5 of the 7 habits of strong ethical leaders

Ethical leaders should have knowledge and have experience to make the right decision. Archie Carroll pointed out seven habits of strong ethical leaders. I think Vietnamese businesspeople should know five habits below.

Firstly, ethical leaders have strong personal character. This is one of basic factors. If the leaders have this character, they can teach employees respecting corporate values and codes of ethic. Moreover, employees are also equipped the intellectual skills to address the complexities of ethical issues.

Secondly, ethical leaders have a passion to do right. They compliment about good things and punish bad ones. These leaders are able to recognize role of ethical behavior and willing to face challenges. This kind of habit is quite popular in organizations in Vietnam.

Thirdly, ethical leaders are proactive. A few of leaders have never waited for ethical problems until they happen. They usually have full experience to forecast, plan, and act proactively to prevent their companies from potential ethical crises. This habit is popular in Vietnam.

Fourthly, ethical leaders consider stakeholders’ interests. These leaders always have to balance stakeholder interests, respect their legal right, and make organization to become “a good citizen”. Scandal 3-MCPD soya sauce shows that boards of directors of these companies do not care for the shareholders, customers, and social responsibilities.

Lastly, ethical leaders are competent managers who take a holistic view of the firms’ ethical culture. They always view role of ethics as a strategic issue. Ethical issues are considered as important as production, marketing, and so on. In Vietnam, business ethics has not been viewed properly yet, so this kind of habit is quite rare. In few international organizations in our country, ethical issues management is built as a strategy.

Generally speaking, ethical leaders who have a passion to do right are the most popular leaders in Vietnam. In my opinion, we should improve ethics in businesspeople through education, propaganda, and stimulating to increase awareness of business ethic’s role in society.

The ethical decision-making framework

A basic model of the ethical decision making process includes four factors. They are ethical issue intensity, individual factors, organizational factors, and opportunity. Their influences on that process are very great.

Ethical issue intensity can be identified as level of importance of ethical issue to the decision makers. All individuals in organizations always have to face evaluating an issue is ethical or unethical. If they suppose that issue is important, they will certainly pay attention more.

Individual factors are honesty, conflicts of interests, gender, education, nationality, and locus of control. Some of them are more important than others are. For instance, a person of high honesty is likely to have ethical behavior, although they have generally less education or experience than other colleagues do.

Organizational factors are very important in making ethical decision of a person. Research has revealed that the organization’s values have great impacts on making decision than values of an individual. If employees perceive that they have been working for an ethical company, they are not likely to have unethical behavior. Besides, many studies points out that significant others may have more influence an employees’ decision on a daily basis than other factors.

Opportunity reflects the conditions that limit or permit ethical or unethical behavior in an organization. To avoiding employees’ making unethical decisions, companies should develop their formal codes, rules, and policies.

In Vietnam, making ethical decision of a person is also affected by above factors. Unethical behaviors, however, usually happen in some emerging cases. Conflict of interests is popular, such as some employees only make decisions, which bring them personal benefits. Moreover, a number of organizations do not punish employees if they make unethical decisions because these companies only focus on making profits.

In conclusion, although it is impossible to show exactly how an individual makes ethical decisions, we know basic factors that influence business ethics evaluations and intentions, which lead to ethical or unethical behavior.

The significance of the US Sarbanes- Oxley Act

Being enacted on July 30, 2002, Sarbanes-Oxley, commonly Sarbox or SOX, is a United States federal law. It was passed to react to corporate and accounting scandals such as Enron, WorldCom, and Tyco International. This law sets new standards for all US public company boards, management and accounting firms.

The most important point of the law is creating Public Company Accounting Oversight Board (PCAOB). This agency has to supervise, control, inspect and discipline accounting firms that audit public companies. Besides, it also establishes standards and rules for operation of accounting firms. For instance, the act prohibits auditing companies from providing non-audit services (e.g., consulting) for the same clients.

The act also requires carrying out greater responsibility for decisions in every corporation and providing leadership based on ethical principles. For example, top managers are required to certify the completeness and accuracy of financial reports; senior executives also have to take individual responsibility for companies’ financial statements. Moreover, SOX also provides certain protections for “whistle-blowers”. These persons may be anyone such as employees who report illegal activities to law enforcement officer. According to Section 1107, persons who took any action harmful to any person “shall be fined under this title, imprisoned not more than 10 years, or both”.

In these days, violations of the law have increased. New laws and regulations have been passed to prevent unethical decisions. The most significant of them are the Sarbanes-Oxley Act (SOX) and the Federal Sentencing Guidelines for Organizations (FSGO). With low cost of compliance, these rules bring a lot of benefits to firms and stakeholders. According to a survey of Finance Executives International (FEI), for 168 companies with average revenues of $4.7 billion, compliance costs were $1.7 million (0.036% of revenue) in 2007. Main benefits of Sarbox are greater accountability of top managers, greater penalties for senior managers, renewed investor confidence, and whistle-blower protection. If every corporation complies with these laws, ethical behavior will be certainly generated.

In Vietnam, some laws and regulations are issued. They, however, are not sufficient. In the future, I think we should set up laws to prohibit corporations from misconducts, and encourage companies to avoid unethical behaviors. Besides, passed laws need to be modified, and complemented to appropriate to changing business environment.

Honesty, fairness and integrity in international business environment

Some business people suppose that following laws and regulations of their business is enough. They, however, forgot that any ethical business relations should be based on honesty, fairness, and integrity. These are basic virtues to maintain all of business exchanges, especially one between local business people and foreign ones.

Firstly, honesty, fairness, and integrity are universal accepted virtues. No country on this world supports lacking of these virtues. They belong to humankind elements. Lacking of them, government could not run or control the country, business people could not do any transaction because they do not trust their counterparts.

Secondly, these virtues are really important things to establish ethical behavior between local ones and foreign ones. They are from different countries with different cultures, custom, or social etiquette. For example, giving or accepting bribes is sometimes acceptable in Vietnam if government cannot prove that it is based on bad purposes. In other countries, however, this action is not acceptable because they think it is unethical.

Finally, foreign business people sometimes have lots of knowledge, international experience. Some inexperienced Vietnamese business people worry about doing transactions with them. They do not want to be cheated. In another aspect, some unethical foreign businesspersons use ambiguous company rules to treat their workers, or their stakeholders unfairly.

To resolve many dilemmas in business, many activities have to be done.

Firstly, government has to be interested in ethical issues. They should launch clearly, specific laws and regulations. A special commission should be found. Its duties are promulgating ethical business rules, checking, controlling and improving carrying out these rules in real business environment.

Secondly, every organization has to build its own ethical programs. Then they are disseminated, controlled, and evaluated regularly. Dissemination can be done through diversity methods such as training programs, traditional meetings. Rewarding and disciplining are also necessary in every corporation.

General speaking, although basic purpose of any economic activity is earning profits, all business behaviors, especially between local business people and foreign ones, have to be grounded on basic standards. Those standards are honesty, fairness, and integrity.

Problems, which involve ethical issues, exist in Vietnam

Vietnam is a developing country, so in business environment, there are many problems, which involve ethical issues, exist in our country. Some of them are awareness of business ethics, issue of intellectual property, and social responsibilities of economic organizations.

First, some business people do not understand exactly concept of business ethics. Even in some Vietnamese universities, business ethics is supposed that it is based on kindness or complying with law rules is enough.

Second, copyright breach is very popular in Vietnam. Important reasons are that price of copyright products are quite high with average income Vietnamese, and buying those things is not their regular habit. For example, if we want to buy a Microsoft Office OEM CD with copyright, we have to pay about 300 USD, but most Vietnamese can buy this software with only 0.3 USD easily. This is a pirate program.

Finally, some organizations have not considered social responsibilities yet. Two main responsibilities are manufacturing standard products and protecting environment. Recently example in producing problem is scandal soya sauce with 3MCPD content which is higher than standard. Using too much this substance may be harmful to customers’ health. Another example is that scandal causing water pollution of Vedan, a glutamate manufacturer. Thi Vai river is polluted seriously because of letting out unprocessed waste water of this company.

That is why we should launch solutions for these issues as soon as possible. First, by using mass communication, government and scientists have to disseminate business ethics knowledge. Besides, completing and supplementing the legal frame with close, specific rules are very important. Furthermore, we should encourage raising ethical issues in organizations, and show them benefits of these issues.

In conclusion, if a country wants to develop stably, ethical issues, especially business ethics, have to be considered, encouraged, and popularized in society. We could expect that Vietnamese people would carry out these issues consciously.