BusinessDay 15 Feb 2018

Thursday 15 February 2018
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BUSINESS DAY
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Spiritual accounting: In search of pathway to priming ethical behavior
FRANCIS IYOHA
Professor Iyoha is of the Department
of Accounting, Covenant University
and Research Fellow, the Institute
of Chartered Accountants of Nigeria
(ICAN). He wrote viafoiyoha@ican.
org.ng
Public debate on ethics has
intensified following the
series of corporate failures
in the recent past. All
known conventional ways
of priming ethical conduct have failed
and can no more be relied upon to
produce any fundamental change in
behaviour. As noted by Ian Mitroff and
Elizabeth Denton, there is no denying
the fact that today’s organizations
are ‘spiritually impoverished’ and
therefore ethically demented. In the
beginning this was not so as the Islamic
and Catholic businessmen conducted
their businesses ‘in the name
of God.’ The phrase ‘in the name of
God’ invoked ethical consciousness.
However, through the wisdom or lack
of it of the Jews and the Protestant
businessmen, businesses came to
be conducted ‘in the name of God
and profit.’ Since then, the beautiful
internal walls of ethics in business that
were laid with cedar boards became
eroded. We now await companies to
find ways to integrate personal beliefs
with organizational values in order to
rebuild the broken ethical walls and
cause desired change to occur.
While we await the goodish times
to come, the accounting profession
has tried to ensure ethical compliance
through codes of conduct for professional
accountants. Accountants have
had no strain upholding the letter of
the codes but, the spirit thereof has
occasionally been punctuated by
events directly or indirectly outside
their control. This arises because
social beings, with whom accountants
relate in the course of their work
have facetious proclivities by nature,
to make and transform the world in
which they live against the public
interest. Consequently, it needs be
emphasized that unethical practices
are ubiquitous a whirlwind that blows
in every profession.
I have always advocated with
reference to the accounting profession,
that ethical reform initiatives
should directly address the inner life
and character of accountants through
education of the right type in order
to be effective. This is premised on
the belief that the capacity to behave
and think right is a precondition for
anyone who wants to do the right
thing. The moral conviction of what
is right goes beyond rules, regulations
and academic intelligence. It
is not sufficient to be a prize winner
following a rigorous examination
process and conclude that one will
Spiritual Accounting (SA)
provides the needed
window to reach the inner
life and character of accountants.
SA in the context
of this advocacy is the
“integrity of faith in God
in the interpretation and
application of the letter of
accounting standards and
pronouncements in order
to align with the spirit of
accounting practice
be ethical. There is the need to first
and foremost understand who we are
before a thorough understanding of
our professional demands. We need
morality that links individual character
to proper social relationship to be and
remain well-balanced professional
accountants. There is, therefore, an
urgent imperative to look beyond the
extant codes of ethics and embrace a
more proactive paradigm to create a
critical mass of dedicated, knowledgeable
and ethical savvy accountants.
Herein lies the advocacy for Spiritual
Accounting (SA).
Spiritual Accounting (SA) provides
the needed window to reach the inner
life and character of accountants.
SA in the context of this advocacy is
the “integrity of faith in God in the
interpretation and application of the
letter of accounting standards and
pronouncements in order to align
with the spirit of accounting practice.”
SA espouses the alignment of the
head, the heart and the will of God in
accounting practice in meeting the
public interest obligation of the profession.SA
breeds accountants who
have integrity of heart, skilfulness of
hand and divine will. In fact, the spirit
should always be the heart behind the
figures, thereby moderating the deeds,
the words and the art
of accounting practice. It is in
recognition of this that the International
Federation of Accountants
(IFAC) observe and note that the programme
of professional accounting
education should provide potential
professional accountants with “a
framework of professional values,
ethics and attitudes for exercising
professional judgment and for acting
in an ethical manner that is in the
public interest.”A culture of compliance
with the ‘letter’ rather than the
‘spirit’ of accounting practice occurs
when emphasis is laid on the need
for compliance while ignoring valuebased
internal motivation for acting
ethically.
SA takes the accountant from the
realm of desire and intellect (rational
consciousness) through the heart
(psycho-spiritual consciousness) to
the realm of conscience (divine consciousness)
in the process of recording,
classifying, summarizing transactions
and interpreting the results
thereof. Each of the processes has
spiritual values related to them such
as integrity, objectivity, love, sincerity
and divine will and they are driven by
spiritual sensitivity, motivation, courage
and judgment. When these values
and processes are firmly written and
inscribed in the heart of accountants
and they come in contact with
any unethical situation, they would
simply say: Lord, ‘I delight to do thy
will.’ I perceive in my heart that a time
will come, in the nearest future, that
spiritual accounting practice will gain
respect and influence ethical conduct
of men more than the irrational call
for bland, complex, sophisticated
and castrated accounting standards
and pronouncements that hitherto
rule the accounting world. Let’s come
together in a tripartite relationship
(The Institute of Chartered Accountants
of Nigeria, the Universities and
established Accounting Firms) to
develop SA further and you would
be surprised to see its practice hedge
against unethical practices. It will
certainly be a reset of the mindset
of future accountants and a positive
signal of a shared ethical future for the
accounting profession.
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ADAMS ADEIZA
Dr Adeiza is a lecturer at Dangote
Business School, Bayero University,
Kano. He is a consultant on Smart
Innovation, New Venture Creation
and Franchise Business. He can be
reached on successfuladams@gmail.
com and his tweeter handle is @
Adamsking
In the beginning, it was great
Within the period of 2001
and 2010, business format
franchising grew
rapidly in Nigeria and
the industry became the darling of
many entrepreneurs. As a confirmation
of the proven potential of the
country’s franchise industry, it was
reported that between 2010 and 2011
alone, the International Finance
Corporation (IFC) invested a total
of USD28.5 million in two of the
country’s franchised quick service
restaurants – Food Concept PLC and
Tantalizers. However, things have
taken the turn for the worse in recent
years as the available performance
records of some franchise systems in
Nigeria call for serious worry.
For example, as reported by
Nairametric – a leading financial
resource firm in Nigeria – one of
the largest player in the industry
which was doing so well and attracted
IFC to invest in it in 2010 has
declared loses in the last four years
consecutively (N303.3m in 2012,
N564.8m in 2013, N784.2m in 2014
and N707m in 2015) totalling N2.36
billion (USD118,032,786).
In search of what went wrong
Worried by the reported loses and
the apparent inability of the country
to realize the huge potentials of her
franchise industry, I embarked on
and recently concluded a 3-year
The imperative of a healthy relationship in
reinvigorating the Nigerian franchise industry
study, where we interviewed franchisees
from across different brands
and locations in Nigeria. The study
unearthed four fundamental factors
that have been responsible for the
declining fortune of the country’s
franchise industry. This article summarizes
the findings of the study
on one of the factors – relationship
quality – and suggests innovative
solutions for addressing it.
Relationship quality is a measure
of satisfaction that people in a
relational exchange feel towards
each other and towards the object
of their interaction. Even in the
most advanced franchise systems
like Australia, South Korea and
the United States, the bedrock and
critical prerequisite for success in
franchising is high quality relationship
between franchisors and their
franchisees. A franchise arrangement
with attributes of good quality
relationship is one that delivers such
benefits as effective cooperation between
parties and successful longterm
business operation. In particular,
the success of franchisees’
outlets depends on the strength of
the relationship they maintain with
their franchisors. Excellent relationship
also has significant impact on
the two cardinal measures of long
sustainability of a franchise system;
franchisees overall satisfaction and
intention to remain.
Moreover, my study established
that at present, poor quality relationship
characterizes most franchise
systems in Nigeria. More than
75% of franchisees interviewed
in our study indicated that current
relationship with their respective
franchisors is not at its best. Indeed, a
number of franchisees are currently
in courts with their respective franchisors
as relationship became sour
and couldn’t be resolved in-house.
One of such franchisees put it this
way,“we don’t have any good relationship
now. The relationship became
very toxic and we couldn’t get along.
We are in the process of negotiating a
settlement now. I don’t think I want to
continue operating under their name
but I want to remain in the restaurant
business”.
Rebuilding business relationship
in the industry
Based on the findings of my research,
four key issues need to be
addressed in order to rebuild and
strengthen business relationship
between franchisees and franchisors
in Nigeria. This include trust, commitment,
communication, and interpersonal
relationship.
Essentially, trust is having faith
in the goodwill of another. The current
low level of franchisees’ trust in
franchisors in the Nigerian franchise
industry has resulted in several undesirable
situations. As one franchisee
lamented, “the low trust situation is
paralyzing us. We have to always work
out alternatives and provide contingencies
for everything we have to do
with them. We cannot really quantify
the cost of this situation”.
To address the trust issue, there is
a need for franchisors to take a longterm
view of their relationships with
franchisees right from when they join
the system. The tendency to overpromise
franchisees to lure them
into the system and subsequently
falter on commitment must be
avoided. There should be a system
of keeping tabs on responsibilities to
be met to franchisees. Furthermore,
franchisors need to treat trustbuilding
as a strategic issue. Business
processes and systems must be
organized in ways that establish and
maintain trust.
The second strategy for improving
relationship in the industry is to
enhance franchisors’ commitment
to the success of franchisees. Franchisees
require unbroken chain of
guidance, mentoring and access to
resources that are critical to their
success. If they do not have these in
the right quality and at the right time,
the seed of discord is being sowed.
Supports need to be delivered as at
when due and new initiatives that
assist franchisees to run a more
profitable outlets must always be
explored.
The third strategy for deepening
relationship between franchisor
and franchisees is for franchisors
to enhance communication. Poor
communication results in misunderstanding
and misalignment of
franchisees with system objectives
and strategies. It is important to remember
that the effectiveness with
which franchisees carry out system
strategy depends on how well they
feel ownership of the strategy, so
there is a need to involve them in
taking major decisions. More specifically,
there is a need to cultivate
and sustain a culture of listening and
efforts need to be made to reduce
bureaucracy and establish proper
channels of communication.
Lastly, it must be understood
that franchisees care for a more
intimate and reasonably informal
interaction with their franchisors.
Indeed, evidence shows that many
franchisees do not join a franchise
system for money, but for the love of
the brand and opportunity to be part
of network of people of like minds.
A healthy level of interpersonal
relationship enhances franchisees
satisfaction in the relationship and
gives them a sense of being treated
as valuable members of the network.
More so, efforts should be made to
train and improve the interpersonal
skills of franchisors’ compliance
officers who regularly interact with
franchisees.
This paper summarises the findings
of my empirical research on
how to rebuild relationship in the
Nigerian franchise industry and
reinvigorate it to optimally perform
its roles of enterprise promotion
and SME development. To rebuild
relationship in the industry, suggestions
have been offered to address
trust issues, improve commitment
of franchisors and enhance
effectiveness of communication.
Ideas were also offered to develop
the critically important general
interpersonal relationship between
the two parties.
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