ETHICS
SESSION 1
Ethics
- Aka MORAL PHILOSOPHY
- Systematizing, defending, recommending
concepts of right and wrong
Business Ethics
- Study of proper business policies and practices
regarding potentially controversial issues such
as corporate governance, insider trading,
bribery, discrimination, corporate social
responsibility, and fiduciary responsibilities
Social Responsibility
- Businesses should balance profit making and
activities that benefits society
- Developing a positive relationship in the society
in which they operate
SESSION 2
Governance is not only about steering but also about
who should be involved in deciding, and in what
capacity.
- Steering – controlling the direction; moving or
guiding in a particular direction
- exercise of power or authority by political
leaders for the well-being of their country’s
citizens or subjects.
- essentially means the process of decision-
making and implementation
- manner in which the organizations involved
relate to each other
Areas of Governance
1. Governance in “global space”
Global governance or world governance is a
movement towards political cooperation among
transnational actors, aimed at negotiating
responses to problems that affect more than one
state or region. Institutions of global governance—
the United Nations, the International Criminal
Court, the World Bank, etc.—tend to have limited or
demarcated power to enforce compliance. The
modern question of world governance exists in the
context of globalization and globalizing regimes of
power: politically, economically and culturally.
2. Governance in “national space”
Within a country: this is sometimes understood as
the exclusive preserve of government, of which
there may be several levels: national, provincial or
state, indigenous, urban or local
3. Governance in “organization space”
This comprises the activities of organizations that
are usually accountable to a board of directors. 
4. Governance in “community space”
Community Governance - this includes activities at a
local level where the organizing body may not assume a
legal form and where there may not be a formally
constituted governing board
“Community governance” refers to the processes for
making all the decisions and plans that affect life in the
community, whether made by public or private
organizations or by citizens.
Corporate Governance (Private Sector)
- refers to the system of direction and control of
business corporations
Public Governance
- refers to the method through which power is exercised
in the management of the country’s political, economic
and social resources for development (World Bank,
1992).
Governability refers to management of the people or
the extent to which societal institutions and spheres can
be steered. Basically, it could mean the ability of the
people to govern and to be governed.
There can be good governance when government is
manned by people who have the ability to govern and
when the people themselves are willing and allow
themselves to be governed.
It means that government leaders have the capacity,
capability and spirit to serve as civil servants. On the
other hand, the people themselves must be willing to
give up some of their “rights” and privileges for the
government to be able to act.

The Governance Framework
State
Civil
Market
society
The Government/State
- creating a favorable political, legal and economic
environment
- The Institution, that is, the establishment that
governs.
- The group of people that control a country, that is,
the elected and appointed officials that lead.
- The people, that is, the citizens and constituencies
that compose the country.
- A system of people, laws and officials that define
and control the country/state.
- Investment Policies such as tax incentives and
efficient operations such as streamlined business
processes application must be in place.
- This obligation of the government finds legal basis
from the Philippine Constitution, Art. II, Section 20
which states:
Section 20. The State recognizes the indispensable
role of the private sector, encourages private
enterprise, and provides incentives to needed
investments.
 The Market
- Creating opportunities for people. Labor intensive
businesses are best to create employment
opportunities for people. Moreover, their
employment must come with just wages in order for
the people to have decent lives
- the area of economic activity in which buyers and
sellers come together and the forces of supply and
demand affect price
- the business sector and the private sector
Civil Society
- Mobilizing peoples’ participation, cooperate with
the government but also hold government and
market/business accountable.
- defined as a community, nation, or broad grouping
of people having common traditions, institutions,
and collective activities and interests
- includes political parties, interest groups, non-
governmental organizations, the media, the
academe and the church, among others
The right to hold the government accountable finds
legal basis from the Philippine Constitution specifically:
  Art. II, Section 1. The Philippines is a democratic and
republican State. Sovereignty resides in the people and
all government authority emanates from them.
Art. II, Section 27. The State shall maintain honesty and
integrity in the public service and take positive and
effective measures against graft and corruption.
  Art. II, Section 28. Subject to reasonable conditions
prescribed by law, the State adopts and implements a
policy of full public disclosure of all its transactions
involving public interest.
The Relationship among Government, Market and Civil
Society
If government wants to encourage investment
opportunities, it must provide an enabling environment
for business to thrive.
For example, the peace situation must be stable and
there is no threat of kidnapping of rich businessmen for
ransom or bombing. Applying for a business permit
must be easy and taxes must not be prohibitive. If the
people/civil society want the government to be not
corrupt, it must not offer or pay bribes to government
officials and report and testify against those who are
corrupt so that they can be prosecuted. If the
people/civil society want the business sector to engage
in good business practices such as paying their
employees just wages, they should patronize those that
practice good business and boycott those that employ
illegal practices. For example, if a mall or department
store does not pay the correct taxes to the government
or engages in child labor, the customers must not
patronize such business.

SESSION 6
ORGANIZATIONAL ISSUES
Workplace Romance
- relationship that occurs “between two members
of an organization where sexual attraction is
present, affection is communicated, and both
members recognize the relationship to be
something more than just professional and
platonic.”
- voluntary and reciproal
- no law prohibiting workplace romance, but
there are companies whose guidelines prohibit
it because of its negative effects.
Advantages:
1. Happily In Love Makes You A Good Worker
2. Motivation To Start Each Day
3. Positivity Everywhere
4. Less Distractions
5. Mutual Understanding of Professional Pressures
Disadvantages:
1. Commingling Of Personal And Professional Life
2. What If It Ends?
3. Think About Promotion
4. Work Is No More An Escape
5. Excess Of Everything Is Bad
Sexual Harassment
They are unwelcome sexual advances, requests for
sexual favors, and other verbal, visual or physical
conduct of a sexual nature. It is considered harassment
when:
• submission to the conduct is either explicitly or
implicitly a term or condition of employment,
• submission to or rejection of such conduct is
used as the basis for employment decisions, or
• the conduct has the purpose or effect of
unreasonably interfering with an individual’s
work performance or creating an intimidating,
hostile, or offensive working environment.
• Unwelcome and unwanted sexual conduct that
either happens repeatedly or is of serious
nature (e.g. sexual assault)
Legal Basis for Sexual Harassment
(Philippine Commission on Women)
Republic Act 7877- Anti-Sexual Harassment Act of 1995
SECTION 3. Work, Education or Training -Related,
Sexual Harassment Defined. - Work, education or
training-related sexual harassment is committed by an
employer, employee, manager, supervisor, agent of the
employer, teacher, instructor, professor, coach, trainor,
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.
(a) In a work-related or employment environment,
sexual harassment is committed when:
(1) The sexual favor is made as a condition in the
hiring or in the employment, re-employment or
continued employment of said individual, or in
granting said individual favorable compensation,
terms of conditions, promotions, or privileges; or
the refusal to grant the sexual favor results in
limiting, segregating or classifying the employee
which in any way would discriminate, deprive or
diminish employment opportunities or otherwise
adversely affect said employee;
(2) The above acts would impair the employee's
rights or privileges under existing labor laws; or
(3) The above acts would result in an intimidating,
hostile, or offensive environment for the employee.
(b) In an education or training environment, sexual
harassment is committed:
(1) Against one who is under the care, custody or
supervision of the offender;
(2) Against one whose education, training,
apprenticeship or tutorship is entrusted to the
offender;
 (3) When the sexual favor is made a condition to the
giving of a passing grade, or the granting of honors
and scholarships, or the payment of a stipend,
allowance or other benefits, privileges, or
consideration; or
(4) When the sexual advances result in an
intimidating, hostile or offensive environment for the
student, trainee or apprentice.
Any person who directs or induces another to
commit any act of sexual harassment as herein
defined, or who cooperates in the commission
thereof by another without which it would not have
been committed, shall also be held liable under this
Act.
Elements
1) The employer, employee, manager, supervisor,
agent of the employer, teacher, instructor,
professor, coach, trainor, or any other person has
authority, influence or moral ascendancy over
another;
2) The authority, influence or moral ascendancy
exists in a working, education or training
environment;
3) The employer, employee, manager, supervisor,
agent of the employer, teacher, instructor,
professor, coach, or any other person having
authority, influence or moral ascendancy makes a
demand, request or requirement of a sexual favor.
Just Wage, Labor Union, Unfair Labor Practice and
Strikes
KINDS OF WAGES
JUST WAGE
- wage level for a job that is set by market
dynamics and justified by the requirements in
terms of the worker's experience, education,
and skills. Justified wage is the wage level that is
high enough to attract workers but low enough
to enable employers to offer employment.
MINIMUM WAGE
- mandated by the government to be given to a
worker for an 8 hour work. The minimum wage
differs from region to region and is set by the
Regional Tripartite Wages and Productivity
Board (RTWPB) composed by representatives
from government, the business sector and the
labor unions.
LIVING WAGE
- is a theoretical wage level that allows the
earner to afford adequate shelter, food and the
other necessities of life. The living wage should
be substantial enough to ensure that no more
than 30% of it needs to be spent on housing.
LABOR ORGANIZATION
It is an employee union or association existing in whole
or in part for the purpose of collective bargaining or of
dealing with employers concerning terms and
conditions of employment.
Although the employer follows certain business laws
they still need as well to take note of the needs and
welfare of their employees by that the government
mandated organization to allow employees created
their own Labor Union.
Labor Unions of an organization is filed in DOLE for its
legitimacy, personality (rationale or background), and
has the right privileges to
1. As representative of any employee or
employees.
2. Conducts the employee collective bargaining for
policies and protocols that have been
implemented and will be implemented.
3. Takes care of the employees’ welfare and
rights..
Presidential Decree No. 442 Labor Code of the
Philippines, Book Five Labor Relations, Art. 211.
Declaration
It is the policy of the State:
1. To promote and emphasize the primacy of free
collective bargaining and negotiations, including
voluntary arbitration, mediation and
conciliation, as modes of settling labor or
industrial disputes;
2. To promote free trade unionism as an
instrument for the enhancement of democracy
and the promotion of social justice and
development;
 3. To foster the free and voluntary organization of
a strong and united labor movement;
Art. 247. Concept of unfair labor practice and procedure
for prosecution thereof. Unfair labor practices violate
the constitutional right of workers and employees to
self-organization, are inimical to the legitimate interests
of both labor and management, including their right to
bargain collectively and otherwise deal with each other
in an atmosphere of freedom and mutual respect,
disrupt industrial peace and hinder the promotion of
healthy and stable labor-management relations.
KINDS OF STRIKE
When management violates the CBA, the workers go on
a labor strike. Labor Strike is work stoppage caused by
the mass refusal of employees to work which usually
happens during collective bargaining or when the CBA is
violated.
Last resort and presupposes that the duty to bargain in
good faith has been fulfilled and other voluntary modes
of dispute settlement have been tried and exhausted.
Unfair Labor Practices Strike is one called to protest
against the employer’s acts of unfair labor practice
enumerated in Article 248 of the Labor Code, as
amended, including gross violation of the collective
bargaining agreement (CBA) and union busting.
Slowdown Strike is one staged without the workers
quitting their work but merely slackening or by reducing
their normal work output.
Wild-cat Strike is one declared and staged without filing
the required notice of strike and without the majority
approval of the recognized bargaining agent.
Sit Down Strike is one where the workers stop working
but do not leave their place of work.
Economic Strike is one staged by workers to force wage
or other economic concessions from the employer
which he is not required by law to grant.
• Can be resolved by collective bargaining of the
employees or the wage labors
• If an employer exhibits unfair practices or working
conditions
Agency Problems, Disclosures and Corporate
Governance
AGENCY PROBLEMS
The agency problem arises in a situation where an agent
(i.e. a director of a company) does not act in the best
interests of a principal (i.e. a shareholder). When a
principal chooses to act through others and its interest
depends on others, it is subject to an agency problem.
“The problem lies in motivating the agent to act in the
principal’s interest rather than simply in the agent’s
own interest.”
CORPORATE DISCLOSURE
Corporate disclosure is information public companies,
mutual funds and corporate insiders are required to tell
the investing public.
This is required by law such as the Annual Report.
Contents of the annual report must include but are not
limited to:
• The financial and operating results of the
company
• Company objectives
• Major share ownership and voting rights
• Members of the board and key executives and
their remuneration
• Material foreseeable risk factors
• Material issues regarding employees and other
stakeholders
• Governance structures and policies
A strong disclosure regime is a pivotal feature of
market-based monitoring of corporate conduct and is
central to the ability of shareholders to exercise their
voting rights effectively. Experience in countries with
large and active equity markets shows that disclosure
can also be a powerful tool for influencing the
behaviour of companies and for protecting investors. A
strong disclosure regime can help to attract capital and
maintain confidence in capital markets. Shareholders
and potential investors require access to regular,
reliable and comparable information in sufficient detail
for them to assess the stewardship of management and
make informed decisions about the valuation,
ownership and voting of shares. Insufficient or unclear
information may hamper the ability of markets to
function, may increase the cost of capital and result in a
poor allocation of resources.
 The purpose of requiring disclosures is to inform the
investing public about the performance, similarity of
purpose and risks that may be attendant to investing in
the company. For example, an environmentalist would
not feel comfortable investing in a company that invests
in mining and engage in practices that contribute to
environmental degradation. Or, a human rights activist
would not invest in a company whose CEO or other
officer is facing a case for sexual harassment. Good
corporate governance disclosure, however, typically
includes voluntary disclosures providing information
over and above the minimum statutory or regulatory
requirements.
CONFLICT OF INTEREST
"Conflict of interest" is a situation in which personal
and/or financial considerations have the potential to
influence or compromise professional judgment in
clinical service, research, consultation, instruction,
administration, or any other professional activity. In
most cases, this involves a breach of the person’s duty
of loyalty to their corporation or business organization.
1. “Self-Dealing”
Self-dealing occurs when a director or officer
enters into a transaction with another organization that
benefits the officer to the damage of the company.
Conflicts like these are sometimes called “usurping
corporate opportunities”
2. Issues with Gifts
Many business laws prohibit officers from
receiving gifts from persons with whom the company
does business. Gifts include both tangible items and
non-tangible assets (like transportation and lodging
costs)
3. Outside Employment Conflicts
If a corporate official is employed with more
than one company, their interests in one job can’t
conflict with those of the other
4. Confidential Information
Confidential information can’t be used for one’s
own advantage, especially those relating to trade
secrets, insider trading, and other types of securities
violations
5. Family Interests
This is where a child, spouse, or other close relative is
hired based on their relation to the director or officer.
A conflict of interest based on family relations is called
“nepotism”, and can also involve unfair distribution of
gifts like increased salaries and benefits.
Nepotism - the practice among those with power or
influence of favoring relatives or friends, especially by
giving them jobs.
TRADE SECRET
A trade secret is a formula, practice, process, design,
instrument, pattern, commercial method, or
compilation of information not generally known or
reasonably ascertainable by others by which a business
can obtain an economic advantage over competitors or
customers.
INSIDER TRADING
Insider trading is buying or selling the securities of a
publicly traded firm by an insider to benefit from insider
information.
It is also called insider dealing.
Insider trading is not always illegal such as the
corporate insider is buying or selling his/her own
securities. It becomes illegal when stock market
transactions are made with knowledge of nonpublic
information about corporate activity that might
influence the buying or selling by the shareholders who
do not know such information.
Core Principles of Good Governance
1. Fairness
Each decision made requires balancing the
interest of different stakeholders. Fairness expresses
the just and reasonable treatment of the stakeholders,
free from discrimination and according to the rules and
principles of the corporation. Fair practices are able to
establish long-term relationships which are critical to
sustain the development of the corporation.
2. Accountability
 Each decision-maker in the corporation should to look for the company’s direct competition and
assume complete responsibility to take initiative and be prevent disclosure of confidential information.
answerable for his/her decisions, actions, and
The agreement may include exclusion to approach the
behaviors.
company’s clients for a specific period of time.
3. Transparency
Finance and Accounting (Transparency)
Transparency is the openness and willingness by
Accounting policies deals with how money is
the company to provide clear, factual, and timely
handled in the company and how acquisitions and
information that accurately reflects the financial
liabilities are recorded. A well-managed finance
situation, performance, ownership and corporate
department should have clear guidelines on purchases,
governance of the company.
petty cash disbursements, and recording.
Trust from the stakeholders can be gained only
through transparency.

Stakeholders should be informed about the

company’s activities, its plans in the future, and the
risks involved in its strategies. All these will help
stakeholders have confidence in the corporation.

Common Practices in Business Organizations

Employee Conduct (Accountability)

Employee conduct policy sets the duties and

responsibilities each employee must follow as condition
of employment.

Equal Opportunity (Fairness)

Equal opportunity laws are policies that

promote fair treatment in the workplace. Companies
are expected to advocate anti-discriminatory policies
and encourage unprejudiced behavior within
workplace.

Attendance and Time Off (Accountability and Fairness)

Attendance policies not only outline employees’

responsibility to adhere to work schedules but also
define how employees may schedule leaves and
notification of an abuse or late arrival. It is also the
disciplinary action employees face for compliance.

Computer Use (Transparency and Accountability)

Companies may implement policies governing

the use of computers and internet in the workplace to
limit unnecessary and time-wasting internet surfing and
social media usage.

Noncompetition (Fairness)

Companies require employees to sign a non-

compete agreement that limits the employee’s activity