Islamic Ethical Precepts While Conducting Business

Category: Featured, Life & Society Topics: Business, Economy Values: Education, Knowledge, Trustworthiness Views: 9314

Corporations today mostly increase their market capitalization and earn loyal clients and shareholders by maximizing profits and growth. CEOs and CFOs often declare to their shareholders that their main priority is to maximize Return on their Investment. When a company misses a targeted earning, even by a small margin, its stock most often declines. The pursuit of profit muddies the ethical bases of the conduct of business and may lead to the adoption of dubious tools used to reach financial goals.

The global recession and economic crisis that roiled the world since 2008 motivated governments, media and publics to scrutinize the practices of corporations such as powerful banks and to produce laws that limit some of their and their employees' risky or unethical behavior. Such laws encourage greater financial transparency, disclosures about the business, and more honest estimates of costs. The lobbying of special interest groups also produced regulations that improve corporate environmental behavior and their treatment of animals.

I describe in this article an Islamic perspective on ethical conduct in the conduct of business. The first part of the article deals with hiring practices and personnel issues, the second with managerial honesty and the third with ethical limitations on the conduct of business more broadly. Many Muslims do not necessarily abide by these precepts and many may disagree that they are suitable for today's business environment, but they may be valuable to prevent future economic calamities.

The virtue of work in Islam

The Quran, the Muslim Holy Book, defines the most important goal in the life of a Muslim as the worship of God, or Allah. The Quran States: "I created the jinn and humankind only that they might worship Me (51:56). Worshipping includes abiding by the principles of the faith and restricting oneself from what is forbidden. Moreover, worship in Islam encompasses many possible activities if done with the right intention; such as providing for one's children and working. According to his sunnah (example), the prophet of Islam, Mohammad, Peace be Upon him, once noticed a man praying endlessly in the mosque. When he asked who provides for the worshiper's livelihood, he was told that it was his brother. He then proclaimed a famous saying, or Hadith: "his brother is better than him".

The Hiring process

Many organizations hire personnel because of family or personal ties, their attractiveness, their experience and credentials, or similarity in background and outlook to the recruiter. An Islamic perspective suggests different priorities.

Islam looks at the individual from a point of view of the value added he brings to humanity. The Quran (49:13) states "Verily the most honored of you in the sight of Allah is (he who is) the most righteous of you. And Allah has full knowledge and is well acquainted (with all things)." The prophet says in a hadith: "Verily Allah does not look at your bodies or at your faces but He looks at your deeds and hearts". So a person's righteous acts and sincerity take precedent over his physical appearances, association or rank.

In addition, the prophet declares the following in his last sermon:

All mankind is from Adam and Eve. An Arab has no superiority over a non-Arab, nor does a non-Arab have any superiority over an Arab; white has no superiority over black, nor does a black have any superiority over white; [none have superiority over another] except by piety and good action. .. Do not, therefore, do injustice to yourselves.

This sermon has laid down the rights of Muslims towards each other, and has laid the basis against discrimination and racism. This is the echelon and ranks of Men and Women in humanity, being pious and elevating oneself from transgressing the laws of the Creator.

If this philosophy and understanding rest in the heart of a Muslim, he starts seeing and dealing with people on merits different then their appearances; their faith and their good conduct will start taking precedent over how they look.

In the context of the hiring process, this hadith implies that a Muslim employer should look for a candidate who is principled, moral, and pious and dedicate to performing good deeds while employed by the organization. These actions should add value to the company, and help it become more profitable in the long run. The honesty of such an employee should motivate him to negotiate better deals; plan better to benefit the company, design better products to meet the client's needs, etc. He would be motivated by his desire to have his product or service simultaneously maximize profit and God's blessing.

A Muslim employee is expected to be both professional and spiritual. He joins technical knowledge acquired through education and experience with ethical conduct to produce goods and services to the best of his abilities because he considers work to be a form of worship. The Prophet also entices him to achieve the highest standards in his work by saying in a hadith that "Allah is pleased with those who when they undertake a task, they do it with perfection."

A Muslim working to the best of his abilities is supposed to have vision and to be equipped with the right tools to do the job well. He is expected to acquire skills and tools from wherever possible. The Quran states: "It is He Who has made the earth manageable for you, so traverse ye through its tracts and enjoy of the Sustenance which He furnishes" (67:15). This encourages travelling and seeking the suitable location to establish a business, collect data, and attend exhibitions, learn new skills. Both employer and employee should try to add value to the organization by exploring beyond borders. Regarding acquiring knowledge more specifically, the prophet said "Seek knowledge even in China", with China being a euphemism for faraway places. In other words, he said that distance should not deter a Muslim from seeking important knowledge.

Another way a Muslim acquires important knowledge and skills is by freeing his or her mind from the risk of failure. After planning, preparing a good feasibility study, and putting together a plan, a Muslim is supposed to implement the project with boldness and without worrying unnecessarily about the risk of failure. The reason is the key Muslim belief that one needs to take all necessary measures and behave morally, but that ultimately Allah decides the outcome of all ventures.

Supervision and productivity

In today's workplace, the employer requires employees to punch in their cards to make sure they are coming to work and on time. Some employers place cameras in the workplace to monitor the workforce. Some ask for daily reports, send patrolling supervisors, or use other means of monitoring performance. In management books, students learn of the Hawthorne Effect - the idea that employees who are closely monitored perform better than those who are not.

An Islamic perspective on monitoring adds two types of such activities: self-monitoring and God's monitoring. Self-monitoring is the believer's effort to restrict himself from being immoral or from shirking.

An important description of piety in Islam is called Al Ihssan. Al Ihsan has several meaning in Arabic, one being charity or giving alms to those who need it. Another meaning which is about our subject translates into: "Observing Allah". The definition of it is to worship God as if you are seeing, (watching) Him, and is explained as follows: "Ihsan is worshipping God as if you can see Him, for if you do not see Him, He sees you." (Imam Nawawi Forty Hadiths, Hadith number 2). A Muslim who believes in this concept and embraces its meaning is more strongly deterred from committing unethical acts or shirking than an employee who is only concerned about traditional means of monitoring. This notion of being watched by Allah is recurrent in the Quran. The Quran emphasizes this notion by declaring that even one's thoughts are known to Allah, as in (2:29): "say if you conceal that which in your souls or reveal it, Allah knows it".

A story from the time of the Caliph Omar bin al khattab illustrates the point. Omar had prohibited the sale of diluted milk. Omar was walking in the city one evening when he heard a woman suggesting to her daughter to add water to the milk they were selling. The daughter replied "how can I mix when Omar has prohibited it?" The mother retorted by saying that others were doing and gaining from doing so and that Omar will never know. The daughter answered famously "if Omar would not know, certainly the Lord of Omar would know and I would not do such a thing."

When Muslims believe they are being monitored by the Lord of the Worlds, the One, the Omnipotent Creator who asked them to act righteously and with integrity, they will be careful in how they act within their organizations. They will produce well, minimize waste, and refrain from deceiving and cheating. These benefits combined increase profits for the organization while reducing the cost of creating layers of supervisors and monitoring systems.

Perhaps employers in Muslim societies should invest in educated employees in the precepts of their Islamic faith instead of emphasizing tools of monitoring and control. This could be done at during orientation or in cyclical workshops.

In the next article, Insha Allah I will share my thoughts on honesty in business from a Muslim perspective.


Bilal Karima has BA in MIS from Florida International University in Miami, USA (1995) and currently he is pursuing MBA in Leicester University, UK. He has extensive experience in the field of supply chain management. He has been working in various multi million dollar projects in UAE, Saudi Arabia and other places in the middle east. He can be reached at

  Category: Featured, Life & Society
  Topics: Business, Economy  Values: Education, Knowledge, Trustworthiness
Views: 9314

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