TOPIC 3

THE SOCIAL FUNCTION OF BUSINESS

 Why Should Business be Ethically
Sensitive?
 Businesses play a major role in keeping any
economy alive. It is therefore necessary to ensure
the proper and ethical governance of businesses.
Business people – managers and employees, but
above all the organizational leaders must behave
in an ethical manner in managing and operating a
business. Otherwise, no one will be willing to invest
in or loan money to the business. Business activities
must be viewed and examined from the
perspective of morality. Business without ethics
threatens the survival of human society and in
some cases, destroys the fiduciary relationships of
people.
 Fundamental reason for examining the activities of
business from the social and ethical perspective is for
the promotion of the common good, protection of
the individual’s interests, and the preservation of the
human society in general. Without this ethical
consideration, business will be a chaotic human
activity because there will be no common
understanding and agreement about what is the
right and wrong human conduct.
Ethics
 It is a moral principles that guide the conduct of individuals. Unfortunately,
business managers and employees sometimes behave in an unethical
manner. A number of managers of companies in the last two decades
engaged in accounting or business fraud. These ethical violations led to
fines, firings, and lawsuits. In some cases, managers were criminally
prosecuted, convicted and sent to prison.
Business Roles in Poverty Alleviation

 Poverty reduction, or poverty alleviation,

is a set of measures,
both economic and humanitarian, that
are intended to permanently lift people
out of poverty.
 Poverty reduction is one of the world's
most important challenges, and it is
proposed the private sector has an
important role to play in creating the
economic growth, employment and
purchasing options needed for
significant poverty reduction.
 Areas of Business Most in Need of
Ethical Attention
 Morality of Advertising
 Basic Employee Rights, Job Discrimination, Other Labor-
Related Ethical Issues
 Insider Trading
 Pollution and Resource Depletion
 Whistle Blowing
Morality of Advertising

 Advertising presents several ethical issues, one of them being

Deceptive Advertisement.
 Deceptive Ads are those that make false statements about or
misrepresent the product. For example, the picture presented in the
advertisement is different from the actual products.
 Deceptive ads may occur not only through sentences or
propositions but also through pictures, individual words, or through
certain combinations of objects which can deceive the eye and
the mind.
Basic Employee Rights, Job
Discrimination, Other Labor- Related
Ethical Issues
 The Labor Code of the Philippines (or Presidential
Decree No. 442) (a decree instituting a labor code
thereby revising and consolidating labor and social laws
to afford protection to labor, promote employment and
human resources development, and insure industrial
peace based on social justice) lays down the rights of
workers in relation to wages, rights to self-organization,
collective bargaining, security of tenure, and just and
humane conditions of work.
Insider Trading

 Insider trading in the stock market is characterized as the buying or selling

of shares of stock on the basis of information known only to the trader ( an
insider, somebody belonging to the company, as opposed to the public) or
to a few persons.
 Insider trading, in finance, is the reverse of speculation. It is reward without
risk, wealth generated and injury done to others – by an unfair advantage
in information.
 Is insider trading unethical? Is insider trading illegal?
Pollution and Resource Depletion

 Pollution is the undesirable contamination

of the environment by the manufacture or
use of commodities.
 Resource depletion refers to the
consumption of finite and scarce
resources.
 Pollution is a type of resources depletion as
contamination of air , water, and land
diminishes their beneficial qualities.
Whistle Blowing
 Whistle-blowing is the act, for an employee or
former employee of disclosing what he
believes to be unethical or illegal behavior to
higher management or to external authority or
the public.
 Its status is debated: some see whistle blowers
as traitorous violators of organizational loyalty
norms, others see them as heroic defenders of
values considered to be more important than
company loyalty.
Collaborative Work.

 Based on the lesson, gather your group and do the following together.
 Choose only one of the areas that have been discussed.
 Discuss one specific a of topic you chose.
 Write down a description of the nature of the ethics issue.
 Brainstorm and write down possible ways in which to resolve those ethical issues.
(on the part of the company and the part of the public)
 Share with the rest of the class.
TOPIC 4
ETHICAL CHALLENGES IN DOING BUSINESS
Inappropriate practices and policies are
conscious and deliberate wrong doings, such as
discrimination designed to harm others and
withhold the rights of an individual; humiliation of
people designed to diminish psychological
needs and dignity; destructiveness; and acts of
violence. However, some are not easy to
recognize as inappropriate behavior because
not everything can easily be classified as wrong
or right.
BRIBERY

 Bribe is something valuable that is

given in order to get someone to do
something.
 Paying bribes is unfortunately quite
common and usually takes the form of
grease money. Bribes are intended to
expedite required services or to secure
contracts. Government and private
companies are affected by this kind of
corruption.
CONFLICT OF INTEREST AND LOYALTY

 Conflict of interest occurs when an

individual must choose between
promoting personal interest and
avoiding such actions.
 Examples of personal interest
include using company information
HARASSMENT
 The first type of harassment is quid pro qou involving
an employer who asks an employee or applicant for
a sexual favor in return for employment or job
benefit or promotion.
 The second type is hostile work environment involving
a person who makes unwelcome sexual comments,
touching or acting in a sexually inappropriate way
toward an employee.

 Some Practices you should observe not only in an

office setting, but also in life in general:
 Do not touch people inappropriately
 Never date someone who works for you
 Watch your language and;
 Watch the jokes being shared.
FORCED OVERTIME
 Overtime is a time in addition to what is normal, as
time worked beyond one's scheduled working
hours.
 No one should be compelled to work overtime in
excess of the mandatory eight hours on any given
day against his/her will.
 Employees have the option to refuse rendering
overtime work. Additional time, day, or night spent
at work requires more physical and mental effort
that can lead to health degradation to
employees. It also deprives employees of
spending time with his/her family. Companies are
required to compensate employees with overtime
pay.
ASSIGNMENT #2

Search for examples of the following

inappropriate practices.

Bribery
Conflict of Interest
Harassment
Forced Overtime
CODE OF ETHICS FOR
BUSINESS
 Corporate culture is defined as the values, standards, attitudes and beliefs
shared by the members of an organization.

 EXAMPLES OF ORGANIZATIONAL CULTURES

 1. TEAM-ORIENTED CULTURE
 It prioritize the employees’ happiness. These types of organizations believe that
when an employee is happy, they become more productive, and are thus more
willing to go the extra mile for their company, and their costumers.
 It is also characterized by regular socializations with teammates in and outside of
work, employees who interact with different departments, and thoughtful
feedback from employees during surveys.
 2. ELITE CULTURE
 Organizations that have an elite culture hire only the best qualified individuals,
and expected to lead the way.
 In an elite culture environment, employees often prioritize work, and are
expected to work long hours.
 3. HORIZONTAL CULTURE
 In an horizontal culture environment, everyone is encouraged to pitch in their
ideas.
 This kind of culture is common among younger companies.
 Your job title is not very important in horizontal cultures. Everybody has a voice in
the company, and ideas are discussed openly.
 4. CONVENTIONAL CULTURE
 Companies who have a conventional culture work in a more traditional manner.
A dress code is normally employed in companies that espouse this culture.
 Banks and schools are examples of companies that have conventional cultures.
CODE BASICS

 A code of ethics sets the company’s mission, values, ethos, objectives, and
responsibilities to guide employees on how to deal with different scenarios
in the workplace.
 Some companies set short codes, some set generals guidelines, while
others include examples of how to deal with particular situations.
 The code should be simple, concise, and easily understood.
 The best code states expected behaviors
 The code of ethics applies to all employees.
 The code should be written, reviewed, and edited by a multidisciplinary
team to make it consistent with all other corporate policies.
 It should be revised and updated as appropriate.
A. Key Elements of a Code of Conduct

 1. Introduction
 An introductory letter from the CEO or leader define the importance of
compliance.
 2. Mission, Vision
 A brief mission, vision reflects the commitment of what is important to the
organization.
 3. A framework to assist employees in making the right choice.
 4. for topics not covered by the rules, further suggestions are
recommended by the code.
 5. Set up clear whistle-blowing policies to reassure everyone that the
company will protect what is right and just.
 6. List available resources for guidance and assurance of confidentiality
and nonretaliation.
 7. Revision
B. Implementation

 Having a code of ethics is meaningless unless it is communicated to all

members of the corporation. This can be in an sheet of paper, a bound file,
an electronic copy, or a webpage.
C. Requires Training

 Apart from trainings, a good way to keep everyone updated is to do

annual webinars on the code of ethics followed by a mandatory
comprehension exam.
D. Enforcement

 A company that wants to uphold strong ethics cannot bend the rules
regardless of the magnitude of financial damage it would cost.