The importance of business ethics in large real estate firms in the United Kingdom
Ethics is a system of moral principles where there is a distinction between acting in a good way or in a wrong way. In 1943, French writer Somerset Maugham stated that people accept the importance of the virtues of integrity and self-sacrifice, but that this meant nothing compared powerful incentive of self-interest. In contrast to what he referred as ‘correct virtues become habits’, a great part of real estate business nowadays operate in the exact opposite way. A great deal of real estate agents act with the wrong ethical principles. Real estate is a business which involves a series of vague regulations and laws considering the matter of business ethics. There has been an increase of reports of ethical financial misconduct regarding real estate offices in the United Kingdom. To manage the code of conduct in different firms it is of great importance that the regulations are unambiguous and clear in order to avoid doubt and uncertainty. The fact that there is still a misinterpretation of the ethical regulations inhibits real estate firms from implanting the right code of conduct to surveyors and delays the growth of the real estate market in the United Kingdom.
Hofstede (2001) clarifies that individuals’ values start to form in ones childhood within their direct environment and develops through age, education and surroundings. An individuals’ first years in the workplace they observe more experienced co-workers and tend to replicate the behavior of the colleagues. Therefore, it can result in conducting unethical behavior. The College of Estate Management discovered that what is considered to be ethical or not differs in relation to place and time. Ethical behavior changes over time. What is acceptable in 2015 is different from what was acceptable thirty years ago. It also varies to in what position one may find themselves. Resulting in the conclusion that ethical behavior is a subjective combination.
In 2009, the report Ethics for Surveyors stated that the ethical aspect in real estate firms in the United Kingdom was a concerning matter. Large real estate firms expected highly ethical standards from their surveyors, not considering age or experience. To discover what real estate surveyors were performing ethically, the College of Estate Management researched the entire sector. 89% of the entire sector are firms that retain ten employees or less. The entire study accounted 24,000 employed surveyors and over 2,500 enterprises. There is a significant altering interpretation of business ethics concerning the small real estate firm as the large real estate firms. Not only discrimination or favouritism in hiring or promotion are frequent ethical issues, bribery and gift giving as well. Concerning the follow-up of ethical misconduct in the United Kingdom, a lot of improvement is needed. Realtor is worldwide authority where real estate agencies can affiliate themselves with. In order to have a guarantee that the real estate agency conducts its business in both theirs and the customers interest. Regrettably, The United Kingdom does not affiliate with the ‘Realtor’ authority.
Even though the expectation of the firm regarding ethical behaviour of the surveyor is high, there is a large difference concerning age, experience and education. In 2000 Jennings stated that the higher the surveyor was educated, the less ethical behaviour they had. This problemacy is commonly related to goal attainment. Three major predicaments were discovered during a study concerning young surveyors interacting with less ethical colleagues. At first, it is risky in the current economic climate to challenge a co-surveyor on the ethical basis because of the restricted job opportunities. Surveyors believe that enhancing less ethical principles is the way to acquire a promotion. Last, by staying employed by the firm that requires less ethical behaviour the surveyor attains a bad reputation, complicates the acquirement of a more ethical firm.
There is a difference between what is ethical and what is legal. The legal system merely specifies minimal standards to what an entrepreneur can or cannot do. Acting an ethical way is a matter of what the entrepreneur considers to be the right way to conduct business. All real estate agents are compelled to the RICS rules of conduct. In 2010, the College of Estate Management discovered that apart from the RICS, small firms have less written policy regarding ethics and rely more on informal communication. Only 37% of the small firms had a written policy. whereas, 69% of the large firms tend to make use of a general policy, utilized in more offices. Remarkably, the survey showed that in either circumstance, written policy or not, the real estate agents preferred the way their company managed ethics.
Individuals’ values are a subjective combination of time, place and the environment where business is conducted. What an individual finds acceptable or unacceptable start to form in ones childhood. With the fact that, apart from the RICS basic rules of conduct, merely half of the British real estate agencies make use of a self written policy regarding ethics, employers tend to expect high ethical standards. In contrast to most real estate firms’ expatations there is a large difference concerning age, experience and education towards ethical behavior. Not only discrimination or favouritism in hiring or promotion are frequent ethical issues in the workplace. Bribery and gift giving is also a concerning matter. The law is merely a minimal standard. Therefore, it is so that there are misinterpretations of the ethical regulations which inhibits real estate firms from implanting the right code of conduct to surveyors resulting in a delay of growth of the real estate market in the United Kingdom.
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