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Islamic work ethics in Islamic banks

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Islamic work ethics in Islamic banks

Abstract

Work ethics is an issue that has been raised in many fields including the banking sector. Although work ethics are perceived differently in countries, organizations and groups, it brings huge and positive impact to anyone. In Islam, it is known as the Islamic work ethics (IWE) defined as a set of moral principles associated with Islamic values, beliefs and practices. The IWE inspire employees with confidence and reinforce social business responsibilities in their workplaces via, among others, hard work, honesty, teamwork, accountability, dedication, justice, fairness, generosity, work creativity and cooperation. Both Islamic banks and the IWE are established and comply with Shariah.
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©13th March 2019
SPECIAL
REPORT
Dr H Ahmad Ra ki is
the assistant professor in
the Department of
Business Administration
at the University College
of Bahrain. He can be contacted at
hahmadra ki@gmail.com.
The 2018 Thomson Reuters report
highlighted the signi cant importance
of the IWE addressed as the Global
Ethical Economy Framework that
presents a viable global context to
derive the Islamic economy’s role in
terms of the IWE whereby the economic
need of ethical and social development
is recognized. Moreover, there are 117
articles in the Scopus indexed journal
published in 2015–19 that discuss about
the IWE but only nine are related to
Islamic nance or Islamic banks. This
indicates less interest from researchers
or academicians to explore IWE-related
ma ers which are supposed to be
included as part of IWE awareness and
socialization initiatives.
The following are issues commonly
associated with the IWE:
1. Employee commitment
Research on the two variables — IWE
and employee commitment — have
been conducted in populous Muslim
countries such as Indonesia, Malaysia,
Kuwait, Saudi Arabia, the UAE, Bahrain
and Pakistan. Surprisingly, most of the
ndings revealed that the IWE have a
signi cant relationship with employee
commitment. Employee commitment
gained prominence in management
discourse since it plays an essential
role in goal achievement, innovation
and the stability of an organization.
Employee commitment increases when
business operations are conducted
with justice and honesty. If any Islamic
banks are caught for discrepancies
or inconsistencies of information and
reports, this is classi ed as an unethical
action that probably in uences employee
commitment.
2. Job satisfaction
The IWE and job satisfaction are two
variables that have been tested and
found to have a positive relationship.
Satisfaction is a priceless feeling not
easily felt by employees, in other words,
e orts need to be applied in order
to obtain it such as by implementing
the IWE. The level of job satisfaction
among employees declines when top
management and supervisors are least
likely to practice work ethics. Employees
who are dedicated in their work have job
satisfaction. Moreover, an employee’s
level of satisfaction is dependent on the
level of fairness received by them in a
certain situation.
3. Job performance
The IWE, employee commitment, job
satisfaction and job performance are
interrelated. When employees adopt any
IWE element, commitment is created
that generates job satisfaction and
contributes to their work performance.
Be er job performance is achieved not
merely by material gain but also by
feelings that emerge through teamwork,
generosity and creativity. Codes of ethics
consisting of IWE elements are crucial in
workplaces as a reference for employees
to change their a itude and behavior
while at work.
Unethical cases such as speculative
trading, short-selling and margin
trading are prohibited under Islamic
nance as in these cases, justice,
fairness and honesty are ignored.
This is a challenge for the regulatory
authorities in Islamic countries which
are a empting to structure a viable
trading system. Nevertheless, this needs
to be addressed by Islamic banks where
be er job performance is important to be
a ained. Islamic banks should perform
ethical screening to see its e ect on job
performance.
Approaches that can be implemented
relating to the IWE are:
i. Leadership
Leaders have an in uence that can
promote the IWE at all levels in
an organization. Employees will
notice the behavior of leaders when
performing their daily tasks.
ii. Selection process
It is important to match the values of
an individual with the basic ethics of
the organization during the selection
process. Each department should
identify its supporting operating
values and ethics.
iii. Induction
The organization conducts an
induction where new employees are
made aware of the fact that speci c
work ethics are not negotiable as
well as the reason that they are not
negotiable.
iv. Training and development
There is a tendency to maintain an
organizational culture and ethical
values by speci c training and
development programs.
v. Incentives
Organizations need to develop an
incentive scheme that will reward
productivity improvements in such
a way that employees perceive the
rewards as fair and valued.
vi. Communication
A communication strategy is needed
to disseminate work ethics together
with the mission of the organization.
The message that is communicated
through various media channels need
to be strengthened via work ethics.
The IWE place a lot of emphasis on
business motives which also serves as a
criterion for evaluating performance in
positive or negative terms. It also views
engagement in economic activities as an
obligation, thus embracing both private
and public activities as well as a ecting
not only religious aspects but also social
behaviors. The IWE elements are applied
in all business applications and
behaviors, bene ting all stakeholders,
thus Islamic banks should have no reason
not to adopt the IWE in their daily
operations.
Islamic work ethics in Islamic banks
Work ethics is an issue that has been raised in many elds including the banking sector. Although work ethics
are perceived di erently in countries, organizations and groups, it brings huge and positive impact to anyone.
In Islam, it is known as the Islamic work ethics (IWE) de ned as a set of moral principles associated with
Islamic values, beliefs and practices. The IWE inspire employees with con dence and reinforce social business
responsibilities in their workplaces via, among others, hard work, honesty, teamwork, accountability, dedication,
justice, fairness, generosity, work creativity and cooperation. Both Islamic banks and the IWE are established and
comply with Shariah. DR H AHMAD RAFIKI delves further.
Article
Full-text available
Islamic Work Ethic (IWE) showed a significant role in various Islamic institutions, including Islamic banking. Unfortunately, only a few scholars studied the critical role of IWE in Islamic Banking and how it affected the whole organization. This study attempted to explore the degree of IWE implementation and its implications in Islamic banking. We investigated in-depth 22 articles related to IWE in Islamic banking between 2012-2021 through various reputable journal indexing sites. We concluded that the implication of IWE in Islamic banking associated with work behavior/attitude, work outcomes, and organizational outcomes. IWE implications related to work behavior included organizational citizenship behavior (OCB), employee attitudes towards organizational change, and auditor's opinion and behavior. IWE implications related to work outcomes included employee job performance, organizational commitment, job satisfaction, and intrinsic motivation. IWE implications related to organizational outcomes included organizational performance, strategic performance measurement systems (SPMS), organizational culture, and customer satisfaction. Thus, due to the enormous implication of IWE in Islamic banking, it's supposed to be integrated with the HR management system, started from HR planning strategy, HR training & development program, performance appraisal system as well as benefit and compensation. Limitations and directions for future research are discussed further.
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