment on which
business activity makes considerable
demands. It implies a caring management not a selfish exploitation and is
concerned with both present and future.
4. Honesty
The fourth
principle is honesty. It incorporates the concepts of
truthfulness and reliability and covers all aspects of relationships in human
life-thought, word and action. It is more than just accuracy, it is an attitude
which is well summed up in the word “integrity.” Muslims place considerable emphasis on
truthfulness in business. For instance, in a Hadith it is stated: “The merchant
whose words and transactions are righteous and who is a trusty man will be
(resurrected) amongst the martyrs in the day of judgement” (Ibn Mace, Sunan,
II/724, no. 2139 [Ticaveti]). Jews too
constantly stress honesty as the basis for human relationships. The book of
Leviticus is explicit concerning honesty in business: “You shall have true
scales, true weights, true measures” (Lev. 19: 36), and “All who act dishonestly
are an abomination to the Lord” (Dt. 26: 16), and regarding truthfulness, the
Decalogue states: “You should not bear false witness” (Ex. 20: 16).
These four principles, justice, love, stewardship and honesty form the
moral basis of the Guidelines that follow.
GUIDELINES
A. BUSINESS & POLITICAL ECONOMY
All business
activity takes place within the context of a political and economic
system. It is
recognised that:
1. Business is
part of the social order. Its primary purpose is to meet human and material needs
by producing and distributing goods and services in an efficient manner. How
this role is carried out-the means as well as the end-is important to the whole
of society.
2. Competition
between businesses has generally been shown to be the most effective way to
ensure that resources are not wasted, costs are minimized and prices fair. The State
has a duty to see that markets operate effectively, competition is maintained
and natural monopolies are regulated. Business will not seek to frustrate this.
3. All
economic systems have flaws; that based on free and open markets is morally neutral
and has great potential for good. Private enterprise, sometimes in partnership
with the State, has the potential to make efficient and sustainable use of
resources, thereby creating wealth which can be used for the benefit of
everyone.
4. There is no
basic conflict between good business practice and profit making. Profit is one
measure of efficiency and is of paramount importance in the functioning of the system.
It provides for the maintenance and growth of business, thus expanding employment
opportunities and is the means of a rising living standard for all concerned. It also acts as an incentive to work and be
enterprising. It is from the profit of companies that society can reasonably
levy taxes to finance its wider needs.
Profit should not therefore be concealed.
5. Because the
free market system, like any other, is open to abuse, it can be used for selfish
or sectional interests, or it can be used for good. The State has an obligation
to provide a framework of law in which business can operate honestly and fairly
and business will obey and respect the law of the State in which it operates. The law exists for the prompt and fair
resolution of private disputes.
6. As business
is a partnership of people of varying gifts they should never be considered as
merely a factor of production. The terms of their employment will be consistent
with the highest standards of human dignity.
7. The
efficient use of scarce resources will be ensured by the business. Resources employed
by corporations include finance (savings), technology (machinery) and land and
natural renewable resources). All are important and most are scarce.
8. Business
has a responsibility to future generations to improve the quality of goods and service,
not to degrade the natural environment in which it operates and seek to enrich
the lives of those who work within it. Short-term profitability should not be
pursued at the expense of long term viability of the business. Neither should
business operations disadvantage the wider community.
B. THE POLICIES OF A BUSINESS
Business
activity involves human relationships; it is the question of balancing the
reasonable
interests of those involved in the process: i.e., the stakeholders, that
produces moral and ethical problems. The policies of the business will
therefore be based on the principles set out in the paragraphs above and in
particular:
1. The board
of directors will be responsible for seeing that the business operates strictly
within the letter and spirit of the laws of nations in which it works.
2. The board
will issue a written statement concerning the objectives, operating policies of
the organisation and their application. It will set out clearly the obligations
of the company towards the different stakeholders involved with a business
[employees, shareholders, lenders, customers, suppliers and the community
(local and national government), owners].
3. The basis
of the relationship with the principal stakeholders shall be honesty and fairness,
by which is meant integrity, in all relationships as will as reliability in all
commitments made on behalf of the organisation.
4. The
business shall maintain a continuing relationship with each of the groups with which
it is involved. It will provide effective means to communicate information affecting
the stakeholders. This relationship is based on trust.
5. The best
practice to be adopted in dealings with six particular stakeholders, emplyees,
providers of finance, customers, suppliers, community, owners can be summarized
as follows:
a) Employees
Employees make
a unique contribution to an organisation; it follows that in their policies, businesses
shall where appropriate, take notice of trade union positions and provide:
i) Working
conditions that are safe and healthy and conducive to high standards of work.
ii) Levels of
remuneration that are fair and just, that recognize the employees’
contribution
to the organisation and the performance of the sector of the business in which
they work.
iii) A respect
for the individual (whether male or female) in their beliefs, their family responsibility
and their need to grow as human beings. It will provide equal opportunities in
training and promotion for all members of the organisation. It will not
discriminate in its policies on grounds of race, color, creed, or gender.
b) Providers
of Finance
A business
cannot operate without finance. There is therefore, a partnership between the provider
and the user. The company borrowing money shall give to the lender:
i) What has
been agreed to be repaid at the due dates.
ii) Adequate
safeguards in using the resources entrusted.
iii) Regular
information on the operations of the business and opportunities to raise with directors
matters concerning their performance.
c) Customers
Without
customers a business cannot survive. In selling products or services, a company
shall provide for the customer:
i) The quality
and standard of service which has been agreed.
ii)
After-sales service commensurate with the type of product or service and the
price paid.
iii) Where
applicable, a contract written in unambiguous terms.
iv)
Informative and accurate information regarding the use of the product or
service especially where misuse can be dangerous.
d) Suppliers
Suppliers
provide a daily flow of raw materials, products and services to enable a
business to
operate. The relationship with suppliers is normally a long term one and must therefore
be based on mutual trust. The company shall:
i) Undertake
to pay its suppliers promptly and in accordance with agreed terms of trade.
ii) Not use
its buying power in an unscrupulous fashion.
iii) Require
buyers to report offers of gifts or favors of unusual size or questionable purpose.
e) Community (Local and National Government)
While
companies have an obligation to work within the law, they must also take into account
the effects of their activities on local and national communities. In particularly
they shall:
i) Ensure that
they protect the local environment from harmful emissions from
manufacturing
plant, excessive noise and any practice likely to endanger humans, animals or
plant life.
ii) Consider
the social consequences of company decisions e.g. plant closures, choice of new
sites or expansion of existing ones.
iii) Not
tolerate any form of bribery, extortion or other corrupt or corrupting
practices in business dealings.
f) Owners (shareholders)
The
shareholders undertake the risks of ownership. The elected directors shall:
i) Protect the
interests of shareholders.
ii) See that
the company’s accounting statements are true and timely.
iii) See that
shareholders are kept informed of all major happenings affecting the
company.
C. CONDUCT OF INDIVIDUALS AT WORK
The following
are based on best ethical practice for employees in a business.
Employees of
an organisation shall:
1. Implement
the decisions of those to whom he or she is responsible which are lawful and in
accordance with the company’s policies in cooperation with colleagues.
2. Avoid all
abuse of power for personal gain, advantage or prestige and in particular refuse
bribes or other inducements of any sort intended to encourage dishonesty or to break
the law.
3. Not use any
information acquired in the business for personal gain or for the benefit of relatives
or outside associates.
4. Reveal the
facts to his superiors whenever his personal business or financial interests become
involved with those of the company.
5. Be actively
concerned with the difficulties and problems of subordinates, treat them fairly
and lead them effectively, assuring them a right of reasonable access and
appeal to those to whom their immediate superior is responsible.
6. Bring to
the attention of superiors the likely effects on employees of the company’s plans
for the future so that such effects can be fully taken into account.
CONDUCT OF DIRECTORS AT
WORK
While Directors may
delegate certain duties to management to carry out they delegate none of the
ultimate responsibility for those duties.
Belief in the
future, progressive business aims, are the driving force and spirit of business
and the responsibility for this vision of the future rests with the Board of
Directors.
A director owes to his
company seven statutory general duties (Companies Act 2006, sections 170 to
177), which might conveniently be divided into those of loyalty and good faith,
analogous to those owed by a trustee, and those of care and skill,
DIRECTORS DUTIES
A director owes to his
company seven statutory general duties (Companies Act 2006, sections 170 to
177), which might conveniently be divided into those of loyalty and good faith,
analogous to those owed by a trustee, and those of care and skill,
170Scope and nature of
general duties
(1)The general duties specified in sections 171 to 177 are owed by a
director of a company to the company.
(2)A person who ceases to be a director continues to be subject—
(a)to the duty in section 175 (duty to avoid conflicts of interest) as
regards the exploitation of any property, information or opportunity of which
he became aware at a time when he was a director, and
(b)to the duty in section 176 (duty not to accept benefits from third
parties) as regards things done or omitted by him before he ceased to be a
director.
To that extent those duties apply to a former director as to a director,
subject to any necessary adaptations.
(3)The general duties are based on certain common law rules and
equitable principles as they apply in relation to directors and have effect in
place of those rules and principles as regards the duties owed to a company by
a director.
(4)The general duties shall be interpreted and applied in the same way
as common law rules or equitable principles, and regard shall be had to the
corresponding common law rules and equitable principles in interpreting and
applying the general duties.
(5)The general duties apply to shadow directors where, and to the extent
that, the corresponding common law rules or equitable principles so apply.
171Duty to act within
powers
A director of a company must—
(a)act in accordance with the company's constitution, and
(b)only exercise powers for the purposes for which they are conferred.
172Duty to promote the
success of the company
(1)A director of a company must act in the way he considers, in good
faith, would be most likely to promote the success of the company for the
benefit of its members as a whole, and in doing so have regard (amongst other
matters) to—
(a)the likely consequences of any decision in the long term,
(b)the interests of the company's employees,
(c)the need to foster the company's business relationships with
suppliers, customers and others,
(d)the impact of the company's operations on the community and the
environment,
(e)the desirability of the company maintaining a reputation for high
standards of business conduct, and
(f)the need to act fairly as between members of the company.
(2)Where or to the extent that the purposes of the company consist of or
include purposes other than the benefit of its members, subsection (1) has
effect as if the reference to promoting the success of the company for the
benefit of its members were to achieving those purposes.
(3)The duty imposed by this section has effect subject to any enactment
or rule of law requiring directors, in certain circumstances, to consider or
act in the interests of creditors of the company.
173Duty to exercise
independent judgment
(1)A director of a company must exercise independent judgment.
(2)This duty is not infringed by his acting—
(a)in accordance with an agreement duly entered into by the company that
restricts the future exercise of discretion by its directors, or
(b)in a way authorised by the company's constitution.
174Duty to exercise
reasonable care, skill and diligence
(1)A director of a company must exercise reasonable care, skill and
diligence.
(2)This means the care, skill and diligence that would be exercised by a
reasonably diligent person with—
(a)the general knowledge, skill and experience that may reasonably be
expected of a person carrying out the functions carried out by the director in
relation to the company, and
(b)the general knowledge, skill and experience that the director has.
175Duty to avoid conflicts
of interest
(1)A director of a company must avoid a situation in which he has, or
can have, a direct or indirect interest that conflicts, or possibly may
conflict, with the interests of the company.
(2)This applies in particular to the exploitation of any property,
information or opportunity (and it is immaterial whether the company could take
advantage of the property, information or opportunity).
(3)This duty does not apply to a conflict of interest arising in
relation to a transaction or arrangement with the company.
(4)This duty is not infringed—
(a)if the situation cannot reasonably be regarded as likely to give rise
to a conflict of interest; or
(b)if the matter has been authorised by the directors.
(5)Authorisation may be given by the directors—
(a)where the company is a private company and nothing in the company's
constitution invalidates such authorisation, by the matter being proposed to
and authorised by the directors; or
(b)where the company is a public company and its constitution includes
provision enabling the directors to authorise the matter, by the matter being
proposed to and authorised by them in accordance with the constitution.
(6)The authorisation is effective only if—
(a)any requirement as to the quorum at the meeting at which the matter
is considered is met without counting the director in question or any other
interested director, and
(b)the matter was agreed to without their voting or would have been
agreed to if their votes had not been counted.
(7)Any reference in this section to a conflict of interest includes a
conflict of interest and duty and a conflict of duties.
176Duty not to accept
benefits from third parties
(1)A director of a company must not accept a benefit from a third party
conferred by reason of—
(a)his being a director, or
(b)his doing (or not doing) anything as director.
(2)A “third party” means a person other than the company, an associated
body corporate or a person acting on behalf of the company or an associated
body corporate.
(3)Benefits received by a director from a person by whom his services
(as a director or otherwise) are provided to the company are not regarded as
conferred by a third party.
(4)This duty is not infringed if the acceptance of the benefit cannot
reasonably be regarded as likely to give rise to a conflict of interest.
(5)Any reference in this section to a conflict of interest includes a
conflict of interest and duty and a conflict of duties.
177Duty to declare
interest in proposed transaction or arrangement
(1)If a director of a company is in any way, directly or indirectly,
interested in a proposed transaction or arrangement with the company, he must
declare the nature and extent of that interest to the other directors.
(2)The declaration may (but need not) be made—
(a)at a meeting of the directors, or
(b)by notice to the directors in accordance with—
(i)section 184 (notice in writing), or
(ii)section 185 (general notice).
(3)If a declaration of interest under this section proves to be, or
becomes, inaccurate or incomplete, a further declaration must be made.
(4)Any declaration required by this section must be made before the
company enters into the transaction or arrangement.
(5)This section does not require a declaration of an interest of which
the director is not aware or where the director is not aware of the transaction
or arrangement in question.
For this purpose a director is treated as being aware of matters of
which he ought reasonably to be aware.
(6)A director need not declare an interest—
(a)if it cannot reasonably be regarded as likely to give rise to a
conflict of interest;
(b)if, or to the extent that, the other directors are already aware of
it (and for this purpose the other directors are treated as aware of anything
of which they ought reasonably to be aware); or
(c)if, or to the extent that, it concerns terms of his service contract
that have been or are to be considered—
(i)by a meeting of the directors, or
(ii)by a committee of the directors appointed for the purpose under the
company's constitution.
