Chapter 5: INTRODUCTION TO ETHICS

Introduction Chapter 6: BUSINESS ETHICS

- Ethics is defined broadly as a set of moral principles or Business Ethics

values that govern the actions and decisions of an
individual or group. - refers to standards of moral conduct, behavior and judgment in
- Examples of prescribed sets of moral principles or values at business.
the implementation level include laws and regulations, - an area of corporate responsibility where businesses are legally
church doctrine, code of business ethics for professional bound and socially obligated to conduct business in an ethical
groups and codes of conduct within individual manner.
organizations - based on the personal values and standards of each person
engaged in business.
CHARACTERISTICS AND VALUES ASSOCIATED WITH
ETHICAL BEHAVIOR
PURPOSES OF BUSINESS ETHICS
 Integrity
- Be principled, honorable, upright, and courageous Main Purpose:
and act on convictions;
- To help business and would-be business to determine what
 Honesty business practices are right and what are wrong.
- Be truthful, sincere, forthright, straightforward,
frank, and candid; Special Purpose:
 Trustworthiness and Promise Keeping
- Be worthy of trust, keep promises, full commitments - To make businessmen realize that they cannot employ double
abide by the spirit as well as the letter of an standards
agreement; - To show businessmen that common practices are really wrong.
 Loyalty (Fidelity) and Confidentiality - To serve as a standard or ideal upon which business conduct
- Be faithful and loyal to family, friends, employers, should be based
client and country
SCOPE AND IMPACT OF BUSINESS ETHICS
 Fairness and Openness
- Be fair and open-minded, be willing to admit error  Economic Impact
and, where appropriate, change positions and beliefs, - A business has an economic impact on society
demonstrate a commitment to justice, the equal through the wages it pays to its employees, the
treatment of individuals, and tolerance for acceptance materials that it buys from their suppliers and the
of diversity prices it charges its customers.
 Caring for Others  Social Impact
- Be caring, kind, compassionate - The social impact of corporate governance
 Respect for Others contributes to the ethical climate of society.
- Demonstrate respect for human dignity, privacy, and - Corruption may unfairly raise the price of goods for
the right to self-determination of all people; consumers or the quality of the product or service
 Responsible Citizenship compromised.
- Obey just laws  Environmental Impact
 Pursuit of Excellence - Businesses that implement good environmental
- Pursue excellence in all matters policies to use energy more efficiently, reduce
 Accountability waste and in general lighten their environmental
- Be accountable; accept responsibility for decisions footprint can reduce their internal costs and
promote a positive image of their company.
WHY DO PEOPLE ACT UNETHICALLY?
SCOPE AND IMPACT OF BUSINESS ETHICS
 The person’s ethical standards are different from those of
society as a whole, or;  Impact on Business Managers:
 The person chooses to act selfishly. In particular, a manager should:
 Acknowledge that his role is to serve the business
The Need for Professional Ethics
enterprise and the community;
 A responsibility to serve the public  Avoid all abuses of executive power for personal
gain, advantage or prestige;
 A complex body of knowledge
 Reveal the fact to his superior whenever his
 Standards of admission to the profession
personal business of financial interests conflicts
 A need for public confident with those of the company;
 Be actively concerned with the difficulties and
problems of subordinates,
 Recognize that his subordinates have a right to
information
 Fully evaluate the likely effects on employees
and the community of the business plans for the
future before taking a final decision and;
 Cooperate with his colleagues and not attempt to
secure personal advantage at their expense.
interfere with, restrain or coerce employees in the
exercise of their rights to self-organization;
Chapter 7: COMMON UNETHICAL PRACTICES OF - To initiate, dominate, assist or otherwise with the
BUSINESS ESTABLISHMENTS formulation or administration of any labor
organization, including the giving of financial or
other support to it;
Types: - To discriminate with regards to wages, hours of
work, and other terms or conditions of
 Misrepresentation - may be classified into two types: direct employment in order to encourage or discourage
misrepresentation and indirect misrepresentation membership in any labor organization.
 Direct Misrepresentation – characterized by actively - To dismiss, discharge, or otherwise prejudice or
misrepresenting about the product or customers. This includes; discriminate, against an employee for having
 Deceptive packaging. given or being about to give testimony under the
 Misbranding or Mislabeling Labor Code;
 False or Misleading Advertising - To violate the duty to bargain collectively as
 Adulteration prescribed by the Labor Code.
 Weight understatement or short weighing - To pay negotiation or attorney’s fees to the union
 Measurement understatement or short measurement or its officers or agents as part of the settlement
 Quality understatement or short numbering. of any issue in collective bargaining or any other
 Indirect Misrepresentation - omitting adverse or unfavorable dispute;
information about the product or service. - To violate or refuse to comply with voluntary
Caveat emptor - means “let the buyer beware” arbitration awards or decisions relating to the
- the seller is not obligated to reveal any defect in implementation or interpretation of a collective
the product or service he is selling. It is the bargaining agreement;
responsibility of the customer to determine for - To violate a collective bargaining agreement.
himself the defects of the product. 5. Making false claims about losses to free themselves from
 Deliberate withholding of Information paying the compensation and benefits provided by law.
 Passive deception - contributes to the impression that 6. Making employees sign documents showing they are
businessmen are liars and are out to make a fast buck. receiving fully what they are entitled to under the law when
 Over-persuasion - appealing to the emotions of a prospective in fact they are only receiving a fraction of what they are
customer and urging him to buy an item of merchandise he supposed to get.
needs. 7. Sexual Harassment.

CORPORATE ETHICS  Some Unethical Practices by Employees

 Conflicts of Interest - arises when an employee who is
Unethical Practices of Corporate Management
duty bound to protect and promote the interests of his
 Board of Directors employer violates this obligation by getting himself into a
 Plain Graft situation where his decision or actuation is influenced by
- voting for themselves during the Stockholder’s what he can gain personally from it rather than what his
Meeting employer can gain from it.
- executive officers huge per diems, large salaries, Examples:
big bonuses that do not commensurate to the - holds a significant interest or shares of stock of a
value of their services. competitor, supplier, customer or dealer favors
 Interlocking Directorship this party to the prejudice of his employer.
- holds directorial positions in two or more - accepts cash, a gift or a lavish entertainment or a
corporations that do business with each other loan from a supplier, customer, competitor, or
- involve conflict of interest and can result to contractor.
disloyal selling. - uses or discloses confidential company
 Insider trading information for his or someone else’s personal
- broker or another person with access to gain.
confidential information uses that information to - engages in the same type of business as his
trade in shares and securities of a corporation employer.
 Negligence of Duty - uses for his own benefit a business opportunity in
- failure to attend board meetings which his employer has or might be expected to
have an interest.
 Dishonesty. Business ethics is not just limited to business
 Some Unethical Practices of Executive Officers and Lower
transactions with outside parties. It also covers employee-
Level Managers
employer relationship, especially with respect to an
1. Claiming a vacation trip to be a business trip.
employee’s honesty as he carries out his assigned duties in
2. Having employees do work unrelated to the business.
the office.
3. Loose or ineffective controls.
Examples:
4. Unfair labor practices.
- Taking office supplies home for personal use.
- To interfere with, restrain or coerce employees in
- Padding an expense account through the use of
the exercise of their right to self-organization;
fake receipts when claiming reimbursements.
- To require as a condition of employment that a
- Taking credit for another employee’s idea.
person or an employee shall not join a labor
organization or shall withdraw from one to which  
he belongs;
- To contract out services or functions being
performed by union members when such will