ETHICS AND INTEGRITY IN PURCHASING.
Topic 4 : Ethical Issues in Purchasing
Ethics(also known as moral philosophy) is a branch of philosophy which seeks to address questions about morality; that is, about concepts such as good and bad, right and wrong, justice, and virtue. Ethics can also be defined as rules or standards governing the conduct of a person or the members of a profession e.g. procurement function.
Integrity is the quality of being honest and having strong moral principles or moral uprightness. It is regarded as the honesty and truthfulness or accuracy of ones actions.
Importance of ethical buying to an organization:
- High profitability
- Value for money
- Public confidence
- Cultivating ethical culture
- Saving costs
- Cultivate better Buyer supplier relationship
- Conformance to KISM , PUBLIC officer code of ethics codes and PPADA 2015
CAUSES OF UNETHICAL PRACTISES
- Complexity of systems
- Role models
Principles of Professional Ethics
Individuals acting in a professional capacity take on an additional burden of ethical responsibility. For example, professional associations have codes of ethics that prescribe required behaviour within the context of a professional practice such as procurement, medicine, law, accounting, or engineering.
These written codes provide rules of conduct and standards of behaviour based on the principles of Professional Ethics which include:
|1. Impartiality; objectivity|
|2. Openness; full disclosure|
|4. Due diligence / duty of care|
|5. Fidelity to professional responsibilities|
|6. Avoiding potential or apparent conflict of interest
7. Business gifts
9. Fair competition
The Code of Ethics and standard of Professional Conduct are the ethical cornerstone of many companies across the globe. They are essential to company’s mission to lead the global investment profession and critical to maintaining the public’s trust in the financial markets.
The procurement ethical standards are:
- all business must be conducted in the best interests of the State, avoiding any situation which may impinge, or might be deemed to impinge, on impartiality;
- public money must be spent efficiently and effectively and in accordance with Government policies;
- Agencies must purchase without favour or prejudice and maximise value in all transactions;
- agencies must maintain confidentiality in all dealings; and
- Government buyers involved in procurement must decline gifts, gratuities, or any other benefits which may influence, or might be deemed to influence, equity or impartiality.
- Dealing with suppliers ethically
- Develop open, transparent and direct long-term stable relationships with suppliers rather than relying on ‘arms length’ contracting and licensing agreements.
- Avoid the attraction of searching for the cheapest labour and goods at the expense of social and environmental responsibility.
- Avoid frequently changing suppliers- this undermines their commitment to long term progress on labour standards.
- Develop a reasonable and agreed time frame for suppliers to meet standards as specified in the company’s ethical purchasing strategy or code.
- Avoid ‘cutting and running’ from high risk suppliers-engage suppliers to improve conditions on an incremental basis.
Code of Ethics and Conduct as per the Kenya Institute of Supplies Management (KISM)
Content sourced from Kenya Institute of Supplies Management
Guidelines or rules of conduct that govern our lives, work, behavior and communication in both public and private undertaking
The way we carry ourselves, behave in the public eye, do things, respond to situations, give instructions, obey rules and think of or perceive the needs of the other human beings
A body of rules of conduct which people with common interest, aspirations, objectives, goals, duties, activities and responsibilities have to adhere to all the time so long as they continue to remain in the profession, group or trade
The need for a code of ethics and conduct
A code of conduct is necessary for the following reasons:
- Our society, employers, peers and workmates are genuinely concerned about our individual and organizational ethical behavior
- Our work performance and standards can only be of manifestly acceptable quality and appreciable level if good rules of ethical conduct are not only obeyed but also seen in practice
- Discipline can only be instilled in our behavior through a codified procedure. The surest way of disciplining errant members of a group is through a code of rules and conduct
- A group of profession can only stand the test of time, defend itself and spread its influence if its members are ethically upright and steadfast in doing the right things, at the right time, in the right place, in the right way and at the right level of performance
- The overall need for a code of conduct is that it will bring respect to, enhance recognition for, uphold discipline and harmony within the profession
Principles of ethical behavior
In carrying out their duties and responsibilities appertaining to work and the profession, members of KISM shall:
- Be loyal to the employing organization (i.e. the employer)
- Do justice to those with whom they deal with and interact
- Be faithful to their profession
- Abstain from temptations and acts that are harmful to themselves and members of the society or community
- Do the right thing at the right time, in the right place, in the right way and at the right level of performance
ROLES OF EACC IN KENYA.
A Corruption free Kenyan Society that upholds integrity and rule of law.
To promote integrity and combat corruption through law enforcement, prevention and education.
- Fidelity to the Law
To combat and prevent corruption and economic crime in Kenya through law enforcement, preventive measures, public education and promotion of standards and practices of integrity, ethics and anti-corruption.
About the Commission
The EACC is a public body established under Section 3 (1) of the Ethics and Anti-Corruption Commission Act, 2011.
As per Section 4 of the Act: The Commission shall consist of a chairperson and two other members appointed according to the provisions of the Constitution and this Act.
Section 16 (1) of the Act states that: The Commission shall, through an open, competitive and transparent process, and with the approval of the National Assembly, appoint a suitably qualified person to be the Secretary of the Commission.
13 The Commission shall have all powers generally necessary for the execution of its functions under the Constitution, this Act, and any other written law.
Without prejudice to the generality of subsection (1), the Commission shall have the power to –
- Educate and create awareness on any matter within the Commission’s mandate;
- Undertake preventive measures against unethical and corrupt practices;
- Conduct investigations on its own initiative or on a complaint made by any person, and,
- Conduct mediation, conciliation and negotiation.
What you could do to help fight corruption?
Report all forms of corruption to the Ethics and Anti-Corruption Commission (EACC) or other Law Enforcement Agencies.
You could report corruption to us:
- In person at our offices
- By writing to us a letter or an email
- By telephone or fax
- By use of drop-in corruption reporting boxes
- By use of any other method convenient to you.
All information given to the Commission will be treated with utmost confidentiality
- PUBLIC OFFICERS CODE OF ETHICS (P.O.C.E)
A public officer shall-
- Carry out his duties in a way that maintains public confidence in the integrity of his office;
- Treat the public and fellow public officers with courtesy and respect;
- To the extent appropriate to his office, seek to improve the standards of performance and level of professionalism in his organisation;
- If a member of a professional body, observe the ethical and professional requirements of that body; Publication of specific Codes.
- Observe official working hours and not be absent without proper authorization or reasonable cause;
- Maintain an appropriate standard of dress and personal hygiene; and
- Discharge any professional responsibilities in a professional
Methods of Eradicating Unethical practices
- Capacity building
- Punitive measures including investigating and arrests
- Lifestyle audit
- Wealth declaration
- Frequent vetting of both procurement and accounting officers
- Market research on prevailing prices, specifications
- Strictly following PPADA 2015
- Due diligence on prospecting bidders
- Strict internal and external audits.
- Recognize that managing ethics is a process: Ethics is a matter of values and associated behaviours. Values are discerned through the process of ongoing reflection. Therefore, ethics programs may seem more process-oriented than most management practices. Managers tend to be sceptical of process-oriented activities, and instead prefer processes focused on deliverables with measurements. However, experienced managers realize that the deliverables of standard management practices (planning, organizing, motivating, controlling) are only tangible representations of very process-oriented practices. For example, the process of strategic planning is much more important than the plan produced by the process. The same is true for ethics management. Ethics programs do produce deliverables, e.g., codes, policies and procedures, budget items, meeting minutes, authorization forms, newsletters, etc. However, the most important aspect from an ethics management program is the process of reflection and dialogue that produces these deliverables.
- The bottom line of an ethics program is accomplishing preferred behaviours in the workplace.
As with any management practice, the most important outcome is behaviours preferred by the organization. The best of ethical values and intentions are relatively meaningless unless they generate fair and just behaviours in the workplace. That’s why practices that generate lists of ethical values, or codes of ethics, must also generate policies, procedures and training that translate those values to appropriate behaviours.
- The best way to handle ethical dilemmas is to avoid their occurrence in the first place.
That’s why practices such as developing codes of ethics and codes of conduct are so important. Their development sensitizes employees to ethical considerations and minimizes the chances of unethical behaviour occurring in the first place.
- Make ethics decisions in groups, and make decisions public, as appropriate.
This usually produce s better quality decisions by including diverse interests and perspectives, and increases the credibility of the decision process and outcome by reducing suspicion of unfair bias.
- Integrate ethics management with other management practices.
When developing the values statement during strategic planning, include ethical values preferred in the workplace. When developing personnel policies, reflect on what ethical values you’d like to be most prominent in the organization’s culture and then design policies to produce these behaviours.
- Use cross-functional teams when developing and implementing the ethics management program.
It’s vital that the organization’s employees feel a sense of participation and ownership in the program if they are to adhere to its ethical values. Therefore, include employees in developing and operating the program.