BUSINESS ETHICS

AND SOCIAL
RESPONSIBILITY
 UNIT I:
The Role of Business in
Social and Economic
Development
 LESSON 3
Core Principles of
Fairness, Accountability,
and Transparency
 Lesson Objectives
• To explain the meaning of fairness, justice,
accountability, stewardship, and transparency
• To explain the notion of competence,
professionalism, and responsibility
• To explain the relationship of accountability,
stewardship, and responsibility with ethical
businesses
• To explain the notion of organizational diversity
and the role of women in business organizations
 Accountability: What It Is
• To be accountable is to be liable to explain or
justify one’s actions and decisions.
• Accountability is the process of explanation
and justification.
• Holding to account is the process of requiring
explanation and justification, but it is also
about testing, forming a judgment, and if
necessary, taking action.
• Accountability implies responsibility: it is
reasonable only to hold people to account for
those things for which they are responsible.
 Accountability: What It Is Not
• It is not synonymous with responsibility.
• It does not imply a management relationship.
• It is not a “one off” annual event.
• It is not the same as appraisal.
• It is not about confrontation, “putting someone
in his/her place” or “giving him/her a hard
time.”
Why Is Accountability Important?
 Sound accountability structures are the most
important aspect of prevention and detection
of corruption.
 A civil society organization without proper
accountability systems is fragile and open to
rumors about mismanagement and abuse of
power.
 Worst of all, it will prevent it from enjoying
respect and full legitimacy in the eyes of its
stakeholders including those duty bearers
whom it intends to engage with advocacy.
Accountability in the Context of a
Business Organization
Accountability is the obligation to demonstrate
that work has been conducted in compliance with
agreed rules and standards or to report fairly and
accurately on performance results vis-à-vis
mandated roles and/or plans.
 Fairness in the Context of a
Business Organization
Fairness involves balancing the interests
involved in all decision-making including any
decisions related to hiring, firing (including the
investigatory process), and the compensation
and rewards system.
Overall, fairness has to do with justice, which is to give to another that
which is due him or her. More concretely, justice: (1) looks at the
balance of benefits and burdens distributed among members of a
group; and/or (2) can result from the application of rules, policies, or
laws that apply to a society or a group. In general, the just results of
actions override utilitarian results.
Transparency in the Context of a
Business Organization
 On the organizational level, the instrumental
salience of transparency is referred to in two
instances (Caritas in Veritate (CV) 47, 65). In
the first case (CV 47), transparency is
identified as an important mechanism for
guaranteeing social accountability. The
discussion is focused on the role that
transparency plays in international and
nongovernment organizations (NGOs) working
in humanitarian projects.
 This understanding of transparency as a
means for organizational accountability is
consistent with previous Catholic Social
Thought (CST) documents. Appropriate
information disclosure, such as the
percentage of funds directly used to help
people, the activities and the results achieved,
and how these organizations’ budgets are
distributed among different organizational
functions, is necessary to inform donors about
how their money is used by these
organizations.
 Transparency allows stakeholders to
understand whether the activities of social
institutions, such as international
organizations and NGOs, provide a genuine
service to civil society and whether money is
used appropriately.
 Minimum Competencies
Expected of Professionals
1. Technical Skills
They encompass the ability to apply specialized
knowledge or expertise, both that which is learned
through extensive formal education and that which
is developed on the job.
The first and most basic necessary skill for a working
professional is solid competence in the human
sphere, in the sphere of work.

Such competence requires the following characteristics: (a) human

maturity—a person works not only hard and solidly but also efficiently,
that is, with professionalism; and (b) work is done in a spirit of
service and love for those around us (social dimension of the work).
2. Human Skills
These pertain to the ability to understand,
communicate with, motivate, and support other
people, both individually and in groups, which
defines human skills.
The working professional also
needs “relational intelligence (RI)” RI is based on a combination
in order to connect and interact of emotional intelligence and
effectively and respectfully with “ethical intelligence.”
people and stakeholders from
various backgrounds, diverse
cultures, and with different
interests, inside and outside the
organization, and to build lasting
and trustful relationships.
3. Conceptual Skills
These are the skills and the mental ability that
managers must have to analyze and diagnose
complex situations.
 The Notion of Responsibility
 Commercial viability and long-term business
success depend on the ability of a firm and
their leadership to act responsibly with
respect to all stakeholders in business,
society, and the environment.

Responsibility here means to make sure that the company’s

products and services meet the needs of the customers and
clients, that they are safe and not harmful, and that real and
potential risks are openly and transparently communicated.
 Part of the responsibility of the worker is to be
trustworthy.
Employees demonstrate that they
have integrity, benevolence, and
ability in situations where trust is
important.

Trust can also be won in the ability

domain simply by demonstrating
competence.
 Businesses also support the well-being of
members of society through their other key
functions.
Good businesses carefully avoid
actions that undermine the local or
global common good.

These businesses actively seek

ways to serve genuine human
needs within their competence and
thus advance the common good.

In some cases they actively

promote more effective regulation
on a regional, national, or
international level.
 Who Are Servant Leaders?
• They go beyond their own self-interest and
focus on opportunities to help followers grow
and develop.
• They do not use power to achieve ends.
Instead, they emphasize persuasion.
• Their characteristic behaviors include
listening, empathizing, persuading, accepting
stewardship, and actively developing
followers’ potential.
 What Are the Effects of Servant
Leadership?
• One study found it has resulted in higher
levels of commitment to the supervisor, self-
efficacy, and perceptions of justice, which all
were related to organizational citizenship
behavior (OCB).
• It increases team potency (a belief that one’s
team has above-average skills and abilities),
which in turn leads to higher levels of group
performance.
• Another study has found higher levels of
citizenship associated with a focus on growth
and advancement, which in turn was
associated with higher levels of creative
performance.
 Components of an Effective,
Comprehensive Workforce
Programs That Encourage Diversity
1. They teach managers about the legal
framework for equal employment opportunity
and encourage fair treatment of all people
regardless of their demographic
characteristics.
2. They teach managers how a diverse
workforce will be better able to serve a
diverse market of customers and clients.
3. They foster personal development practices
that bring out the skills and abilities of all
workers, acknowledging how differences in
perspective can be a valuable way to improve
performance for everyone.
 Women in Organizations
Findings appear to show that:

1. Firms employing more women managers

have probably done a better job of recruiting
capable managers from the total available
talent pool, and consequently will be in a
better position to link with customers,
employees, and other constituencies.
2. Firms having a higher proportion of women
serving on their boards do engage in
charitable giving to a greater extent than firms
having a lower proportion of women serving
on their boards.
3. Investors (in Singapore) value the diversity
and potential contribution of women on the
board of directors, that is, the appointment of
female directors may be viewed as a means
of improving corporate governance of firms
whose boards may be dominated by old-boys
networks, besides adding to the diversity of
corporate boards.
4. Since women represent a significant
proportion of the customer base in many
corporations, the presence of female directors
would bring the female perspective to the
boardroom and positively impact the bottom-
line of companies, as explained by evidence
that male CEOs find the viewpoints of female
directors beneficial in understanding female
clients.
 Discussion Questions
1. How do you define the terms fairness, justice,
accountability, and transparency?
2. How do you define the terms competence,
professionalism, and responsibility? Why do
you need to be competent in your job?
Explain the basic skills needed in the
workplace.
3. What is stewardship? How can you be a good
steward of your home, your school, your
workplace, and the environment?
4. What is organizational diversity? What is the
role of women in business organizations?