Business Ethics Quiz

Module 3 - Code of Ethics

• This module covers Business Ethics & Social Responsibility in Accountancy, Business and Management, module 12.
• The module number is 3.
• The school is City National High School, Bayog, 2007.
• Contact information is provided: (055) 209 1535, @TheCityHighBulletin, @CCNHSOfficial.

Most Essential Learning Competency

• The competency is to formulate a "code of ethics that reflect core principles derives from analyses".
• The code of ethics is for ABM_ESR12-Illa-d-1.6.

Quotes

• "If ethics are poor at the top, that behavior is copied down through the organization" - Robert Noyce.

Objectives

• Define ethics.
• Explain why ethics is important in business.
• Classify ethical issues.
• Create a simple code of ethics for a business.

Activity #1

• Chona, an online food service owner, receives a complaint from a customer about spoiled food.
• Students are asked to consider how Chona should handle the situation.

Definition of Ethics

• Ethics are derived from the Greek word "ethos," meaning "characteristic way of thinking."
• Ethics is a science that evaluates morality and provides a common understanding of universal, objective, and irreversible moral principles.
• Ethics guide human behavior and moral decisions (Roa, 2011).
• Ethics are moral principles that guide individual conduct (Racelis, 2017).
• Ethics are rules of behavior based on ideas about what is morally good and bad (Merriam-Webster Dictionary).

Why Ethics is Important in Business

• Business ethics, whether professional or personal, reflects principles and values of the person and the institution.
• Organizations establish their culture, ideals, and thus impact efficiency, prestige, performance, and employee retention.
• It impacts the relationships within the company, legal aspects, and the wider community.
• Organizations develop values and codes of conduct, recognizing ethical actions, and an atmosphere that prevents unethical behaviors. This is a vital part of the administrative and workplace obligations.

How to Apply Ethics

• Organizations should concentrate on improving and encouraging respect for ethical principles among employees.
• Understanding ethical implications of individual decisions is important.

Examples of Ethical Issues in Business

• Finance: Fairness in trading, conditions, and financial contracting, sales, consultancy, and tax payments; internal and external audits, and executive compensation; corporate bribery, kickbacks, misinformation, insider trading, and fraud are issues under the umbrella of finance and accounting.

• Human Resource Management (HR): Hiring, orientation, performance evaluation, training, development, labor relations, and health and safety concerns are tasks of HR. Discrimination based on age, gender, sexual orientation, race, ethnicity, disability, and physical appearance, are all ethical issues.

• Sales and Marketing: Marketing ethics involves beliefs, standards, and morals followed by advertisers and marketing organizations. It includes promoting obsolete or harmful products and/or services; providing appropriate environmental and financial information; protection of consumer privacy and autonomy; and honest advertising. Pricing involves practices like price manipulation and price skimming, as discussed by Hayes (2020).

• Production: Company duties to ensure that goods and industrial procedures do not inflict harm. Examples include the adverse effects of tobacco products on consumers and the environment, such as air pollution, habitat destruction, and urban sprawl.

Activity #2

• Classify phrases into ethical issues categories (finance, human resource, sales/marketing, and production).
• Examples of phrases to be classified are provided.

Code of Ethics

• It's a guide of behavior, professionally, to conduct business honestly and with integrity.
• It may outline a business' mission and values; ethical principles; and the standards to which professionals are held.
• Recommendations for developing a code of ethics include:
  • Adopting code of ethics from other companies.
  • Providing training to management and employees.
  • Dealing with immoral activities.
  • Rewarding employees' ethical behavior.
  • Carrying out a social audit/conducting surveys of employees.
  • Empowering individuals who maintain integrity and work with honesty.
  • Ensuring proper procedures for handling violations of ethical conduct within and across the company and the industry.
  • Ensuring high ethical standards are upheld by the board of trustees.
  • Leading by example.

Ethical Issues in Business Decisions

• When making ethical decisions, one way is by use of the four-way test.
• Four key questions to address are: Is it truthful, fair to all affected parties, goodwill-building to the organization, and benefitting all parties with interest?

Components of a Code of Ethics

• Vision: A clear picture or idea of the future.
• Values: Important principles or standards.
• Mission: A specific task or goal.
• Principles: Moral rules or beliefs.

Simplified Sample Code of Ethics (XYZ Company)

• Values: Integrity, respect for individuals.
• Vision: Leading the car industry with quality cars and services.
• Mission: Efficient and enthusiastically working to be the top car dealer and serving customers punctually and courteously.
• Principles: Zero tolerance for bribery/corruption, following Philippine laws and regulations, acting in good faith, and maintaining professionalism.
• Link to example code provided.

Ethical Issues:

• Ethical issues are identifiable problems and situations that require decisions according to several options--right or wrong, ethical or unethical.
• These issues usually involve business financial matters.

Ethical Issues in Business Decisions

• Possible examples of ethical issues are given in the tables included.
• The examples describe topics such as: misrepresentation of benefits, misuse of company time and resources, abusive behavior, and conflict of interest.

Ethical Leadership and Management

• Ethical leaders need to be visible models of company characteristics, values, and behaviors
• Ethical leadership is important for creating and maintaining an ethical corporate culture, inspiring and motivating employees towards company goals.
• Ethical leadership can include a values-based approach or a compliance-based approach.
  • Compliance-based cultures focus on adherence to rules, laws, policies, and regulations to address business ethics.
  • Values-based cultures prioritize values and principles over rules and focus on individual integrity and ethical decision-making.
• The importance of ethical employees, their appropriate treatment and reward or punishment for ethical performance and mistakes is illustrated.

Activities

• Activity 4 requires referring to the textbooks for assigned readings.
• Activity 4 contains examples of questions to be answered, such as classifying or defining the given issues, or responding to a possible workplace issue.

Test your knowledge on key concepts of business ethics, including ethical responsibilities, discrimination issues, and the development of corporate culture. This quiz will challenge your understanding of individual ethics and the ethical implications in various business practices.