Ethics and Business Practices PDF

PART 02 Ethics and Business Part 2 Making Ethical Decisions Ethics enables a person to discern right from wrong. It is derived from the Greek word Ethos which means character. Ethics is a branch of philosophy that involves systematizing, defending, and recommending co...

PART 02 Ethics and Business Part 2 Making Ethical Decisions Ethics enables a person to discern right from wrong. It is derived from the Greek word Ethos which means character. Ethics is a branch of philosophy that involves systematizing, defending, and recommending concepts of right and wrong conduct. Ethics involves understanding the differences between right and wrong concepts and actions and using principles of decision-making to choose actions that do not hurt others. The concern today is not about the need or the rationale for ethics to be part of a business but rather, about how ethics should be integrated into business practices. Part 2 Why Should Business be Ethically Sensitive By beginning to study the social function of business, we begin to be introduced to fundamental concepts of what is right or wrong in our human conduct and their implications for business as an important human activity. The fundamental reason for examining the activities of the business from the social and ethical perspective is for the promotion of the common good, protection of the individual’s interests, and the preservation of human society in general. Without this ethical consideration, business will be chaotic human activity because there will be no common understanding and agreement about what is right and wrong human conduct. Part 2 Why Should Business be Ethically Sensitive Ethics are moral principle that guide the conduct of individuals. Unfortunately, business manager and employees sometimes behave in an unethical manner. A number of managers of companies in the last two decades engaged in accounting or business fraud. These ethical violations led to fines, firings, and lawsuits. In some cases, managers were criminally prosecuted, convicted, and sent to prison. The following are the four main reasons that may persuade a business to act ethically: Legal reasons, of which there are several different sorts; Public image reasons, which again, might encompass a number of different types; Pragmatic reasons, acknowledging that sometimes, acting ethically might be the most direct path to business success; and Moral reasons, where it is affirmed that these reasons are different from each of the other three types. Part 2 Social Function of Business Business’ role in poverty alleviation Continuing extreme poverty in the midst of economic growth Businesses’ role in overcoming the poverty trap Areas of business most in need of ethical attention Social responsibilities of capitalist business practices Morality of advertising Basic employee rights, job discrimination, other labor-related ethical issues Pollution and resource depletion. Part 2 Social Function of Business Providing goods and services Creating employment opportunities Advancing economy Promoting sustainability Investing in innovation and excellence Part 2 Changing Business Environment Economic environment It has evolved to accommodate global inputs in trade, market, and processes. Most multinational companies choose to source materials or have their products manufactured in emerging markets, such as the Philippines, India, Vietnam, Bangladesh, and others. However, some of these countries are not able to implement laws to protect the workers. A company may have well- placed ethical values, but its suppliers may not. Part 2 Changing Business Environment Technological environment It has pushed organizations to explore more aspects of the business at a faster rate. There are different software that can aid in managers’ analyses of data by providing business analytics. Communication has become easier, and digital media provides bigger and better ways of reaching customers. With so much information virtually stored in the cloud more companies are threatened by security vulnerabilities of their data. Part 2 Changing Business Environment Government and legal environments It creates legislation to implement regulatory laws to protect consumers and restrict unfair corporate practices. However, graft and corruption are widely known issues in the Philippines. Companies may choose to provide bribes when dealing with government offices to expedite processes, receive better treatment, and/or violate certain regulations without repercussions. PART 03 The Ethical Corporate Culture Part 3 A certain culture exists in every organization. As a person who wants to fit in, you try to follow the norm in the group – the way the other members act, dress up, behave, speak, and other actions that may affect your decisions. Part 3 Corporate Culture A system of shared actions, values, and beliefs that develops within an organization and guides the behavior of its members (Schermerhorn, Osborn, Uhl-Bien, Hunt 2012). Part 3 Functions of Corporate Culture External Adaptation requires an organizational culture to determine how the company will reach its goals, accomplish its tasks, identify methods to achieve its goals, and place measures to cope with success or failure. Internal Integration starts with the establishment of an identity that is unique to the business organization. Members acquire this identity through their interaction with each other. This enables the members to work in harmony with each other and to work toward advancing the company’s goals Part 3 Understanding Corporate Culture Observable culture – refers to the way things are done in an organization. This can be observed in daily activities or in specific instances which include unique stories according to the company’s history, ceremonies, and corporate rituals. Part 3 Understanding Corporate Culture Shared Values – refer to the common values that are meant to put together and motivate the members of the organization. These include a deeper understanding of what the company stands for. Part 3 Understanding Corporate Culture Common cultural assumptions– these assumptions are at the core of corporate culture, and thus difficult to discern or understand because they exist at a largely unconscious level, yet they provide the key to understanding why things happen the way they do. As employees become ingrained in the culture, their actions that are based on the company beliefs and values become everyday routines. Part 3 Ethical Leadership and Management There is no doubt that the leaders of a business organization serve as role models of the beliefs, values, and behavior that are expected from someone who represents the company. The top management sets the tone of the corporate culture and has to be consistently adopted throughout the firm. Part 3 Two Types of Corporate Culture Compliance-based culture focuses on following rules, laws, policies, and regulations as the primary responsibility of ethics. It empowers legal counsel and auditing/accounting firms. Part 3 Two Types of Corporate Culture Values-based culture reinforces a particular set of values rather than a particular set of rules. It is presumed that a company with a values-based culture adopts its code of conduct with more regard for ethical values. Values-based culture also recognizes that despite the rules set by the company’s code of conduct, there are situations where rules can be applied so the organization will have to rely on the personal integrity of its workforce when decisions are made. Part 3 Ethical Leaders Practice ethical decision-making. Their goal is not simply to perform the job but to perform consistently with a set of ethical values and principles chosen by the organization. Part 3 Ethical Leaders A good ethical leader must be visibly practicing the company’s traits and behaviors to influence perceptions and actions among employees. An effective ethical leader can successfully and efficiently guide, direct, and escort others toward the goals of the company, in consideration of the ethical standards set by the organization. Part 3 Ethical Leaders Note: not all effective leaders are effective ethical leaders. Some effective leaders may be able to deliver the expected output of the company with the use of coercion, harassment, or intimidation in directing the employees. However, ethical leaders use more ideal interpersonal means of motivating employees by modeling ethical behavior, gentle persuasion, or positive reinforcement by offering incentives. Part 3 Setting a Corporate Code of Conduct Code of conduct or code of ethics is a list of guidelines and protocols based on the organization’s values. It articulates how an employee should behave and imbibe the values of the organization at all times, and it also serves as a reference when decisions are to be made. Part 3 Guidelines in Developing a Code of Conduct Understand the mission and vision of the organization. This will set the tone for the required conduct and behavior that the members must know by heart. Identify the values that the organization lives for. Part 3 Guidelines in Developing a Code of Conduct Spell out the different behaviors and values that an employee must follow in order to maintain the ethical values of the organization. Ensure proper enforcement of the conduct in order to maintain the ethical culture within the organization. Part 3 Guidelines in Developing a Code of Conduct Outsiders, such as suppliers, distributors, subcontractors, and customers, must also understand the organization’s code of conduct in order to avoid presenting the employees with actions that go against the code. Part 3 Sample Code of Conduct Company Values Customer-centered – We strive to provide the best service and products to our customers. Safety – we assure that our products are safe from harmful chemicals. Integrity – we practice integrity in all actions, and we promise an honest and fair service to all our employees, customers, and suppliers. Part 4 Sample Code of Conduct Code of Conduct Employee Decorum Employees must always practice respect for one another. The company does not tolerate the spreading of rumors and stories that may taint the reputation of its employees. Employees must practice a professional tone in communicating with colleagues, whether oral or written communication. Part 3 Sample Code of Conduct Code of Conduct Use of Company Property Employees must only use company properties for official business functions and not for personal gains. Company properties are the employees’ resources. Everyone must engage proper use, care, maintenance, and operation of these properties. Part 3 Ethical Issues An ethical issue is an identifiable problem, situation, or opportunity that requires a person to make an action or decision based on several options – whether right or wrong, ethical or unethical. It usually concerns financial matters in a business setting. Part 3 Sample of Ethical Issues in Business Org. Misrepresenting the benefits of a product Overstating a product’s benefits in order to make a sale is often committed by sales personnel or even by marketing officers. Misuse of company time and resources Some employees may engage in activities that are not related to the job – for example, browsing and posting on social media during office hours. Part 3 Sample of Ethical Issues in Business Org. Abusive behavior Harassing a colleague by using physical threats, harassment, false accusations, profanity, yelling, and unreasonableness may result in conflicts within the department or organization. Conflict of interest It happens when an employee is presented with a dilemma of whether to advance personal gain or interests or that of the company’s