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Islamic Business Ethics, by Dr. Rafik Issa
Beekun, addresses key principles of management
from an Islamic point of view with a stated
goal to help Muslims engaged in business
to act in accordance with the Islamic system
of ethics.
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Author: Dr. Rafik Issa Beekun |
It
is one of those rare 'Management' books that provides
an Islamic perspective with a regular businessperson
in mind. This is in contrast with the multitude
of academic titles that evaluate the intricacies
of Islamic teachings on the same topic.
In
an age of global multi-nationals and public corporations,
sophisticated strategic planning, finance, marketing,
management, accounting, technology and human-resource
processes; there really hasn't been a professional
ethics framework defined for Muslims to ethically
manage their businesses in the 21st century corporate
environment.
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Islamic
Business Ethics, begins to identify the
practical elements of managing ethics within
an organization that business leaders can
use, offering the framework of an overall
Islamic ethics model for an organization
to adopt.
The
first part of the book gives a background
to the concept of ethics in Islam, its relevance
today, and a comparison to other systems.
It then leads into identifying specific
approaches to developing and managing ethics
within an organization and an individual's
professional responsibilities.
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Ethics
defined
Ethics
is defined as a set of moral principles that distinguish
what is right from wrong, and in an Islamic context,
the Qur'anic term khuluq is closest to
it. Also, some other terms referenced from Qur'an
describing the concept of good are khayr
(goodness), birr (rightousness), qist
(equity), and 'adl (equilibrium and justice).
Islamic
Ethical System
The
author compares six dominant ethical systems prevalent
today and draws out some of the key parameters
that shape the Islamic ethical system. Some of
these referenced include the importance of an
individual's intention in judging ethical behavior,
freedom to believe, and the importance of humankind
to experience tazkiyah through active participation
in this life. By behaving ethically in the midst
of the tests of this worldly life, Muslims prove
their worth to God.
The
author has effectively used various references
from the Quran and Sunnah to draw these parameters.
For example, in support of the freedom to choose
one's faith, Surah 2:256 from the Quran is referenced:
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"Let
there be no compulsion in religion: Truth
stands out clear from error: whoever rejects
evil and believes in God has grasped the
most trustworthy handhold, that never breaks.
And God hears and knows all things."
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In
addition, an important reference to profit maximization
not being the ultimate goal or only ethical outcome
of trade in Islam is supported through the following
Surah 18:46:
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"Wealth
and sons are allurements of the life of
this world; But the things that endure,
good deeds, are the best in the sight of
your Lord, as rewards, and best as the foundation
for hopes."
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At
the same time, the author makes clear references
that Islam does not reject profits or trade and
does not aim to remove all differences in income
and wealth that may result in various social and
economic classes.
Five
Axioms of Islamic Ethical Philosophy
The
book also describes five axioms that govern Islamic
ethics: unity (related to the concept of tawhid
or oneness of God), equilibrium (related to the
concept of 'adl or justice), free will (to a certain
degree, man has been granted the free will to
steer his/her own life as God's vicegerent on
earth), responsibility (accountability for one's
actions), and benevolence.
The
book then derives the business implications of
these axioms. In the case of the Unity axiom,
the application to Muslim businesses is not to
discriminate among employees, suppliers, buyers,
or any other stake-holder on the basis of race,
color, sex or religion. One of the supporting
Surahs (49:13) referenced in this case is:
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"O
mankind! Lo! We have created you male and
female, and have made you nations and tribes,
that you may know one another."
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Similarly
the concept of equilibrium is put in context for
the businesses both figuratively and literally.
Figuratively, equilibrium relates to the all-embracing
harmony in the universe and is also seen as a
dynamic characteristic for each Muslim to strive
for. An ayah on those "who will be rewarded
with the highest place in heaven" is referenced
as follows:
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"Those
who, when they spend, are not extravagant
and not niggardly, but hold a just (balance)
between those two extremes;" (Surah 25:67-68)
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The
book then starts leading into the practical implications
of a system based on Islamic ethical principles
for Muslim professionals. It identifies permissible
and non-permissible business areas. The author
takes through various Ahadith and Ayah's referencing
Halal (permissible) earnings and Haram earnings
(Non-permissible.) Some of the Haram sources of
income included are trading in alcohol, drug dealing/
trading, prostitution and any kind of trade involving
uncertainty.
Developing
an Ethical Organization
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In
framing a business organization's ethical
responsibilities, the author first reviews
the need for developing an ethical organization.
As done throughout the book, the author
uses examples of contemporary multi-national
businesses, here referencing the rash of
scandals on Wall Street, in the savings
and loan industry in the U.S. and in other
countries.
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The
author writes about how a culture of loose ethical
oversight or leadership can essentially impact
the whole organization's business climate. Even
though some of the examples are outdated, we are
very well aware of the Enron's of the world today
including the dismal ethical reputation of many
businesses from the Muslim world with issues such
as bribery/ kickbacks, discriminatory labor treatment,
non-transparency, not upholding promises, cheating/lying
etc.
For
an organization to practice ethics from an Islamic
perspective the author switches to referring to
the concept as an organizations 'social responsibility.'
This interestingly very much correlates to the
existing global emphasis and debate on Corporate
Social Responsibility (CSR). Perhaps CSR is a
separate topic, but interesting comparisons could
be made between the current global CSR models
and the Islamic perspective on Corporate Social
Responsibility.
The
three domains of Islamic perspective on corporate
social responsibility identified include its stakeholders,
the natural environment, and the general social
welfare.
Ethics
related organization stakeholders (i.e, those
who represent the people and/or organizations
that are affected by the actions of an organization),
are categorized as a firms relationship to its
employees, how employees relate to the firm, and
how the firm relates to other economic agents.
A summary of the these key stakeholders and their
associated ethical issues to be addressed are
shown below:
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Key
Ethical Focus Areas
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Focus
Areas
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Stakeholder(s)
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Issues
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Relationship of the firm to its employees
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Employees
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Hiring and firing; Wages and working
condition; Privacy
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Relationship of employees to the firm
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Firm
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Conflicts of interest; Secrecy; Honesty;
Skills training and qualifications
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Relationship of the firm to key stakeholders
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Suppliers
Buyers
Debtors
General Public
Stakeholders/Owners/
Partners
The Needy
Competition
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Cost of Inputs
Hoarding
and price manipulation; quantity
and quality of goods sold; selling
strategy; use of riba in
finaning sales
Repayment
terms; hoarding; abuse of environment
Distribution
of losses/ gains; Sadaqah; Fair
competition
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Excerpt
From: Islamic Business Ethics, pg
39
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For
each one of the issues identified above, the author
addresses the Islamic course of action for organizations.
These are some of the key insights from the book
for organizations to incorporate.
For
example, for any form of transaction with partners,
suppliers or clients, the importance of putting
contractual obligations in writing is emphasized
referencing the Qur'anic imperative (2:282):
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"O
you who believe! When you deal with each
other in transactions involving future obligations
in a fixed period of time, reduce them to
writing. [.] Let him who incurs the liability
dictate, but let him fear his Lord God,
and not diminish aught of what he owes .
[.]"
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Similarly,
the book covers an organization's obligations
and responsibilities towards the natural environment
again providing practical perspectives on its
treatment of animals (application for animal based
pharmaceutical research, medicine etc.) and environmental
pollution (applies to public safety and hazards
to air and water created through waste management
by factories)
The
third domain of the Islamic perspective on corporate
social responsibility, general social welfare,
is also put in perspective for organizations.
Managing
Ethics/ Social Responsibility
The
book provides some practical tools for organizations
to put a structured ethical model in place.
Explicit
tools referenced include:
- developing
a Code of Ethics to guide the organization's
ethical principles in all its interactions;
- ensuring
compliance by appointing key organization actors
to an ethics review panel;
- appointment
of an ethics advocate to probe management's
decisions regularly;
- selection
and training incorporating an employee's ethical
responsibilities to help set common expectations
and understanding within the organization; and,
- adjusting
the award system to reward ethical behavior
and encourage repetition.
Individual
Responsibilities
The
book also highlights key business principles that
Muslims are obliged to follow given the Islamic
code of ethics and Islam's emphasis on individual
responsibilities and accountability. These guidelines
include honestly and truthfulness; keeping your
word; loving God more than trade; supporting intra-Muslim
trade; being humble; using mutual consultation
in business affairs; not dealing in fraud or bribery;
and dealing justly.
Again,
the author backs each of these with Islamic references.
For example, in discouraging the temptations to
exaggerate and lie about one's products or services
during sales or marketing, the importance of honesty
and truth is referenced as laid out by this saying
of the Prophet Mohammad (saaw):
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"The
merchants will be raised on the day of resurrection
as evil-doers, except those who fear God,
are honest, and speak the truth."
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Similarly,
the following Ayah (4:29) is used in support of
Muslims not resorting to extravagance (the extravagant
behavior of the dot-com companies during the internet
boom comes to mind here):
"O
you who believe! Eat not up your property among
yourselves in vanities: but let there be amongst
you traffic and trade by mutual good-will: nor
kill (or destroy) yourselves: for verily God has
been to you Most Merciful."
Overall
the book is indeed a great leap forward in helping
Muslims engaged in business to act in accordance
with the Islamic system of ethics.
As
mentioned earlier, this book is a rarity. Whereas
in the global corporate environment today there
are numerous business/ management books that are
written providing practical perspectives for business
leaders and managers, insights relating to Islamic
business ethics or other such managerial issues
written for the consumption of business leaders
has been unheard of. Islamic Business Ethics
provides a framework for Islamic code of ethics;
presenting practical perspectives for organizations
to incorporate and manage Islamic ethics.
It's
a short book so it lacks the detail required for
an organization to use as a complete guide for
managing ethics within their organization, but
definitely provides some key pieces to work with.
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