Business Ethics and Social Responsibility PDF

Ethical and Unethical Behavior Module 2 Business Ethics and Social Responsibility Core Principles of Business Ethics There are 12 principles that govern business ethics: 1. Honesty - There is nothing like having hon...

Ethical and Unethical Behavior Module 2 Business Ethics and Social Responsibility Core Principles of Business Ethics There are 12 principles that govern business ethics: 1. Honesty - There is nothing like having honest employees in words and actions. When management makes important decisions, the employees can sense truthfulness and sincerity. Employees take their managers' words and customers are happy to do business with a company whose employees are honest in their dealings. They never hold back the truth and customers are happy to transact with people whom they can trust. The company sells the products or services without any misrepresentation or exaggeration of features. 2. Integrity - Having a high level of integrity means that the company has earned the trust of its stakeholders because it has been consistent in all of its actions, decisions, and character. There are no pretensions. The company can be bold and firm in its decisions if management believes that it is doing the right thing. Management also has the courage and the strength to admit mistakes. Managers who have a high level of integrity have a code of ethics which they believe in and are willing to fight for what is right and true. 3. Keeping Promises - Managers must keep their word and always ensure these promises are not broken. There are times when managers find it hard to fulfill their commitments but they have to. They cannot just get out of a situation and a commitment. 4. Loyalty - Managers should be loyal to the company by not putting their self-interests above anything that will jeopardize the company's position. There should never be any conflict of interests. Employees who decide to leave the company should give a grace period to allow the company to find their replacement. It is also important to keep company information confidential once they leave the company. Loyalty begets respect from the people whom they previously worked with. 5. Fairness - It is treating people as equal. Managers should act with impartiality in all their transactions. They should not exercise their power for their own personal advantage and they should never take advantage of other people's weaknesses. Managers should also be open-minded and value the advice and suggestions of others. They should observe what is right and recognize the fact that they do not have a monopoly of knowledge and skills. 6. Caring - This is the exercise of compassion and sincere concern for others. The company should create a caring environment for its employees which will eventually bring about a chain reaction among customers and other stakeholders. Management should strive to reach the company's goals which would benefit the greatest number of people without inflicting harm or stepping on others. 7. Respect - It is said that respect is not imposed but earned. However, respect should be the default in dealing with oneself and others. Being respectful means being courteous at all times in all dealings, regardless of rank. Each person deserves to be treated with respect without prejudice on gender, religion, or status in life. 8. Obeying the law - All employees should obey the rules. Management, too, must never break the rules. Managers should set an example in following company policies, rules, and regulations. No one is above the law. Managers who craft the rules should not be law breakers. 9. Excellence - Being ethical also means that employees should strive to achieve excellence in all their tasks. The company in return delivers the highest quality products and services and ensures efficient delivery of services. It also ensures that there is continuous improvement in all its processes. 10. Being a leader - This entails leadership by example. Managers should be role models to establish their integrity and credibility among their employees and customers as well. Decisions should be firm yet flexible based on the situation. Yet, leadership should be guided by ethical principles and standards. 11. Morale - Managers who act ethically enhance the company's image. Being ethical also boosts employees' morale. An ethical environment gives the company a good reputation and recognition from other companies. This enhanced image of the company greatly helps in the company's business dealings. 12. Accountable - Being accountable means being responsible for one's actions. Whatever it is, there should be acceptance of the consequences of any decision made. Managers should stand firm on these decisions. There should be no turning back or blaming others whenever a wrong decision is made. Unethical Business Practices There are unethical behaviors that should be avoided because these destroy the company's reputation and result in bad business. 1. Accounting Manipulations - Accounting books can be manipulated and financial statements can be manipulated to show a more favorable result of accounting transactions. A company may hide its true status and present a better picture of its financial statements to investors. Contrary to what is true, the assets are ballooned to the highest level and the debts and liabilities are hidden. 2. Overbilling - Some service providers are guilty of charging more than the actual price for the services given. Overpricing for a service destroys the reputation of a service provider and may result in lower sales for the company. 3. Misleading Advertisements - There are advertisements which mislead consumers by making promises which the product cannot really deliver. They may temporarily increase sales but once the consumers figure out the truth they end up dissatisfied, thus resulting in lower sales. For instance, dermatological services with exaggerated advertisements end up with lawsuits because of excessive claims on their beauty products and services. Companies should stand by their claims in their advertisements. 4. Making False Claims - Some managers tend to take credit for something like charity works which they actually are not a part of. Some vendors, suppliers, or sellers use dangerous chemicals to increase the quantity of the product being manufactured or perhaps cut short the production to reduce expenses. These unethical practices are not good for a business. 5. Customer Service Failures - Poor customer service is also considered unethical. Failure to replace a damaged product or not being able to serve a warranty is considered unethical. Failure to refund a complaining customer is also another example, as well as being rude. Credit collection agencies who antagonize and threaten credit card customers for non-payment of debt damage the reputation of credit card companies and the banks issuing the credit cards. 6. Layoff and High Executive Compensation - Some companies are guilty of laying off workers allegedly because they are losing profit, when in reality, they are just giving higher salaries to their executives. Whatever expenses are saved from laying off workers are given to senior management as perks. 7. Poor-quality Materials - In manufacturing processes, poor products may be the result of low-quality raw materials used to lower the total cost of production. Victims of these poor or faulty products may file legal action against dishonest manufacturers. Good Policies and Ethical Practices in Business Organizations 1. Business organizations should comply with reportorial requirements as mandated by government agencies for ethical practices. The sole proprietor should register with the Department of Trade and Industry (DTI) while partnerships and corporations should register with SEC. Business owners should also secure barangay and municipal clearances and register with the Bureau of Internal Revenue (BIR), Social Security System (SSS), PhilHealth, and Home Development Mutual Fund (Pag-BIG). They must remit and comply with the monthly, quarterly, and yearly requirements of these government bodies. 2. Practice proper office decorum. Employees must observe good manners such as ensuring that conversations are not too loud which may distract other employees. Conversations in the workplace must be kept on a professional level as much as possible and making personal calls must be avoided. Everyone must be mindful of confidential conversation and should not divulge any information that may be the subject of gossips and rumors. 3. Be sensitive to smells and scents which may be unpleasant to the employees. Management should maintain cleanliness in the workspace at all times. Empty food containers should be properly disposed of. Use the restrooms, pantry, and other office areas properly. Keep them clean and orderly. 4. Company property or assets are for business purposes and not for personal use. It is the responsibility of every employee to safeguard company property against loss, theft, and misuse. Some examples of these assets are computers, laptops, equipment, forklifts, office supplies, calculators, printers, cellphones, telephones, photocopiers, and other equipment. Also included are softwares and programs, books, compact discs, list of customers, suppliers, or distributors, and other records. 5. Employees should use communication infrastructure properly and appropriately. The use of email, Internet, intranet, telephone, and other forms of communication greatly helps employees in the conduct of their duties. However, these forms of communication should be used appropriately and employees should help in maintaining their confidentiality and integrity at all times. 6. Employees should always act in the best interest of their employer. They should avoid conflicts of interest, and any personal gain or interest should never interfere with company interest. 7. There are confidential information that are protected and which should not be divulged to anyone outside the company without proper authorization. The following are some examples of confidential information which should be safeguarded by the employees: trade secrets, business plans, pricing schemes, client lists and suppliers' contracts, test questions, compensation schemes, software and computer programs, brand formulations, market share, new product development, and major and strategic plans. Employees should exercise care in discussing confidential information especially in public places where conversations may be overheard. Human resource staff who hold employee information such as addresses, telephone numbers, identification numbers, test results, and medical data should protect the privacy of the employees 8. All financial and accounting records should be accurate, reliable, and truthful. These reports should project the credibility and integrity of the company. There should be no off-the-record funds or undisclosed assets. There should be no distorted or falsified documents related to particular transactions. All transactions should be properly accounted for and supported by documents. Financial records should be in compliance with applicable laws. Components of Code of Ethics 1. Values - A company's values guide the organization's internal conduct and its relationship with stakeholders. They emanate from its corporate culture as displayed by its stakeholders. The values of the company should be expressed with honesty and fairness. The values sum up the company's reputation wherein all interactions are treated with respect regardless of position and circumstances. 2. Principles - To support the values of the organization, there are credos that employees should live with during their stay in the company. Business principles such as customer satisfaction, business profitability, and continuous improvement are just some of the principles that stakeholders live by. Corporate social responsibility is also another principle found in the code of ethics 3. Management Support - This means that management is serious in considering the code as the bible of the employees in terms of ethics. To show support, management allows the display of this code of ethics in prominent and strategic places in the work area 4. Personal Responsibility - Any member of the organization should uphold and preserve the code of ethics because any violation of the code may involve legal and moral consequences. Each employee should be guided by the code and must report anyone who violates it. 5. Compliance - All legal requirements of the code should be met. Any licensing requirements, including but not limited to reporting of financial statements, should be met