NATIONAL COLLEGE OF BUSINESS AND ARTS

LECTURE ON: BE2 (GOOD GOVERNANCE AND CORPORATE SOCIAL RESPONSIBILITY)

PRELIM PERIOD

INTORODUCTION:
Good governance is acknowledged to be essential for the success of any organization and is now more
important than ever. The board members play a vital role in serving their causes and communities and
bring passion and commitment as well as skills and experience to the organizations they lead.

GOOD GOVERNANCE - is the interaction between government and the public where government opens
up and reveals its operations to the people and allows the people to contribute to the effective and
efficient delivery of services.

- “it is the responsible use of political authority to manage a nation’s affairs”

HOW TO PROVIDE GOOD GOVERNANCE AND LEADERSHIP

• Understanding their role;
• Ensuring delivery of organizational purpose;
• Being effective as individuals and a team;
• Exercising control;
• Behaving with integrity; and
• Being open and accountable.

PRINCIPLES OF GOOD GOVERNANCE

1. PARTICIPATION - participation by both men and women is a key cornerstone of good
governance
• Participation.

2. TRANSPARENCY - means that information should be provided easily understandable forms and
media;
• that it should be freely available and directly accessible to those who will be affected by
governance policies and practices, as well as the outcomes resulting therefrom;
• and that any decisions taken and their enforcement are in compliance with established rules
and regulations.

3. RESPONSIVENESS - Good governance requires that organizations and their processes are
designed to serve the best interests of stakeholders within a reasonable timeframe.

4. CONSENSUS ORIENTED - Good governance requires consultation to understand the different

interests of stakeholders
• in order to reach a broad consensus of what is in the best interest of the entire stakeholder
group, and
• how this can be achieved in a sustainable and prudent manner.

5. EQUITY AND INCLUSIVENESS

.
• the government subsidizes education, housing, healthcare programs, etc.

6. EFFECTIVENESS AND EFFICIENCY - Good governance means that the processes implemented
by the organization to produce favorable results meet the needs of its stakeholders.
• Making the best use of its resources – human resources, technology, financial,
natural and environmental resources

7. ACCOUNTABILITY - Accountability is a key requirement of good governance.

• Who is accountable for what should be documented in policy statements.
• In general, an organization is accountable to those who will be affected by its decisions or
actions as well as the applicable rules of law.

8. RULE OF LAW - Good governance requires fair legal frameworks that are enforced by an
impartial regulatory body, for the full protection of stakeholders.
• It also requires full protection of human rights particularly those of minorities
• Have a fair justice system in place if political leaders wish to earn the trusts of the people - this
would give ordinary people confidence that if they will go to court, they will be treated no differently
than the powerful and the rich people.

In November 30, 1998, former Chief Justice Hilario Davide, made an statement called “DAVIDE WATCH”,
wherein the heart in this statement is “good governance”
“he envisioned a Judiciary that is independent, effective and efficient, worthy of public trust
and confidence”

CSR - is the continuing commitment by business to behave ethically and contribute to economic
development while improving the quality of life of the workforce and their families as well as of the local
community and society at large.

ESSENCE AND NATURE OF CSR

1. It is corporate – because it is composed of human individuals who act as one

2. It is social – because the corporate action is geared towards the society in general
3. It is a responsibility – because organizations and their management are responsible for their
stakeholders

ADVANTAGES OF CSR TO BUSINESS:

Some of the positive outcomes that can arise when businesses adopt a policy of social responsibility:

1.COMPANY BENEFITS
• Improved financial performance;
• Lower operating costs;
• Enhanced brand image and reputation;
• Increased sales and customer loyalty;
• Greater productivity and quality;
• More ability to attract and retain employees
• Access to capital;
• Product safety and decreased liability

2.BENEFITS TO THE COMMUNITY AND THE GENERAL PUBLIC

• Charitable contributions;
• Employee volunteer programs
• Corporate involvement in community education, employment and housing programs
• Product safety and quality.

3. ENVIRONMENTAL BENEFITS:
• Greater material recyclability;
• Better product durability and functionality;
• Greater use of renewable resources; (these are part of earth’s natural resources like the source
of energy, the source of water, agriculture, etc.)

BUSINESS ETHICS AND CSR

For a working definition, by ETHICS mean a specialized study of what is right or wrong. It
concerns itself with the correct application of some fundamental moral principles, in our case, to
business decisions and policies.

Business ethics is related to corporate social responsibility, although the former is primarily
personal and CSR is mainly social.

1. Business ethics first, then CSR. Business ethics knocks on the individual conscience before one
makes a decision, while CSR nags the moral accountability of a group of individuals.

2. A philosophy of management that can be both personal and corporate. Whereas ethics is
principally personal, CSR is social and corporate.

3. Goes beyond public relations and profitability. It might happen, as a consequence of

benchmarking CSR, that sales go up, that you project an angelic image.

4. The big challenge is to actually implement and sustain it. Both business ethics and CSR dedicate
their energy to mutual interests existing between business growth and social development.

5. Requires the involvement of everyone. Because it is primarily social, CSR includes code of
conduct, corporate citizenship, employee volunteerism, resource sharing and management social
investment and sustainable development.

6. Aspiration for excellence. While others are contented with the minimal requirements of the
moral norms and code of conduct, the goal of both business ethics and CSR is the moral excellence of all
players of business.

MUTUAL ATTRIBUTES OF BUSINESS ETHICS AND CSR

1. Both business ethics and CSR are born with universal values.

2. Both business ethics and CSR are practical.

3. Business ethics and CSR are all about firm conviction.

PRO-PROFIT ORGNAIZATION GO:

• BEYOND PROFIT – that business learns to genuinely address the common public good beyond
that of corporate interests;

• BEYOND COMPLIANCE – that business responds to higher standards and principles beyond mere
obedience to the law;

• BEYOND FORM – that the company goes beyond public relations and image building.

SOCIAL RESPONSIBILITY TOWARDS THE CONSUMERS, END USERS AND GENERAL PUBLIC

Corporate social responsibility is an "important" consideration in investment decisions.

THE MAIN TRUST OF SOCIAL RESPONSIBILITY, no matter what kind, is the PUBLIC WELFARE -- an entity's
greater responsibility toward consumers. It is therefore vital that guidelines AGAINST DECEPTIVE
PRACTICES can be seen on the existing laws and codes of the state.

DECEPTIVE PRACTICES – refer to acts that cause one to believe what is not true; or cause one not to
believe what is true – the intention of which is to take unfair advantage of
another.

Ex. If you asked somebody who is under intoxicated condition, or with defective mental
capacity to sign a contract or any legal document

SOCIAL RESPONSIBILITY in BUSINESS

After getting some idea about concept and importance of social responsibility of business, let us look
into the various responsibilities that a business has towards different groups with whom it interacts.

1. RESPONSIBILITY TOWARDS OWNERS:

Owners are the person who owns the business. They contribute capital and bear witness risks. The
primary responsibilities of business towards its owners are:

• Run the business efficiently

• Proper utilization of capital and other resources
• Growth and appreciation of capital
• Regular and fair return on capital invested

2. RESPONSIBILITY TOWARDS INVESTORS:

Investors are those who provide finance by way of investment in debentures, bonds, deposits, etc.
Banks, financial institutions, and investing public are all included in this category. The responsibilities of
business towards its investors are:

• Ensuring safety of the investment

• Regular payment of interest
• Timely repayment of principal amount

3. RESPONSIBILITY TOWARDS EMPLOYEES:

Business needs employees or workers to work for it. These employees put their best effort for the
benefit of the business.

• Timely and regular payment of wages and salaries

• Proper working conditions and welfare amenities
• Opportunity for better career prospects
• Better living conditions like housing, transport, canteen, etc.
• Timely training and development

4. RESPONSIBILITY TOWARDS SUPPLIERS:

Suppliers are businessmen who supply raw materials and other items required by manufacturers and
traders:

• Giving regular orders for purchase of goods

• Dealing on fair terms and conditions
• Availing reasonable credit period
• Timely payment of dues

5. RESPONSIBILITY TOWARDS CUSTOMERS:

No business can survive without the support of customers. As a part of the responsibility of business
towards them, the business should provide the following facilities:

• Products and services must be able to take care of the needs of the customers.
• There must be regularity in supply of goods and services
• Price of the goods and services should be reasonable and affordable.
• All the advantages and disadvantages of the product as well as procedure to use the products
must be informed to the customers.
• There must be proper after-sales service.
• Grievances of the consumers, if any, must be settled quickly.

6. RESPONSIBILITY TOWARDS GOVERNMENT:

Business activities are governed by the rules and regulations framed by the government.
The various responsibilities of business towards government are:

• Setting up units as per guidelines of government

• Payment of fees, duties and taxes regularly as well as honestly
• Not to indulge in monopolistic and restrictive trade practices
• Conforming to pollution control norms set up by government
• Not to indulge in corruption through bribing and other unlawful activities.
7. RESPONSIBILITY TOWARDS SOCIETY:
A society consists of individuals, groups, organizations, families, etc. They are all the members of the
society.

• To help the weaker and the backward sections of the society

• To preserve and promote social and cultural values
• To generate employment
• To protect the environment
• To conserve natural resources and wildlife
• To promote sports and culture
• To provide assistance in the field of developmental research on education, medical science,
technology, etc.

8. RESPONSIBILITY TOWARDS COMPETITORS:

• Not to offer exceptionally high sales commission to distributors
• Not to offer to customers heavy discounts and/or free products in every sale
• Not to defame competitors through false or ambiguous advertisements.

TYPES OF DECEPTION IN BUSINESS:

1. False advertising and other misrepresentations

2. Deceptive pricing
3. Deception to employees can happen from hiring to firing of a worker
4. Unfair competition

ESSENTIAL RIGHTS OF CONSUMERS

1. The right to safety
2. The right to be informed
3. The right to choose
4. The right to be heard

MORAL THEORIES AND PRINCIPLES:

MORAL PRINCIPLE - refers to the principles of right or wrong that are accepted by an individual or a
social group.

Moral Principle 1: HUMAN DIGNITY IS THE PRIORITY IN LABOR OVER CAPITAL

• “Man above other Ms” (money, materials, methods, management, machine, etc)
• Material wealth are just secondary to the dignity of the human labor

“the human labor, the spiritual worker, the intelligent capital, with God-given sublime dignity,
is the real wealth creator.” (John Paul II, 1981)

Moral Principle 2: RESPECT FOR FUNDAMENTAL HUMAN RIGHTS

RIGHT - is a personal entitlement to something

• Your right is your privilege, a moral chain

• Your right empowers you to act, perform and think in your own personal and distinct way

• Because human dignity is priceless, human rights are priceless, cannot be bought, sold,
transferred, exchanged for another value

RIGHTS THAT CAN NEVER BE SUSPENDED:

• Right to life
• Right to recognition as a person before the law
• Freedom of thought, conscience and religion
• Freedom from torture
• Freedom from slavery
• Freedom from imprisonment foe debt

WHAT IS THE BUSINESS OF HUMAN RIGHTS IN BUSINESS?

Business enterprises have on-going operational tasks that encompass human rights dimensions such as:

i. EMPLOYMENT: labor conditions, recruiting and laying off employees

ii. SECURITY: ensuring the security of their facilities and personnel

iii. ECONOMIC DEVELOPMENT: deciding in which countries they are going to invest

iv. ENVIRONMENT: identifying and managing environmental risks

v. COMMUNITY AND SOCIAL RESPONSIBILITIES: making a positive contribution to the society

Moral Principle 3: RESPECT FOR BASIC EMPLOYEE RIGHTS (RIGHT TO WORK)

WHAT IS THE RIGHT TO WORK?

• The right to work is part and parcel of the right to life and the duty to sustain it.

• The right to work is fundamental because it flows from nature, as it is inborn in every person

• The human person is created to work, to till the soil, to raise cattle, to subdue the earth and its
natural resources

“Social responsibility, which is both corporate and governmental, means making an attempt to fill up
this vacuum in the human person.” (John Paul II, 1981)

WHAT IS THE RIGHT TO EQUAL EMPLOYMENT?

• Equality in employment embrace all without discrimination
• Employers cannot and should not discriminate in job application procedures such as hiring,
advancement, discharge of employees, employee compensation, job training and other privileges of
employment

REASONS WHY RIGHT TO WORK IS FUNDAMENTAL TO ALL:

1. PEOPLE WORRK TO SURVIVE – people have to work to satisfy some survival needs, those
unavoidable physical and biological necessities in life. Include the compulsion to live with honor and
dignity.

2. THE NATURAL OBLIGATION TO SUPPORT OUR DEPENDENTS – with work, entrepreneurship, or

any means of livelihood, we provide shelter, education and daily bread for our dependents.

3. PSYCHOLOGICAL – means we work to gain and maintain self-respect. In this sense, work
becomes the highway to develop oneself.

CONDITIONS OF DUE PROCESS = the right to due process is actually everybody’s basic right to be heard.
- it is socially responsible that management’s exclusive right to hire, fire, promote and demote is
balanced by the employee’s right to due process, which consists of a fair hearing, a chance to appeal and
an objective evaluation of his case.

PROCEDURE TO BE FAIR AND JUST THE FOLLOWING CONDITIONS MUST BE PRESENT:

1. CLEAR AND SIMPLE NOTICE OR RULES – it is the duty of the employer to give his workers clear
and simple notice of rules and regulations they
need to follow.

2. CONSISTENT ADMINISTRATION OF THESE RULES – employers should administer these rules and
regulations consistently and without discrimination.

3. FAIR AND IMPARTIAL HEARING – employers should provide a fair and impartial hearing to those
workers who are charged with having violated the rules.

4. OBJECTIVE DETERMINATION OF THE FACTS – employers should design, call and arrange a
hearing process the only purpose of which is to determine the truth as objectively as possible.

5. NON-LIABILITY OF THE INNOCENT – employers should not hold any worker liable for matters
over which he/she has no authority, jurisdiction, and control.

Moral Principle 4: SOCIAL JUSTICE

JUSTICE – refers to the disposition by which we render to each one what is due to him/her.
It is a complete disposition, a good habit, a virtue that urges the doer to give “what is
due to others”.
FORMS OF JUSTICE:

1. GENERAL JUSTICE – is directed to the “norms of right order”, specifically towards the promotion
of the common good.

Ex. Presuming the government is good and just, general justice is that virtue that demands all capable
citizens to pay proper taxes for the sake of the common good

2. DISTRIBUTIVE JUSTICE – disposes the legitimate authority to justly distribute the benefits and
burdens to particular individuals.

• It demands that the government distributes the tax burden properly, such that those who have
less in life are not overburdened with added loads

3. COMMUTATIVE JUSTICE - its main concern is the strict mathematical equality that requires us
to give to others what is due to them.
• Equal work, equal pay

4. SOCIAL JUSTICE - from the Christian point of view, requires the private sector, all business
institutions, NGOs, and government to acknowledge that the greatest benefits should go to the 4Ls:

4Ls
a. LESS FORTUNATE – less lucky, those who don’t have what we have

b. LEAST ADVANTAGED – the unskilled, those with less income

c. The lAST - the aged or the senior citizens

d. The lOST – those deprived of the right to honor and dignity

5. PUNITIVE JUSTICE (inflicting punishment)

Corporate citizenship in the workplace recognizes the right of management to apply punishment to the
delinquent and wrongdoers among employees. However the following must be observed:

a. Knowledge and freedom – we cannot punish or blame anyone who acted out of ignorance

Ex. If the rules and regulations are not clearly defined, we cannot blame the employee

b. Proven beyond reasonable doubt - an employee remains a suspect unless proven guilty
• Apply due process

c. Consistency - punitive justice requires that punishment must be consistent

• Give the same penalty for the same infraction

d. Proportionality - it is against justice to impose harsh penalty like outright dismissal for a minor
infraction of rules and regulations such as tardiness
ADVANTAGEOUS OF CSR INTO BUSINESS:
1. COMPANY BENEFITS:
•- Improved financial performance.
•- Lower operating costs.
•- Enhanced brand image and reputation.
•- Increased sales and customer loyalty.
•- Greater productivity and quality.
•- More ability to attract and retain good employees.
•- Reduced regulatory oversight.
•- Access to capital.
•- Workforce diversity.
•- Product safety and decreased liability.

2. BENEFITS TO THE COMMUNITY AND THE GENERAL PUBLIC:

•- Charitable contributions and social development.
•- Employee volunteer programs
•- Corporate involvement in community, education, employment and housing programs.
•- Consumer protection.
•- Product safety and quality.

3. ENVIRONMENTAL BENEFITS:
•- Greater material recyclability.
•- Better product durability and functionality.
•- Greater use of renewable resources.
•- Conservation and protection of species.
•- Integration of environmental management tolls into business plans, including life-cycle
assessment and costing, environmental management standards and eco-labeling.

NATIONAL COLLEGE OF BUSINESS AND ARTS

FAIRVIEW, QUEZON CITY

LECTURE NOTES IN GOOD GOVERNANCE & CSR

MIDTERM PERIOD
ETHICS DEFINED:
“ETHICS “ comes from the Greek word ethos, meaning character, or “a characteristic way of acting.”

“MORALITY” comes for the Latin word “moralis”, meaning customs or manners
Ethics – is a philosophical science dealing with the morality of the human act.
- Is knowing what is right and what is wrong

HUMAN ACT – is one that proceeds from the deliberate free will of man.
• Performed by a conscious agent who is aware of what he is doing and of its consequences
• Performed by an agent who is acting freely, that is by his own volition and powers
• Must be performed by an agent who decides willfully to perform the act

ELEMENTS DETERMINING MORALITY

Every human act derives its morality from three elements:
1. The act itself (“the object”):
In order to judge the morality of a human act, we must first consider the act itself.

2. Purpose or end (“the end”)

The specific human goal/purpose in business should be the full perfection of the human being as a
person.

3. Circumstances (“circumstances”)
There is an old saying, “circumstances alter cases”. This means that morality of the human act must be
judged in the light of the circumstances.

ETHICAL CONCERNS IN BUSINESS

Public Concerns about ethical practices in business usually relate to issues like embezzlement,
accepting bribes or poisoning the environment.

Managers’ ethical concerns are about relationships and responsibilities where correct decisions are not
perfectly clear, and there are no hard, fast rules to follow.

• One set of relationships and responsibilities is directly related to employees, and includes such
as discipline, performance appraisal, safety, and administration of reward systems

• Another set is concerned with customers and suppliers, and includes the intricate aspects of
such elements as timing, quality and price

• Ethical dilemmas also arise when managers have conflicts in values with superiors or peers over
such things as strategy, goals, policy and administration.

Whatever the viewpoint, good ethics means good business. Successful organizations and managers take
ethics seriously.

SOURCES OF ETHICAL VALUES

1. Experience as a source of values. Experience is a profound shaper of values.

2. Culture as a source of values. Our individual values spring from the core values of our culture.

A social scientist, suggest that these core values reflect a particular culture’s orientation to four
constant aspects of the human condition. These are:
a. Human nature orientation
b. Environment orientation
c. Time and activity orientation
d. Interpersonal orientation

3. Science as a source of values

4. Religion as a source of values

BUSINESS ETHICS - (also corporate ethics) is a form of applied ethics or professional ethics that
examines ethical principles and moral or ethical problems that arise in a business environment.

Fairness & honesty – the heart of business ethics

• How employees use resources
• No harm to customers
• Accurate representations
• Disclosure

BENEFITS OF BUSINESS ETHICS

• Employee commitment and trust
• Investor loyalty and trust
• Customer satisfaction and trust
• Long term profits

CORPORATE ETHICS
The role of a corporation in a capitalistic economy is so important that a study of business ethics
would not be adequate without a look at the moral problems that plague corporate management.

The ROLE OF THE BOARD OF DIRECTORS are responsible to spend money entrusted them wisely
and honestly and to distribute the profits equitably among the investors.

Unfortunately, not all men elected to the position of director loyally carry out their
responsibilities.

PRACTICES OF CORPORATE MANAGEMENT

Practices of corporate management that involve ethical considerations may be classified into
two:
1. Practices of the board of directors
2. Practices of Executive officers

PRACTICES OF BOARD OF DIRECTORS

Due to their influential positions as well as the responsibility entrusted to them by the stock
holders, the Board of Directors can act with little or no control provided by the stockholders.

1. Plain graft
• Manipulate the earnings of the corporation and route them to the class where they have the
most holdings
• They can reduce the earning of the other stockholders but increase their earnings
2. Disloyal Selling
• It’s a corporate practice that involves conflict of interest
• Often practiced by a person who holds directorial positions in two or more corporations that do
business with each other.

3. Insider Trading
• It occurs when a broker or another person with access to confidential information uses that
information to trade in stocks and securities

4. Routing Purchases Through Director’s Pocket

• In this practice, the Board of Directors of Company A creates a separate corporation (Company
B) where they are the controlling stockholders.

5. Negligence of Duty
• A failure of the members of the Board of Directors more common than breach of trust is neglect
of duties they have been elected for, that is to attend board meetings regularly.
• If they do not attend meetings, they betray the trust that the stockholders placed on them.

PRACTICES OF EXECUTIVE OFFICERS

To a lesser extent, executive officers are also guilty of unethical practices. Practices that are
more common to executive officers and lesser managers are:

1. Claiming a vacation trip to be a business trip

• The President or VP reports his vacation in the US as a business trip so he can get
reimbursement for his expense.

2. Having employees do work unrelated to the business

• Executive offices ask company employees to do personal things for them on company time.

3. Loose or ineffective controls

• Managers do not provide adequate controls to remove temptations and prevent or discourage
employees from engaging in unethical practices

4. Unfair labor practices

• Practices against the Labor Code

5. Making false claims about losses to free themselves from paying the compensation and benefits
provided by law.

6. Making employees sign documents showing that they are receiving fully what they are entitled
to under the law when in fact they are only receiving a fraction of what they are supposed to get
• Making employees sign a payroll which shows that they are receiving the minimum wage and
emergency-cost-of-living allowances even if they do not.

PRACTICES OF EMPLOYEES
When a person is employed by a company or an individual, he is under obligation:
a. to do a fair day’s work,
b. to conduct business transactions so that the rights of his employer to make a legitimate profit is
protected

c. To make business dealings so that there is no conflict of interest between himself and the right
of the company to profit from the transaction; and

d. To help his employer use his assts economically and wisely, making sure that supplies, materials,
equipment facilitates and money used for the purpose for which they were intended.

CONFLICT OF INTEREST
A conflict of interest arise when an employee who is duty bound to protect and promote the
interests of his employer violates this obligation by getting himself into a situation where his decision
or actuation is influenced by he can gain personally from it rather than what his employer can gain from
it.

COMMON EXAMPLES OF CONFLICT OF INTEREST ARE:

1. The employee accepts cash, a gift or a lavish entertainment or a loan from a supplier, customer,
competitor or contractor.

2. The employee uses or discloses confidential information for his or someone else’s personal gain.

3. The employer engages in the same type of business as his employer.

4. The employee uses for his own benefit a business opportunity in which his employer has or
might be expected to have an interest.

DISHONESTY
Business ethics is not just limited to business transactions with outside parties. It also covers
employee-employer relationship, especially with respect to an employee’s honesty as he carries out his
assigned duties in the office.

COMMON EXAMPLES OF EMPLOYEE DISHONESTY ARE:

1. Padding an expense account is now common among employees entitled to reimbursement

2. Punching another employee’s time card

3. Taking credit for another employee’s idea

SEXUAL HARRASSMENT

Republic Act No. 7877. “An Act Declaring Sexual Harassment Unlawful In The Employment, Education Or
Training Environment, And For Other Purposes”

This act further requires the employer or the head of the work-related, educational or training
environment or institution, to prevent or deter the commission of acts of sexual harassment and to
provide the procedures for the resolution, settlement or prosecution of acts of sexual harassment cases
and the administrative sanctions therefore.

MANIFESTATIONS OF SEXUAL HARASSMENT

• Touching including pats, hugs or akbay, cuddles, kissing or beso-beso, fondling pinches and
staring.
• Standing too close, bending over or extending legs or bodies over desks.
• Leering, watching women go up open staircases, making persistent eye contact.
• Gestures using hands, tongue, mouth, pieces of instrument, fondling of private parts.
• Suggestive comments about one’s body, clothes, personal lives, partners.
• innuendos, sexist or lewd remarks or jokes.
• Display of sexually explicit materials, sexual or sexist telephone calls, fax messages, e-mail,
letters or notes.

VERBAL SEXUAL HARASSMENT is more on the behavior that is coercive, unsolicited and embarrassing on
the part of the victim. Take note: Sexual harassment is not based on the perpetrator’s good feeling but
on the victim’s bad feeling.

THE SOCIO-EMOTIONAL DAMAGE THAT FOLLOWS:

1. Psycho-emotional stress – Though the woman is the victim, oftentimes she is made to feel
responsible for being sexually harassed. Stress-related illnesses, nervousness, forgetfulness,
sleeplessness resulting in irritability and depression are just a few bad results to mention.

2. A degrading aftermath – Sexual harassment also creates a distracting work environment which
may affect the competence and productivity of women. Successful women may instead become
suspects when people start asking questions like “ Did she sleep her way to the top.

3. Self-doubt – The overriding effect is when she begins to lose confidence in her ability to carry
out her job. She may believe she is responsible for the harassment, that she asked for it, provoked it,
wore the wrong dress, said the wrong things, or was in the wrong place at the wrong time.

4. Economic consequences – Many of the victims also reported devastating economic impact and
loss of income because of denied promotions, poor evaluations or transfers. Other women have
suffered work-related stress that made it difficult for them to concentrate on their work. Mental
anguish, depression, self-doubt, and other psychological effects that their toll so that most victims
frequently absent themselves from their jobs until they finally quit or are fired.

5. Breakdown of a relationship –Family members of the victim are also affected. To live with
someone who is frightened or worried about going to work, who is depressed or angry and constantly
losing temper over apparently minor events at home is an interpersonal problem. The presence of a
victim somehow creates distress in the family.

BUSINESS ENVIRONMENTAL RESPONSIBILITIES

ENVIRONMENTAL RESPONSIBILITY - is the duty that a company has to operate in a way that protects the
environment.
THE RIGHT TO A CLEAN ENVIRONMENT
This is the right of the consumer to:
• live in an environment that controls pollution to a minimum
• permits a life of dignity and well being
• safeguards the quality of the environment for future generation

What is Bribery?

•- Bribery is the giving of something of value to a person in a position of trust, who in turn violates
his/her duty or the law in order to benefit the giver.

•- A Bribe can be in the form of money or favor given or promised in order to influence the
judgment or conduct of a person in a position of trust.

•- Commercial Bribery is a “consideration” given or offered to an employee by a person outside

the firm with the understanding that when the employee transacts business, he/she will ideal favorably
with that person’s company.
Bribe vs. Facilitation Payments

•- Facilitation Payments – small payments to low-level government officials – enable or speed up a

process which is the officials job to arrange so business can be conducted without a hitch.

- Bribes generally involve payments to someone to pervert the course of business by taking
improper or illegal action.
•
• SIX-POINT APPRAISAL:
1. What is the value of the gift?

2. Is the gift intended or accepted as bribe?

3. What are the circumstances under which the gift was given?

4. What is the position of the recipient of the gift?

5. What is the locally accepted business practice?

6. What is the company’s policy?

DRIVERS OF BRIBERY

•- Ethical Relativism: In some cultures bribery is acceptable

•- To expedite the processing of an application

YOU SHOULD REMEMBER THAT:
1. There are universal values
2. Don’t confuse bad practice with culture
3. Respect culture without sacrificing values
4. People want those companies with strong CSR policy

BRIBERY IS SOCIALLY IRRESPONSIBLE!

•- It corrupts economic system, as it produces cynicism and a general distrust of business

institutions.

•- It treats people as commodities whose honor and integrity can be bought and sold like
disposable underwear.

•- It disturbs the commitment of the enterprise to contribute to the development of a good social
environment that provides quality goods and services vital to national growth and technological process.

EXTORTION: What is it?

•- It is any form of taking or obtaining property from another person by means of illegal
compulsion or oppressive exaction.

•- It is sometimes defined in its broader sense to include the obtaining of property from another
through a wrongful use of force or fear, or by pre-tense of right.

•- It is also used synonymously with blackmail, such as, for example, the extortion of money from a
person by threats of exposure or wrongdoing.

CONSEQUENCES OF BRIBERY AND EXTORTION

•- Betrayal of public and private trust.

•- It can smash up a company’s reputation and undermine its license to operate.

•- Corruption

•- Bribes get built into the cost of goods and services, thus hurting the consumers and taxpayers.

•- The cost of government services will be unusually high.

•- Entrepreneurs waste time and effort figuring out whom to bribe when they could be “inventing
something.”

•- It prevents an enterprising newcomer from entering the market,

•- Investors’ confidence in the rule of law is undermined, prompting them to build a higher
political-risk premium into their investment calculations.
NATIONAL COLLEGE OF BUSINESS AND ARTS
LECTURE NOTES IN BE2
FINAL PERIOD

WHISTLEBLOWING –is the disclosure by an employee of confidential information which relates to some
danger, fraud or other illegal or unethical conduct connected with the workplace, be it of the employer
or of his fellow employees.

FOUR ELEMENTS THAT ENCOMPASS WHISTLEBLOWING

1. The Disclosure be it intern al or external, must be in good faith;

2. The disclosure must be made by a current, former or prospective employee;

3. The information must be linked with misconduct on the part of the employer; and

4. Evidence of the misconduct should exist as well as information regarding the identity of the
wrongdoer.

TYPES OF WHISTLEBLOWING
1. Internal whistle blowing - occurs within the organization. It is going to “over the head of
immediate supervisors to inform higher management of the wrongdoing.”

2. External whistleblowing - occurs outside the organization. It is revealing to outside individuals

or groups such as media men, public interest groups, regulatory body or non government organizations.

3. Current – those who blow the whistle on present employers.

4. Alumni – those who blow the whistle on former employers.

5. Open – the whistleblower discloses his identity.

6. Anonymous – the whistleblower does not disclose his identity.

DEVELOPING GOOD WORK ETHICS

“Attitude is a little thing that makes a big difference”

-anonymous

A person’s attitude towards work determines the success or failure of one’s business or
personal enterprise.

WORK – is both a personal and a social activity.

 Is the “ use” or application of our physical powers to accomplish certain tasks.

HOW TO ENJOY WORK AND CREATE SPIRITUAL VALUES IN THE WORKPLACE

1. Practice the Golden Rule;
2. Guard your mouth;
3. Stop the green jokes;
4. Practice ethical behavior;
5. Learn to forgive;
6. Be generous;
7. Respect superiors and co-workers;
8. Be considerate;
9. Be a grateful person;
10. Be an inspiration to others.

SOME ETHICAL ISSUES AND PROBLEMS IN BUSINESS AND THE CORPORATE WORLD

1.THE PROBLEM OF JUST WAGE

Work and Compensation

Work is said to be for the purpose of obtaining economic gain for the laborer.
Being compensated for a work done or for services rendered is part of the essence of ”work”.

The main objective of compensation is to create a system of reward that is equitable to the employer
and employee.

The Catholic Church teaches us that “a just wage is the legitimate fruit of labor.”

TYPES OF WAGES

1. Family Wage - the amount of money that the worker needs to provide for the need of the
family.

2. Living Wage – minimum hourly wage necessary for a person to achieve some specific standard
of living.

3. Minimum Wage – refers to the minimum rate a worker can legally be paid as set by the statute
or government.

4. Just Wage - is defined as that remuneration which is enough to support the wage-earner in
reasonable and frugal comfort.

5. Real Wages – measured in terms of actual purchasing power (inflation)

6. Nominal Wages – measured in terms of money paid, not in purchasing power.

SOME ISSUES ON JUST WAGE

1. The minimum wage mandated by the government is not a guarantee of a just and fair wage.

2. Organizations and businesses usually conclude that they are legally and morally right when they
fulfill their “ mutual agreement” with the employees.

3. Geographic differences hinder the formulation of a perfectly common definition of fair wage.
• Some communities have a higher cost of living than others

4. Wage indexation to cost of living

• Wage is automatically adjusted with the increase of cost of living, is not usually met by the
majority of the employers.

5. Companies have different interpretations of the justifiable pay for certain job positions, skills
and tasks.

6. The Law of Supply and Demand on labor

• E.g. the more the supply of labor, the less the compensation being given to workers

7. Inflation rate – as one of the major economic indicators, the inflation rate also dictates the
formulation of just wages as it affects the prices of commodities.

THE PROBLEM OF GIFT GIVING AND BRIBERY

GIFT GIVING –is merely an act of extending goodwill to an individual in an effort to share something
with them.
• Giving gift to customers, clients, and business partners is a common practice in the business
community
• It is normally observed during special occasions like Christmas, New Year, and sometime even
during birthdays.

BUSINESS USUALLY ENGAGE IN GIFT GIVING FOR THE FOLLOWING RESASONS

• To show appreciation for a favor received;

• To effectively establish goodwill with business partners;
• To advertise;
• To compete effectively against competitors.

COMMON FORMS OF GIFT GIVING:

• Samples
• Raffle coupons/certificates
• Rebates/cash refunds
• Padding
• Premiums
• Prizes
• Patronage awards (rewards)
• Tie-up promotions
• Allowance
• Free goods
• Tips

Is Gift-giving Ethical or Unethical?

Business gifts of clients and business associates can raise conflict-of-interest problems, and
knowing where to draw the line , but what is right and wrong, is not always easy. The clear point is that
those who cross that line, intentionally or not, end up in big trouble.

EXAMPLE:

Linda, a former client, has steered a half dozen prospective clients your way this year, and
several of them have become valued clients of your firm. Would it be an appropriate gesture, to thank
her by inviting her and her husband out for dinner?

FACTORS IN DETERMINING THE MORALITY OF GIFT GIVING

1. Value of the Gift

Is the gift of nominal value, or is it substantial enough to influence a business decision?
From the majority point of view, a valuable gift is definitely unethical.

2. Purpose of the Gift

As long as the gift is not intended or received as a bribe and remains nominal, there doesn’t appear to
be any serious problem.

3. Circumstances under Which the Gift Was Given or Received

A gift given during holiday season, for a store opening, or one attached to a special event is
circumstantially different from one unattached to any special event or occasion.

4. Position between or Relationship of the Giver and Receiver

In a superior and subordinate relationship, for instance, the donors or the recipients have to make I
clear that they don’t intend to allow gift to influence their actions and decisions.

5. Acceptable Business Practice in the Industry

Could the act be considered acceptable in this kind of business? When gratuities are an integral part of
customary business practice, they are far less prone to pose moral questions.

6. Company Policy
If firms explicitly forbid the practice of giving and receiving gifts to its customers, vendors or suppliers,
associates, or corporate directors, then gift giving would normally be wrong.

7. Laws and Regulations

Certain federal, state or local government institutions may impose laws that forbid accepting gifts from
firms with which they do business.
BRIBERY - is defined as a practice of giving remuneration for performance of an act that is inconsistent
with the work contract or the nature of the work one has been hired to perform it.

3.THE MORALITY OF ADVERTISING

Advertising – is defined as any paid form of non-personal presentation and promotion of ideas, goods,
or services by an identified sponsor. (Philip Kotler, the famous marketing guru)

SOME ISSUES IN ADVERTISING

1. Deceptive Advertising
Deceptive ads are those which either make a false statement and therefore, lie, or which represent the
product without making any statement.

2. Use of “Weasel Words”

Weasel words are used to avoid or recoil from a direct or straightforward statement. It is for this reason
that ambiguity becomes a serious moral concern in advertising.

3. Exaggeration
Exaggeration occurs when advertisements tend to make false claims of the benefits of the goods or
services which is actually unsupported by valid evidence.

Consumers might also be misled through exaggeration.

4. Psychological Appeals
Richard F. Taflinger defines psychological appeal as a visual or aural influence on the subconscious
mind and emotions.

Advertisers play on several different tactics to get people interested in their products. There are some
advertisements that are directed at arousing human emotional needs rather than reason.
This is one area in advertising that represents a serious moral concern.

5. Ads Directed at Children

Most Advertisers have recognized that advertising to children is effective ad eventually became a big
business recently.

The aim of advertisers is for the children to pester their parents to buy things for them. Children
generally remember what they see.

One advertising expert said that kids are the most pure consumers in that they tend to interpret ads
literally.

Since children are highly susceptible to misleading advertising there is a need to protect them from
possible manipulation that leads to the kind of role advertising must play in a society dominated by the
media.

6. The Problem of Fair Pricing

On the side of the buyer, price is an equivalent given or asked in exchange of value or cost.
On the side of the seller, it is the amount that the business charges its customers for a product or
service – which is part of the firm’s total cost of investment in view of the firm’s target market.

ETHICAL ISSUES IN FAIR PRICE

a. The true cost of the product is concealed

Some companies normally don’t show the real cost of the product

b. Suggested retail price

The impact on the consumers of a suggested retail price is one that is open to a lot of interpretations.

c. Use of electronic scanners

The use of electronic scanners in grocery or department stores is not a foolproof method for pricing
fairly.

d. Promotional pricing
Promo prices such as on sale items manipulate consumers in buying products that are thought to be
cheaper.

e. Follow the leader pricing

Follow the leader pricing is done purposely make the buyers believe that what is being sold is the same
as the well-known brands.

f. Price gouging
Price gouging takes advantage of an economic situation.

g. Price fixing
Price fixing uses the power of the retailer among the producers correspondingly in controlling product
price.

REFORMS AND STANDARDS

AN ADMINISTRATIVE REFORM - is a conscious, well-considered change that is carried out in a public

sector organization or system for the purpose of improving its structure, operation or the quality of its
workforce.

According to Caiden (1968), “Reform is based on the simple idea that man should not wait for changes
to take place naturally but should seek to speed, by artificial means, improvements in the world order.”

IMPERATIVES FOR REFORMS

Global competitiveness, environmental concerns, changing political climate, the rise of civil society, and
paradigm shifts in the role of government have influenced, if not pushed, the Government to institute
administrative reforms.

A. Global competitiveness
• Countries can no longer afford to seclude themselves from a world-wide network
• This competitive advantage is the key which opens the windows of opportunity for countries to
acquire more wealth, gain security and achieve greater standing among nations.

B. Environmental concerns
• Prompted by the alarming deterioration of the environment and inspired by the Global
Conference on Environment and Development in 1992, the Philippines was among the first countries to
formulate a national programme for sustainable development.

C. Changing political climate

• Since June 1992, the Philippines has undergone five major electoral processes which tested the
nation’s democratic system.
• The first and most crucial of these was the presidential election, since this was expected to set in
motion all the reforms that were to take place over the subsequent five years.
• In the following four electoral exercises under the term of President Fidel V. Ramos, the political
system showed vitality to an extent never before seen in recent Philippine history.

D. Rise of civil society

• The Philippine Government has pursued institution-building and effective people’s participation
in governance.
• In an extremely important step, the Government institutionalized the involvement of NGO/Pos
(People’s Organizations) and basic sectors in policy and decision-making on social reform through
membership in the Social Reform Council, which oversees the implementation of the Social Reform
Agenda of the present Administration.

E. Paradigm shift in the role of government

• The serious recession in the Philippines which resulted in the Gross National Product’s dropping
to near-zero in 1991, and consequent financial constraints have forced the Government to take a closer
look at its functions with a view to reducing public expenditures.
• The clear goal was to tread a path to economic recovery and sustained growth.

LABOR STANDARDS - refers to the minimum requirements that an employer shall provide to the workers
pursuant to provisions of the Labor Code of the Philippines, as amended, the Occupational Safety and
Health Standards (OSHS), and other applicable laws, rules and regulations.

GENERAL LABOR STANDARDS

A. Wages
1. The applicable Minimum Wage.
2. Payment of Wages
* Wages shall be paid in cash, legal tender at or near the place of work.
* Payment shall be made directly to the employees.
* Wages shall be given not less than once every two weeks or twice within a month at
intervals not exceeding 16 days.

B. 13th Month Pay (PD 851, as amended by Memorandum Order No. 28 issued by President Corazon
C. Aquino on August 13, 1986)
C. Overtime Work
D. Night Shift Differential
E. Holiday
F. Rest Day
G. Service Charges
H. Service Incentive Leave (SIL)
I. Weekly Rest Period
J. Paternity Leave
K. Maternity Leave
L. Retirement Pay
M. Benefits and Privileges to Solo Parents

LEGISLATION – is a law, body of laws, or the process of making laws

AN ORDINANCE- is a law passed by a municipal government.

Many ordinances deal with maintaining public safety, health, morals, and General Welfare.

• For example, a municipality may enact housing ordinances that set minimum standards of
habitability.
• Other ordinances deal with fire and safety regulations that residential, commercial, and
industrial property owners must follow.
• Many municipalities have enacted noise ordinances, which prohibit prescribed levels of noise
aftercertain hours of the evening.

ORDINANCE VIOLATIONS - are charges issued by municipal governments for violations of local
municipal rules. They are not considered criminal matters. They are not recorded as criminal charges
and no criminal record results from an ordinance violation conviction.

Reference: Business Ethics and Social Responsibility by Fr. Florencio C. Roa

https://www.scribd.com/doc/.../Philippine-General-Labor-Standards

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Francis of Assisi

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