​​Reflections on organizational governance and ethics


LAST year, I studied Governance and Ethics at Wits University. The objective of the course is to equip current and future leaders on how to manage organizations ethically. It was an important course for me because I am very much interested in matters of leadership. South Africa, Africa, and the rest of the world need stronger leadership to tackle the fundamental problems humanity endures.

When I reflected on the death of Former President FW De Klerk and South Africa’s lack of stronger leadership last month, I had been reminded of my Wits course.

The course covered the role of business in society; ethics; risk management; business management tools for governance; governance in practice. These are important modules for people who want to examine the modern state of organizational governance.

The role of business in society is a module I was more interested in. Because what the role of business is, and what it should be, has evolved over the past decades.

The course challenged my views on what the role of business is and should be in our society.

I believe, like most other people, that business exists to maximize profits for its owners. So long they maximize profits within the bounds of the law. In the process to achieve maximum profits – the society benefits by business paying taxes, employing people and other beneficial things it may choose to do without government force.

My view on the role of business in society was also held by the late Nobel economist Milton Friedman. Friedman had learned this from one of the greatest philosophers in human history, Adam Smith.

That business’ role is to develop communities and pursue “equity” that disregards the rules of the market is very wrong.

The government – to which we pay taxes – has the responsibility to build roads, educate citizens so they are competitive in the market. Law and order are also things that the government must guarantee.

Voters must hold their government officials accountable. The voter is the most important and powerful player in a democracy, as famed economist Thomas Sowell once said. They must use their voting power wisely. When voters are dissatisfied with the government services, they must vote for different people in. Politicians must be kept in check. If not kept in check, they will not fulfill their mandate, and will amass wealth at the expense of our hard work.

Sadly, the course did not really accommodate my view’s and Milton Friedman’s on the role of business in our society. The students were advised not to stray away from the perspective of the course on what constitutes ethical governance. Hence, when I wrote the final exam, I could not believe what I wrote. I had to write things that I believed were wrong, to pass.

The obsession over executive pay is also widespread these days. The course touched on this.

There are many people who believe that one of the fundamental problems in our society today is the “inflated” CEO pay. These people want wealth tax and regulations to cap CEO pay imposed. They are obviously motivated by greed and envy. Even if the CEO pay was suppressed, it would not address the fundamental problem the nation faces, namely, lower levels of human capital.

Moletsi Mbeki, one of my favorite South African public voices, tackled the CEO pay matter recently on Business Day. He co-wrote an article with Pale Lehohla, South Africa’s former statistician general.

I have great admiration for Moeletsi. He’s one of the very few sensible voices in the country. However, with respect to this piece on CEO pay, he and Pali were way off. They argued that “inflated” CEO and professional salaries are behind South Africa’s lack of competitiveness. What makes their writing one of the worst is that they racialize the whole issue.

That labour costs are the highest in South Africa compared to other emerging markets is something that has been studied before. And I think Mbeki and Lehohla should have focused the article on labour costs in general – not to focus on CEO and professional pay.

What ethical governance is and should be debated – no views should be suppressed. I wish the Wits course allowed for a robust debate on what organizations should be governed – and what constitutes ethics. PM

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