Business Policy and Strategy
1
Business Ethics, Social Responsibility and Environmental Sustainability
Module 012
Business Ethics, Social Responsibility, and Environmental
Sustainability
Most businesses aims to earn profit or revenue and be the best in the field
but more than earning, the business sustains itself by achieving good
reputation through ethical ways. The firm should be concerned not just with
their standing but also value social responsibilities.
At the end of this module, you will be able to:
1. Define business ethics and corporate social responsibility;
2. Discuss the benefits of managing work ethics;
3. Appraise the importance of business ethics;
4. Distinguish the significance of sustainability report.
Business Ethics
Basically, ethics is defined Merriam-Webster.com as rules of behavior based on ideas about
what is morally good and bad. This is to simply mean as to what is good or bad in the
business field. The business ethics of a firm is to be taken seriously since it directly affects
the product, services and even the relationship with the stakeholders. Perhaps most
important, attention to ethics in the workplaces helps ensure that when leaders and
managers are struggling in times of crises and confusion, they retain a strong moral
compass. However, attention to business ethics provides numerous other benefits.
Wisegeek.com defines business ethics as a behavior that a business adheres to in its daily
dealings with the world. The ethics of a particular business can be diverse. They apply not
only to how the business interacts with the world at large, but also to their one-on-one
dealings with a single customer.
A good business ethics prioritizes the trust of its stakeholders or clients, follows
environmental laws and diminishes exploitation of its employees.
Transparency
One way to reflect business ethics is through “Transparency”. As mentioned
by Gebler (2011) in his article “Transparency is the key to performance” that
a business to show transparency must be honest enough to show the actions
that the business are taking. The problems must be dealt properly with an
assessment if the standards coincide with the values of the company. The
value of honesty is consistent with the ability to act on one’s concerns, or ask
questions. Employees and managers can safely admit mistakes and can
Course Module
openly deal with problems and challenges. There is true open
communication.
The case of Johnson and Johnson in 1982 Tylenol Crisis has been model of
Transparency when they pulled out their products from the grocery shelves
despite public humiliation and lost profits. In repeated interviews Jim Burke
said that J&J’s Credo made it easy for him and his team to know exactly what
to do: J&J’s “first responsibility is to the doctors, nurses, and patients, to the
mothers and all the others who use our products and services.”
Carter McNamara (October, 2010) in his blog cited what are the benefits of
ethics in business and why this should be given significant.
10 Benefits of Managing Ethics in Workplace
1. Attention to business ethics has substantially improved
society.
A matter of decades ago, children in our country worked 16-hour
days. Workers’ limbs were torn off and disabled workers were
condemned to poverty and often to starvation. Trusts controlled
some markets to the extent that prices were fixed and small
businesses choked out. Price fixing crippled normal market forces.
Employees were terminated based on personalities. Influence was
applied through intimidation and harassment. Then society reacted
and demanded that businesses place high value on fairness and equal
rights. Anti-trust laws were instituted. Government agencies were
established. Unions were organized. Laws and regulations were
established.
2. Ethics programs help maintain a moral course in turbulent
times.
Attention to business ethics is critical during times of fundamental
change — times much like those faced now by businesses, both
nonprofit or for-profit. During times of change, there is often no clear
moral compass to guide leaders through complex conflicts about
what is right or wrong. Continuing attention to ethics in the
workplace sensitizes leaders and staff to how they want to act —
consistently.
3. Ethics programs cultivate strong teamwork and productivity.
Ethics programs align employee behaviors with those top priority
ethical values preferred by leaders of the organization. Usually, an
organization finds surprising disparity between its preferred values
and the values actually reflected by behaviors in the workplace.
Ongoing attention and dialogue regarding values in the workplace
builds openness, integrity and community — critical ingredients of
strong teams in the workplace. Employees feel strong alignment
between their values and those of the organization. They react with
strong motivation and performance.
4. Ethics programs support employee growth and meaning.
Business Policy and Strategy
3
Business Ethics, Social Responsibility and Environmental Sustainability
Attention to ethics in the workplace helps employees face reality,
both good and bad — in the organization and themselves. Employees
feel full confidence they can admit and deal with whatever comes
their way. Bennett, in his article “Unethical Behavior, Stress Appear
Linked” (Wall Street Journal, April 11, 1991, p. B1), explained that a
consulting company tested a range of executives and managers. Their
most striking finding: the more emotionally healthy executives, as
measured on a battery of tests, the more likely they were to score
high on ethics tests.
5. Ethics programs are an insurance policy — they help ensure
that policies are legal.
There are an increasing number of lawsuits in regard to personnel
matters and to effects of an organization’s services or products on
stakeholders. As mentioned earlier in this document, ethical
principles are often state-of-the-art legal matters. These principles
are often applied to current, major ethical issues to become
legislation managing ethical values in the workplace legitimizes
managerial actions, strengthens the coherence and balance of the
organization’s culture, It’s far better to incur the cost of mechanisms
to ensure ethical practices now than to incur costs of litigation later.
A major intent of well-designed personnel policies is to ensure
ethical treatment of employees, e.g., in matters of hiring, evaluating,
disciplining, firing, etc. Drake and Drake (California Management
Review, V16, pp. 107-123) note that “an employer can be subject to
suit for breach of contract for failure to comply with any promise it
made, so the gap between stated corporate culture and actual
practice has significant legal, as well as ethical implications.”
6. Ethics programs help avoid criminal acts “of omission” and
can lower fines.
Ethics programs tend to detect ethical issues and violations early on
so they can be reported or addressed. In some cases, when an
organization is aware of an actual or potential violation and does not
report it to the appropriate authorities, this can be considered a
criminal act, e.g., in business dealings with certain government
agencies, such as the Defense Department. The recent Federal
Sentencing Guidelines specify major penalties for various types of
major ethics violations. However, the guidelines potentially lower
fines if an organization has clearly made an effort to operate
ethically.
7. Ethics programs help manage values associated with quality
management, strategic planning and diversity management —
this benefit needs far more attention.
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Ethics programs identify preferred values and ensuring
organizational behaviors are aligned with those values. This effort
includes recording the values, developing policies and procedures to
align behaviors with preferred values, and then training all personnel
about the policies and procedures. This overall effort is very useful
for several other programs in the workplace that require behaviors
to be aligned with values, including quality management, strategic
planning and diversity management. Total Quality Management
includes high priority on certain operating values, e.g., trust among
stakeholders, performance, reliability, measurement, and feedback.
Eastman and Polaroid use ethics tools in their quality programs to
ensure integrity in their relationships with stakeholders. Ethics
management techniques are highly useful for managing strategic
values, e.g., expand market share, reduce costs, etc. McDonnell
Douglas integrates their ethics programs into their strategic planning
process. Ethics management programs are also useful in managing
diversity. Diversity is much more than the color of people’s skin —
it’s acknowledging different values and perspectives. Diversity
programs require recognizing and applying diverse values and
perspectives — these activities are the basis of a sound ethics
management program.
8. Ethics programs promote a strong public image.
Attention to ethics is also strong public relations — admittedly,
managing ethics should not be done primarily for reasons of public
relations. But, frankly, the fact that an organization regularly gives
attention to its ethics can portray a strong positive to the public.
People see those organizations as valuing people more than profit, as
striving to operate with the utmost of integrity and honor. Aligning
behavior with values is critical to effective marketing and public
relations programs. Consider how Johnson and Johnson handled the
Tylenol crisis versus how Exxon handled the oil spill in Alaska. Bob
Dunn, President and CEO of San Francisco-based Business for Social
Responsibility, puts it best: “Ethical values, consistently applied, are
the cornerstones in building a commercially successful and socially
responsible business.”
9. Overall benefits of ethics programs:
Donaldson and Davis, in “Business Ethics? Yes, but What can it Do for
the Bottom Line?” (Management Decision, V28, N6, 1990) explains
that managing ethical values in the workplace legitimizes managerial
actions, strengthens the coherence and balance of the organization’s
culture, improves trust in relationships between individuals and
groups, supports greater consistency in standards and qualities of
products, and cultivates greater sensitivity to the impact of the
enterprise’s values and messages.
10. Last – and most — formal attention to ethics in the
workplace is the right thing to do.
Business Policy and Strategy
5
Business Ethics, Social Responsibility and Environmental Sustainability
Corporate Social Responsibility (CSR)
This is a program adopted by companies that assess and improve corporate
operations in relation to a range of values beyond profit such as human
rights, environmental protection, contribution to local communities, and
workplace diversity among others. The companies also focuses on codes of
conduct which require monitoring of freedom of association, discrimination,
child labor, wages, harassment, working hours, health and safety.
Corporate Sustainability Report
The business or organizations usually consider several sustaining issues that
have great impact in on their stakeholders. With this report, the business
becomes transparent with the risk and challenges it faces.
This report is published by an organization or company to discuss economic,
environmental and social impacts caused by the organization’s activities.
This also allows to present the values and governance and to demonstrate
the link between its strategies, and commitment to a sustainable global
economy.
Sustainable reporting process guarantees transparency which maintains
trust of the stakeholders. If the transparency increases, it leads to a better
decision making too.
Glossary
Reliability - The ability of an apparatus, machine, or system to consistently perform its
intended or required function or mission, on demand and without degradation or failure
Social impact - The effect of an activity on the social fabric of the community and well-
being of the individuals and families
Sensitization - Attempt to make oneself or others aware of and responsive to certain ideas,
events, situations, or phenomenon.
Sustainable - Ability to maintain or support an activity or process over the long term
Transparency - Essential condition for a free and open exchange whereby the rules
and reasons behind regulatory measures are fair and clear to all participants.
References and Supplementary Materials
Books and Journals
Thomas L. Wheelen and David Hunger; 2010; Philippines; Prentice Hall
Course Module
Online Supplementary Reading Materials
Definition of terms. http://www.businessdictionary.com/definition.html. Retrieved
March 30, 2018
Business Ethics. https://study.com/academy/lesson/business-ethics-social-
responsibility-definition-differences.html Retrieved March 30, 2018
Business Ethics. https://managementhelp.org/businessethics/index.html Retrieved
March 30, 2018
Business Ethics. http://www.wisegeek.org/what-is-business-ethics.htm#didyouknowout
Retrieved March 30, 2018
Transparency. https://managementhelp.org/blogs/business-
ethics/2011/03/14/transparency-is-a-key-to-performance/ Retrieved March 30, 2018
Online Instructional Videos
Business Ethics Corporate Social Responsibility.
https://www.youtube.com/watch?v=EFkSfvvAVeE
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