Rules of the game

From the February 2020 print edition

What role do ethics and morality play in procurement? Why even ask the question? In politics, just after the October 21 federal election last year, newly re-elected Prime Minister Justin Trudeau met with Green Party leader Elizabeth May to build consensus even though the Greens don’t hold official party status. Trudeau met with May just to be morally and ethically sensible in matters that are important to Canadians or, at least, to the million-plus Canadians who voted Green.

Yet we see that business leaders and other officials often suffer from a crisis of conscience, usually after they get caught or have the whistle blown on them – all under pressure to be socially and morally good while living up to society’s standards.

Maybe we can’t do much with politicians. But perhaps we can inject more ethical practices into our day-to-day business lives.

Code of conduct
In business, ethics refers to implementing the essence of a business code of conduct to policies and practices. It also becomes essential to the survival and growth of the workplace. This outlook is perhaps most important within procurement governance and polices. Business codes of conduct, as good as the paper that they are written on, outline rules of engagement but are broad, vague, lack specifics and often are too inclusive and encompassing. The codes promote actions and are symptoms of good public relations, but the real custodians are often procurement professionals.

Take, for example, the Ethics in Procurement section of the original United Nations’ Procurement Practitioner’s Handbook. The fact that the UN has written the rules for procurement in the global marketplace reiterates the importance of those rules in business and is evidence of the gravity of the endeavor.

Morality in procurement practices sets a much higher bar than just principles from a corporate code of conduct policy. The aim is for a higher watermark for procurement professionals. It’s almost like an unwritten set of rules. One of the main reasons is that there are more opportunities these days for procurement professionals to be tempted and stray from core principles. Hence the invisible line that the code of ethics draws. Procurement is much more visible than other professions.

Issues that come up in ethics discussions include corporate governance, insider trading, bribery, discrimination, social responsibility, fiduciary responsibilities and others. The law usually sets the tone for business ethics, providing basic guidelines to follow in order to gain public approval and create a positive reputation.

Morals versus ethics
The risks to a business’s bottom line and reputation could be mitigated by vocational training on moral standards. Moral standards involve rules of good conduct in the business. They guide employees toward permissible and lawful behaviour with basic values.

Ethics, however, derive from personal values and arise as the benefits of the highest actions. Although it is morally correct to follow certain actions, those actions could be ethically questionable. For instance, procurement is involved in supplier selection, evaluations, negotiations, contracts sign offs and awarding business to suppliers. When interacting with suppliers, procurement should treat them in a fair and unbiased manner.

Procurement professionals therefore must conduct their business practices in the most ethical way possible. Failing to abide by ethical practices can lead to immoral and illegal actions such as bribery, favouritism, illegal sourcing and so on. The immediate reaction to the idea of unsatisfactory procurement ethics is that they will be damaging for public relations if they go public. Procurement professionals have to make sure that proper ethical guidelines are followed, as this can only contribute to business success.
I also must emphasize the importance of ethical actions versus simply in established policies. The reputation of a business is not separate from the actions of its procurement professionals or leadership. Rather, they enhance an organization’s standing.

In closing, it’s true that procurement represents its organization and is responsible for awarding business to suppliers. Unethical behaviour will have a negative impact on an organization’s brand. Procurement professionals experience enormous pressure to act in unethical ways as they usually control large sums of money. Ethical behaviour helps establish a long-term relationship and goodwill with suppliers. An ethical person is also respected in the business community. Once a buyer earns a reputation within an industry, it is difficult to change. A professional reputation is something a buyer carries throughout their career.

Therefore, as trained professionals with high expectations, we must ensure that ethics remain part of our daily activities and tasks.

Amir R. Mirshahi, CSMP, CPM, is a supply chain practitioner based in Toronto.