BUSINESS ETHICS

I. An overview on Business Ethics

Ethics

- Code of moral principles.

- Set standards of “good” or “bad” or “right” or “wrong” in one’s conduct.

Ethical behavior

- What is accepted as good and right in the context of the governing moral code.

Ethics - is a part of decision making at all levels of work and management

*As important as functional areas of business

*Questions whether practices are acceptable

*There are no universally accepted approaches for resolving issues

Morals: Refer to a person’s personal philosophies about what is right or wrong

Morals are personal and singular

Principles: Specific and pervasive boundaries for behavior that should not be violated

Human rights, freedom of speech and justice

Values: Enduring beliefs and ideals that are socially enforced

Teamwork, trust and integrity

Reasons for Studying Business Ethics

1. Having good individual morals is not enough to stop ethical misconduct

2. Ethics training helps provide collective agreement in diverse organizations

3. Business ethics decisions can be complicated

4. Helps to identify ethical issues when they arise and recognize the approaches available to resolve
them.

Organizational Ethical Culture

Ethical culture: acceptable behavior as defined by the company and industry

- Creates shared values and support for ethical decisions – driven by top management
Goal:

- Minimize need for enforced compliance

- Maximize utilization of principles/ethical reasoning in difficult or new situations

Ethics Contributes to Employee Commitment

• Commitment comes from employees who are invested in the organization and willing to make
personal sacrifices for the organization

- The more company dedication to ethics, the greater the employee dedication

- Concerns include a safe work environment, competitive salaries and benefits packages, and fulfillment
of contractual obligations

Ethics Contributes to Investor Loyalty

• Investors are increasingly interested in a company’s reputation and recognize how:

- ethical culture provides a foundation for efficiency, productivity, and profitability

- negative publicity, lawsuits, and fines threaten a company’s long-term viability

• Gaining investors’ trust and confidence is vital to sustaining financial stability

Ethics Contributes to Customers Satisfaction

• Customer satisfaction is an important factor in a successful business strategy

- Companies seen to be socially responsible increase customer trust and satisfaction

- Trust is essential for long-term customer relationships

- A strong organizational ethical climate places customers’ interests first

• Ethical conduct toward customers build a strong competitive position shown to positively affect
performance and innovation

Ethics Contributes to Profit

• Companies need profits in order to meet their responsibilities

• Corporate concern for ethical conduct is being integrated with strategic planning

- Maximizing profitability

• Ethics has moved from being a compliance standard to becoming an integral part of achieving a
competitive advantage
Utilitarian view of ethics — greatest good to the greatest number of people.

Individualism view of ethics — primary commitment is to one’s long-term self-interests.

Moral-rights view of ethics — respects and protects the fundamental rights of all people.

Justice view of ethics — fair and impartial treatment of people according to legal rules and standards.

- Procedural justice

- Distributive justice

- Interactional justice

Cultural issues in ethical behavior:

• Cultural relativism - Ethical behavior is always determined by cultural context.

• Cultural universalism - Behavior unacceptable in one’s home environment should not be acceptable
anywhere else. Considered by some to be ethical imperialism

How international businesses can respect core or universal values:

• Respect for human dignity

- Create culture that values employees, customers, and suppliers.

- Keep a safe workplace.

- Produce safe products and services.

• Respect for basic rights

- Protect rights of employees, customers, and communities.

- Avoid anything that threatening safety, health, education, and living standards.

• Be good citizens

- Support social institutions, including economic and educational systems.

- Work with local government and institutions to protect environment.

How do an ethical dilemmas complicate the workplace?

Ethical Dillema - An ethical dilemma occurs when choices, although having potential for personal and/or
organizational benefit, may be considered unethical.

Ethical dilemmas include:

- Discrimination

- Sexual harassment

- Conflicts of interest

Factors Influencing Ethical Behavior

1. The person - Family influences, religious values, personal standards, and personal needs.

2. The organization - Supervisory behavior, peer group norms and behavior, and policy statements and
written rules.

3. The environment - Government laws and regulations, societal norms and values, and competitive
climate in an industry.

Manager as a Person Employing Organization External Environment

Family influences Policies, codes of conduct Government regulations

Religious Influences Behaviors of supervisors, peers Norms and values of society

Personal standards and needs Organizational Culture Ethical climate of industry

Ethics training:

- Structured programs that help participants to understand ethical aspects of decision making.

- Helps people incorporate high ethical standards into daily life.

- Helps people deal with ethical issues under pressure.

Whistleblowers

• Expose misdeeds of others to:

- Preserve ethical standards

- Protect against wasteful, harmful, or illegal acts

• Laws protecting whistleblowers vary

Ethical role models:

- Top managers serve as ethical role models.

- All managers can influence the ethical behavior of people who work for and with them.

- Excessive pressure can foster unethical behavior.

- Managers should be realistic in setting performance goals for others.

Perspectives on social responsibility:

Classical view—Management’s only responsibility is to maximize profits.

Socioeconomic view—Management must be concerned for the broader social welfare, not just profits.

II.A CODE OF RIGHT CONDUCT

COMMON VS. GREATEST GOOD

- The common good is that principle that whatever serves the most number of members in a community
is considered good. The common good is usually whatever rules or actions are required to reduce the
disharmony in the community.

- While the greatest good is the principle that there is a standard that people must cooperatively strive
for to maximize the harmony in the community.

- The common good is normally good under every system of objective or subjective measure.

- The greatest good is the higher order of good. It can be used for good purposes to address areas where
the common good is not inclusive of groups of people.

CODE OF CONDUCT

- Every organization must have a code of right conduct. A code has value just like an internal guideline
and an external statement of corporate values and commitments.

- A well-written code of conduct spells out an organization’s mission, values and principles, connecting
them with standards of professional conduct. The code expresses the values the organization desires to
promote in leaders and employees.

EXAMPLE OF CODE OF CONDUCT

Policy elements - Company employees are bound by their contract to follow our Employee Code of
Conduct while performing their duties.

Compliance with Law - All employees must protect the company’s legality. They should comply with all
environmental, safety and fair dealing dictations of local and international laws. employees should also
respect our company’s policy for social corporate responsibility.

Respect in the Workplace

- All employees are bound by our company’s equal opportunity policy. They should behave in a
respectful manner towards their colleagues. Any kind of discriminatory behavior, harassment or
victimization is prohibited. This applies to all aspects of our workplace from recruitment and evaluation
processes to interpersonal relations between employees. We won’t tolerate this behavior and we’ll take
disciplinary actions when appropriate.

Protection of Company Property

All employees should treat our company’s property, whether material or intangible, with respect and
care.

Professionalism - All employees must show integrity and high quality professionalism in the workplace:

• Personal Appearance

• Corruption

• Job duties and authority

• Absenteeism and Tardiness

• Conflict of Interest

Two Types of Moral Theory

Consequentialist – focuses on the outcomes of actions, settling on whether or not an action is good by
knowing the results. Utilitarianism is involved.

Non-consequentialist – centers on the principle that an action is good based on the principle people
follow and regardless of the results of the action. Deontological approach is an example of this theory.
Deontological, means for duty or obligation from the Greek word “deontos”. A phrase that shows the
attitude using this approach is “People have an obligation to respect the rights of the individual”

- In trying to clarify what “right action” is, codes of conduct are often a combination of both
deontological and utilitarian approaches.

Utilitarianism
- Utility is any net benefits produced by an action. The principle of utility affirms that actions or
behaviors are right if they encourage happiness or pleasure, wrong if they generate unhappiness or pain.

- Utilitarianism says that the RESULT or the CONSEQUENCE of an act is the real measure of whether it is
good or bad. It attempts to answer the question about what a man ought to do. The answer to this is
that he ought to act to create the best consequences. These consequences includes all of the good and
bad. (actions are right if they are useful or for the benefit of the majority)

JEREMY BENTHAM'S FORMULATION OF UTILITARIANISM

- Man is under two great masters, pain and pleasure.

- The great good that we should seek is happiness.

- Those actions whose results increase happiness or diminish pain are good. They have “utility.”

FOUR IDEAS OF UTILITARIANISM

Consequentialism: The rightness of actions is determined solely by their consequences.

Hedonism: Utility is the degree to which an act produces pleasure. Hedonism is the thesis that pleasure
or happiness is the good that we seek and that we should seek.

Maximalism: A right action produces the greatest good consequences and the least bad.

Universalism: The consequences to be considered are those of everyone affected, and everyone equally.

Application of Utilitaria Theory

• If you can use eighty soldiers as a trap in war, and thereby attack an enemy force and kill several
hundred enemy soldiers, that is a morally good choice even though the eighty might be lost.

• If lying or stealing will actually bring about more happiness and/or reduce pain, Act Utilitarianism says
we should lie and steal in those cases.

Criticisms of Bentham's Theory

- Bentham’s theory could mean that if 10 people would be happy watching a man being eaten by wild
dogs, it would be a morally good thing for the 10 men to kidnap someone (especially someone whose
death would not cause grief to many others) and throw the man into a cage of wild, hungry dogs.

John Stuart Mill’s Adjustments to Utilitarianism

- Mill argues that we must consider the quality of the happiness, not merely the quantity.

- For example, some might find happiness with a pitcher of beer and a pizza. Others may find happiness
watching a fine Shakespearean play. The quality of happiness is greater with the latter.
II. B CODE OF ETHICS

Ethics — Ethics is also known as moral philosophy which is a branch of philosophy that addresses
questions about morality that deals with concepts such as good and evil, right and wrong, virtue and
vice, justice, etc.

Major Branches of Ethics

 Meta-ethics: The theoretical meaning and reference of moral propositions and how their truth-values
(if any) may be determined.

 Normative ethics: The practical means of determining a moral course of action.

 Applied ethics: It is about how moral outcomes can be achieved in specific situations.

 Moral psychology: It is about how moral capacity or moral agency develops and what its nature is.

 Descriptive ethics: It is about what moral values people actually abide by

Ethical Code

An ethical code is adopted by an organization in an attempt to assist those in the organization called
upon to make a decision. Usually most understand the difference between 'right' and 'wrong' and to
apply this understanding to their decision.

Corporate Or Business Ethics

It focuses on social issues involving the organization.

It sets out general principles about an organization's beliefs on matters such as aims, quality, privacy
and the environment.

It may delineate proper procedures to determine whether a violation of the code of ethics has occurred
and

if so, what remedies should be imposed.

Employee Ethics

The effectiveness of such codes of ethics depends on the extent to which management supports them
with sanctions and reward.

 Violations of a private organization's code of ethics usually can subject the violator to the
organization's remedies
Code of Conduct

– It is a document designed to influence the behaviour of employees.

They set out the procedures to be used in specific ethical situations and delineate the procedures to
determine whether a violation of the code of ethics occurred and, if so, what remedies should be
imposed.

Code of Practice

– It is adopted by a profession or by a governmental or non-governmental organization to regulate that

profession.

It may be styled as a code of professional responsibility, which will discuss difficult issues, difficult
decisions that will often need to be made, and provide a clear account of what behaviour is considered
"ethical" or "correct" or "right" in the circumstances.

Failure to comply with a code of practice can result in expulsion from the professional organization.

Ethics to be followed by students

INTEGRITY: Integrity is the most basic prerequisite to earning and retaining trust. Very highest standards
of integrity will be upheld. There should be no compromise of principles for any reason. Character is as
important as competence in profession.

HONESTY: Honesty and truthfulness are the keystones of the teacher-student relationship. Students
should be truthful at all times.

Etiquette – It is a code of behaviour that delineates expectations for social behaviour according to
contemporary conventional norms within a society, social class, or group

III. FILIPINO VALUES SYSTEM

Filipino Values

– refers to the set of values or the value system

– system includes their own unique assemblage of consistent ideologies, moral codes, ethical
practices, etiquette, and cultural and personal values

– the values that an individual holds sacred can differ on the basis of religion, upbringing and other
factors.

Example of Filipino Values:

1. Utang na Loob

- Considered an important "accommodative surface value", along with hiya and pakikisama.

- Accommodate the demands of the world around them as opposed.

2. Filial Goodness

- means to be good to one's parents

- to take care of one's parents

- to support parents as well as carry out sacrifices to the ancestors

- not be rebellious, show love, respect and support

- display sorrow for their sickness and death; and carry out sacrifices after their death.

3. Padrino – The value system where one gains favor, promotion, or political appointment through family
affiliation (nepotism) or friendship (cronyism), as opposed to one's merit

4. Bahala Na – It can mean” living it all up to God”, “come what may”, “whatever will be will be”, and the
list goes on

5. Maña Na Habit – something that we have learned from the Spaniards means 'tomorrow' or 'specified
future time' also known as “procrastination” in plain English, “mamaya na” in Filipino.

6. Amor Propio

– Spanish word which means self –love

– a sense of self-esteem or self respect that prevents a person from swallowing his pride

IV. SEXUAL HARASSMENT IN THE WORKPLACEWORKPLACE

Sexual harassment – is defined as “unwelcome behavior of a sexual nature.” It can be verbal (making
sexual insinuations), non-verbal (making suggestive gestures) and physical (touching someone in a
sexually explicit manner).

Sexual harassment includes unwanted sexual advances, requests for sexual favors, direct or indirect
threats or bribes for sexual activity, sexually suggestive jokes, unwelcome touching or brushing against a
person, pervasive displays of materials with sexually illicit or graphic content and attempted or
completed sexual assault. It varies depending on the situation and people involved. Sexual harassment is
not restricted by gender.
Sexual harassment can refer to such mild acts as whistling, winking, cat calls, and licking one’s lips, as
well as grave offenses like being forced to perform sexual acts and at worst, rape.

RA NO. 7877 : Anti-Sexual Harassment Act of 1995

– is the country’s standing legislation against sexual harassment.

– is committed by an employer, employee, manager, supervisor, agent of the employer, teacher,

instructor, professor, coach, trainer, or any other person who, having authority, influence or moral
ascendancy over another in a work or training or education environment, demands, requests or
otherwise requires any sexual favor from the other, regardless of whether the demand, request or
requirement for submission is accepted by the object of said act.

Who are Covered by this Act?

• Workers or Employees

• Applicants or Candidates for Employment

• Students

• Those Undergoing Training, Institution, or Education (Trainees)

Two Forms of Sexual Harassment:

1. Quid pro quo (an employment decision) – like in a promotion, an assignment or even keeping ones
job and is based on submission to the sexual harassment. Unwanted sexual advances, requests for sexual
favors or other verbal or physical behavior of a sexual nature comprise quid pro quo sexual harassment
when:

a. giving in to such conduct is made either openly or implicitly a term or condition of employment.

b. giving in to or refusal of such conduct is used as the source for employment decisions.

2. Hostile work environment– The sexual harassment makes the workplace environment frightening,
intimidating or offensive. All verbal or physical conduct of a sexual nature constitutes hostile-
environment.

Physical

- Malicious Touching/Acts of Lasciviousness/Lewdness

- Overt Sexual Advances

- Gestures with Lewd Insinuation

Verbal
- Requests or Demands for Sexual Favors

- Lurid Remarks

PROACTIVE APPROACH - Prevent or deter the commission of acts of sexual harassment.

REACTIVE APPROACH - Provide the procedures for the resolution, settlement or prosecution of acts of
sexual harassment.

Sexual Harassment is classified as:

1. Grave Offenses

a. unwanted touching of private parts of the body (genitalia, buttocks, and breast);

b. sexual assault;

c. malicious touching;

d. requesting for sexual favor in exchange for employment, promotion, local or foreign travels, favorable
working conditions or assignments, a passing grade, the granting of honors or scholarship, or the grant
of benefits or payment of a stipend or allowance; and

e. other analogous cases.

2. Less Grave Offenses

a. unwanted touching or brushing against a victim’s body;

b. pinching not falling under grave offenses;

c. derogatory or degrading remarks or innuendoes directed toward the members of one sex or one’s
sexual orientation or used to describe a person;

d. verbal abuse or threats with sexual overtones; and

e. other analogous cases.

3. Light Offenses

a. surreptitiously looking or stealing a look at a person’s private part or worn undergarments;

b. telling sexist/smutty jokes or sending these through text, electronic mail or other similar means,
causing embarrassment or offense and carried out after the offender has been advised that they are
offensive or embarrassing or, even without such advise, when they are by their nature clearly
embarrassing, offensive or vulgar;

c. malicious leering or ogling;

d. the display of sexually offensive pictures, materials or graffiti;

e. unwelcome inquiries or comments about a person’s sex life;

f. unwelcome sexual flirtation, advances, propositions;

g. making offensive hand or body gestures at an employee;

h. persistent unwanted attention with sexual overtones;

i. unwelcome phone calls with sexual overtones causing discomfort, embarrassment, offense or insult to
the receiver; and

j. other analogous cases.

A compliment produces a good feeling so much so one wants the interaction to go on. Sexual
harassment is so discomforting that one stops it to stop.

V. BELIEF SYSTEMS

– A belief system is an ideology or set of principles that helps interpret everyday reality. This could be in
the form of religion, political affiliation, philosophy or spirituality. These beliefs are formed and
influenced by many different factors. The knowledge on a certain topic, the way people were raised and
even peer pressure from others.

Religious Belief System –is usually controlled around a moral code, the belief of one or more divine
being and the ability for supernatural occurrences to affect inhabitants and the universe that they exist
in.

Spiritual Belief System

– is not structured. Some prefer to believe in an eternal life and pursue a moral code of conduct but do
not join with a particular church or denomination.

Religion can be defined as “belief in God or gods to be worshipped, usually expressed in conduct and
ritual” or “any specific system of belief, worship, etc., often involving a code of ethics.”

Spirituality can be defined as “the quality or fact of being spiritual, non-physical” or “predominantly
spiritual character as shown in thought, life, etc.; spiritual tendency or tone.”

1. ANIMISM

- Animism includes the beliefs that there is no disconnection between the spiritual and physical (or
material) world. It has the idea that the souls or spirits exist, not only in humans but also in some other
animals, plants, rocks, geographic features such as mountains or rivers or other entities of the natural
environment including thunder, wind and shadows.
- Animism is the oldest recognized type of belief system in the world. Animists also supposed that
ancestors watch above the living from the spirit world.

Many Feng Shui tools are used to assess business including but not limited to:

Space allocation – proper use of space

Layout – best arrangement of furniture

Orientation – direction and location of a person within a space

Decor – best color schemes and elements to implement

Remedies – proper use and placemen t to balance the space harmoniously.

2. SHINTO

- Shinto, which means “way of the gods” is the customary religion of Japan that centers on natural world.
Shinto teaches that there is a holiness of the whole universe and that humans can be in tune with this
holiness. Every Mountain, river, plant, animal have spirits which dwell in them.

- Unlike many religions, one does not need to publicly profess belief in Shinto to be a believer. Whenever
a child is born in Japan, a local Shinto shrine adds the child’s name to a list kept at the shrine and
declares him or her a “family child” (ujiko). After death an ujiko becomes a “family spirit” (ujigami).

3. HINDUISM

Hinduism is the major religion of India, practiced by more than 80% of the population. This is the basis
behind most of Hinduism practices including business could be in India. Here are some of those
practices:

1. Doing business meeting requires a handshake called Namaste as part of etiquette. Using the Namaste
is a sign of understanding their etiquette.

2. Always use the appropriate formal title when addressing a person if the person is personally known
like Professor, Doctor, Mr, Mrs. If the person is not quite familiar use their names then Sir or Madam will
be enough.

3. Meetings should be arranged well in advance. This should be done in writing and confirmed by phone.
Meetings must not be scheduled near or on national holidays. They usually schedule between Oct. and
Mar.

4. When entering a meeting room a person must always approach and greet the most elder figure first.
Meetings should always start with some conversation. Talking about personal matter is avoided.
Commenting on matters such as the poverty or beggars must be prevented.
5. Once terms have been agreed there will be a celebration dinner for a successful negotiation and the
continuous process of relationship building process.

4. JUDAISM

Any organization must practice loving, kindness, justice and righteousness demanded by God.

“Were you honest in your business dealings?’

False or deceptive packaging and labeling is likewise prohibited.

Good relation between employees and employers are observed.

5. BUDDHISM

Buddhism developed in India. Buddhists believe in an endless cycle of reincarnation which is

comparable to beliefs of Hinduism.

Buddhist Principles for Business

1. None can live without toil, and an ability that provides ones needs is a blessing really. But if people
work hard without rest, fatigue and weariness will overtake them and they will be denied the joy that
comes from labor’s end. Get sufficient rest.

2. Develop the mind of equilibrium. People will always be getting praise and blame, but do not let either
affect the composure of the mind. Just follow the calmness and the absence of pride.

3. Every individual has a responsibility to help guide the global family in the right direction. Good wishes
are not enough. People must become actively busy. This means that every person shoulders the weight
of responsibility to do good. It is the good actions, not the good intentions, which accomplish the most
on and off the job.

4. One can only lose what he clings to. This means that everyone should embrace change. Change is
everywhere. Nothing is permanent.

5. A jug fills drop by drop. This means that things happen step by step. When people focus on the small
things, the big things make sense. Small efforts can amount to great success.

6. CHRISTIANITY

- Christianity is currently the most popular religion in the world. This religion developed from Judaism,
there are several key differences in its teachings.

- Christians are expected to attend church services regularly, usually on Sundays and holy days such as
Christmas and Easter.

Business Practices of Christianity

1. Integrity - Christ-centered living. It is about doing what is right. Based on the standards and principles
of God which are righteousness, truth and honesty.

2. Commitment to excellence - If an organization is to be recognized as exemplary one, one whose goal

is to glorify God through its commitment to excellence in its service and product. It must always honor
God.

VI. SOCIAL ENTERPRISE

Social Entrepreneurship

- Social entrepreneurship is the activity of establishing new business ventures to achieve social change.
The business utilises creativity and innovation to bring social, financial, service, educational or other
community benefits.

- Social enterprises are not charities or welfare agencies. They are private businesses established by
entrepreneurs with an emphasis on human values rather than just profit. These businesses focus on
working with and enhancing the social capital within the community by encouraging participation,
inclusion and utilising a bottom-up approach to achieve social change

Elements of Social Enterprise

Three core elements:

• Created to provide benefits for a community

• Creates opportunities so people can help themselves as well as others

• Utilises sound commercial business practices to ensure its sustainability i.e. the business will naturally
uphold and encourage environmental sustainability as well as ethical considerations

Characteristics of a Social Entrepreneur

- Not bound by sector norms or traditions

- Not confined by barriers that stand in the way of their goals

- Take innovative approaches to solve social issues

- Transform communities through strategic partnerships

Social Entrepreneurs

Social entrepreneurs are individuals with innovative solutions to society's most pressing social problems.
They are ambitious and persistent, tackling major social issues and offering new ideas for wide-scale
change
“… a path breaker with a powerful idea, who combines visionary and real world problem-solving
creativity, has a strong ethical fibre..

“ ..combines street pragmatism with professional skills..”

“ they see opportunities where others only see empty buildings, unemployable people and unvalued
resources”

“..Radical thinking is what makes social entrepreneurs different from simply ‘good’ people.”

“they make markets work for people, not the other way around, and gain strength from a wide network
of alliances”

“they can ‘boundary ride’ between the various political rhetoric and social paradigms to enthuse all
sectors of society”

• Social entrepreneurs find opportunity in most economic sectors. The growth areas for social
enterprises are identified as:

Environmental

Housing

Health and care

Information services

Public services

Financial services

Training and business development

Manufacturing

Food and agriculture