Ethics and Business PDF

(SOCRES – M1) ETHICS AND BUSINESS c. HINDUISM CONTEXT - “This is the sum of duty: do naught unto others which would cause you pain if done...

(SOCRES – M1) ETHICS AND BUSINESS c. HINDUISM CONTEXT - “This is the sum of duty: do naught unto others which would cause you pain if done to you.” THE MEANING OF “GOOD” —Mahabharata 5:1517 FITNESS - Implies appropriateness that something what it should BUSINESS ETHICS without waste or failure. - Involves the application of standards of moral MORALITY behavior to business situations. - When something is moral, we say an act is good or bad. STAKEHOLDERS - are groups and/or individuals affected by a decision, ETHICS policy or operation of a firm or individual. - Derived from the Greek word ethos, which refers to those values, norms, beliefs, and expectations that STAKEHOLDER INTERESTS determine how people within a culture live and act. STOCKHOLDERS OR SHAREHOLDERS A. DESCRIPTIVE ETHICS - Growth in the value of company stock o Describes how people behave and/or what sorts - Dividend income of moral standards they claim to follow. EMPLOYEES B. NORMATIVE ETHICS - stable employment at a fair rate of pay. o Involves creating or evaluating moral standards. - A safe and comfortable working environment. o It is an attempt to figure out what people should CUSTOMERS do or whether their current moral behavior is - “Fair Exchange” a product or service of acceptable reasonable. value and quality for the money spent. - Safe and reliable products. UNDERSTANDING RIGHT AND WRONG SUPPLIERS or VENDOR PARTNERS MORAL STANDARDS - Prompt payment for delivered goods. - are principles based on religious, cultural, or - Regular orders with an acceptable profit margin. philosophical beliefs by which judgments are made RETAILERS or WHOLESALERS about good or bad behavior. - Accurate deliveries of quality products on time and - These beliefs can come from many different sources: at a reasonable cost. o Family - Safe and reliable products o Friends FEDEREL GOVERNMENT o Ethnic Background - Tax revenue o Religion - Operation in compliance with all relevant o School legislation. o Media CREDITORS o Personal Role Models and Mentors - Principal and interest payments. - Repayment of debt according to the agreed THE GOLDEN RULE schedule. - For some, the goal of living an ethical life is COMMUNITY expressed by the Golden Rule: Do unto others as you - Employment of local residents would have them do unto you, or treat others as you - Economic growth would like to be treated. - Protection of the local environment a. BUDDHISM - “Hurt not others in ways that you yourself CODE OF ETHICS would find hurtful.” —Udana-Varga 5:18 - A company’s written standards of ethical behavior b. CHRISTIANITY that are designed to guide managers and employees in - “Therefore, all things whatsoever ye would making the decisions and choices they face every day. that men should do to you, do ye even so to them.” —Matthew 7:12 PORNOBI, SHEKINAH REIGN P. BSBA – MM3  BUSINESS ETHICS AS ETHICAL DECISION MAKING - A practical decision-making framework to aid in the identification, understanding, and resolution of complex ethical dilemmas in the workplace. BUSINESS ETHICS AS PERSONAL INTEGRITY AND SOCIAL RESPONSIBILITY - Within a business setting, individuals will constantly be asked to make decisions affecting both their own personal integrity and their social responsibilities. - PERSONAL INTEGRITY: Refers to one’s completeness within themselves, often derived from the consistency or alignment of actions with deeply held beliefs. - SOCIAL RESPONSIBILITY: Is an ethical framework and suggests that an entity, be it an organization or individual, has an obligation to act for the benefit of society at large. NORMS - Those standards or guidelines that establish appropriate and proper behavior. VALUES - Those beliefs that incline us to act or to choose in one way rather than another. ETHICS AND THE LAW - Any discussion of norms and standards of proper behavior would be incomplete without considering the law. Deciding what one should do in business situations often requires reflection on what the law requires, expects, or permits. ETHICS AS PRACTICAL REASON - Ethics is a part of practical reason. - Practical reason is reasoning which is used to guide action, and is contrasted with theoretical reason, which is used to guide thinking. PORNOBI, SHEKINAH REIGN P. BSBA – MM3  (SOCRES – M2) INTRODUCTION TO SOCIAL 4. CONSUMER PROTECTIONS RESPONSIBILITY AND GOVERNANCE - From a legal standpoint, businesses are required to comply with relevant laws and regulations to ensure SOCIAL RESPONSIBILITY consumer protection and fulfill their social - It is an ethical focus for individuals and companies responsibilities. that want to take action and be accountable for - This includes adhering to product safety standards, practices that benefit society. providing accurate information to consumers, and - It is a means of achieving sustainability. Adopting honoring contractual obligations. key social responsibility principles, such as 5. EMPLOYEE WELFARE accountability and transparency, can help ensure the - Providing fair wages, safe working conditions, long-term viability and success of any organization or opportunities for career development, and promoting system. a positive work-life balance. - Welfare programs ensure that the most fundamental SCOPE OF SOCIAL RESPONSIBILITY needs of individuals and families are met. This - It includes a variety of initiatives and activities that includes access to nutritious food, safe housing, clean strive to improve society and contribute positively to water, and access to toilets, clean water etc. When the environment. people have these essentials, they can live with - CSR involves considering the interests of various dignity and security. stakeholders, including employees, customers, 6. PHILANTHROPY communities, and the wider community, beyond - This means generosity in all its forms and is often solely financial gains. defined as giving gifts of “time, talent and treasure” THE BROAD SCOPE OF SOCIAL to help make life better for other people. RESPONSIBILITY: - You can practice philanthropy by making a monetary 1. ETHICAL BUSINESS PRACTICES gift, such as a donation to a cause you believe in. - involve rules and codes of behavior that apply to everyday business operations and policies. They GOOD GOVERNANCE shape how an organization interacts with customers, - In the context of business refers to the effective, stakeholders, staff, the media, and the environment. ethical, and responsible management of an Under this type of system, it’s believed that all organization by its leaders. employees are responsible for upholding their - It involves a framework of rules, practices, and company’s values. processes by which a company is directed and 2. ENVIRONMENTAL RESPONSIBILITY controlled. - This refers to the ethical obligation of individuals and - GOVERNANCE refers to the framework companies organizations to act in a manner that promotes the use to define their rules and policies and then carry well-being of the environment, including these processes out when leading the organization. considerations of sustainability, conservation, and There exists a variety of opinions on what constitutes regulatory compliance. good governance, and exact definitions will be 3. COMMUNITY ENGAGEMENTS organization-dependent in line with their guiding - Contributing to the well-being of local communities principles and long-term goals. through charitable activities, supporting education, and promoting economic development a. PARTICIPATION - This means that it encourages participation from members across a variety of backgrounds and encompassing varying areas of expertise. - Participation in good governance means that Boards are aware of their composition and that they place importance on being equitable and diverse, both in their makeup and in their hiring/outreach practices. PORNOBI, SHEKINAH REIGN P. BSBA – MM3 b. CONSENSUS-ORIENTED HISTORICAL EVOLUTION OF SOCIAL - Consensus-oriented decision-making under good RESPONSIBILITY: governance means that the Board considers the broad Ancient to Medieval Ethical behavior and range of opinions presented before making its Periods community welfare decision, including the needs of diverse groups and emphasized (e.g., facets of the organization raised in regard to the Confucianism, Ancient question at hand. Indian Texts, Greek c. ACCOUNTABILITY Philosophy) - is the quality or state of being accountable, especially Industrial Revolution Better working conditions and philanthropy (e.g., an obligation or willingness to accept responsibility Robert Owen, Andrew or to account for one's actions. Carnegie) - Boards are held accountable to anyone affected by Early 20th Century Progressive reforms, their decisions. This includes shareholders, labor laws, social safety stakeholders, vendors, employees and the larger nets (e.g., New Deal in public; their decisions will have a direct impact on U.S.) the integrity of the company. Post – WWII (1940s- Rise of corporate d. TRANSPARENCY 1960s) philanthropy, - is the quality of being easily seen through, while environmental awareness transparency in a business or governance context (e.g., Rachel Carson’s refers to being open and honest. As part of corporate “Solent Spring”) governance best practices, this requires disclosure of Modern Era (1980s- Formalization of CSR, all relevant information so that others can make 2000s) sustainable practices, informed decisions. Triple Bottom Line, increased scrutiny due to e. RESPONSIVENESS globalization, IT, - It is a measure of how quickly and efficiently an corporate scandals. organization responds to the needs of its customers. 2010s to Present (2010s Focus on SDGs, DEI, - It is determined by assessing how quickly customer – 2020s) sustainability, corporate inquiries and complaints are answered and how activism (e.g., response to effectively recommendations are implemented and COVID-19, climate feedback is received. change, social justice) f. EFFECTIVENESS AND EFFICIENCY Future Directions Digital responsibility, - EFFICIENCY is all about reducing costs and (Emerging Trends) ethical AI, corporate resources required to execute on tactics. activism (e.g., ethical AI, - EFFECTIVENESS is about achieving strategic stakeholder engagement) goals that align with the vision of the organization and drive more revenue. Often, increasing IMPORTANCE IN MODERN SOCIETY effectiveness naturally leads to an increase in - Social responsibility works as a platform for efficiency. companies and consumers alike to make a positive g. EQUITY AND INCLUSIVENESS impact on local and global communities. - Diversity, equity and inclusion is a term used to describe policies and programs that promote the representation and participation of different groups of individuals. - DEI encompasses people of different ages, races, ethnicities, abilities, disabilities, genders, religions, cultures and sexual orientations. PORNOBI, SHEKINAH REIGN P. BSBA – MM3  (SOCRES – M3) CORPORATE CULTURE: ETHICAL BUSINESS LEADERS IMPACT AND IMPLICATIONS - Ethical business leaders not only talk about ethics and act ethically on a personal level, but they also allocate CORPORATE CULTURE corporate resources to support and to promote ethical - CULTURE: a shared pattern of beliefs, expectations, behavior. and meanings that influences and guides the thinking and behaviors of the members of a particular group. ETHICS OFFICERS - Individuals within an organization charged with managerial oversight of ethical compliance and enforcement within the organization. PEOPLE-ORIENTED LEADER - Involves supporting and developing people in their team. TRAITS OF AN ETHICAL LEADER o Culture becomes so much a part of the RECEPTIVITY environment that participants do not even its - Willingness to consider suggestions. existence. INTEGRITY - Refers to one’s completeness within themselves, CULTURE AND ETHICS often derived from the consistency or alignment of - If attended to and supported, a strong ethical culture actions with deeply held beliefs. can serve as a deterrent to stakeholder damage and HONESTY improve bottom line sustainability. - To speak and act only in ways that engender and justify trust. COMPLIANCE-BASED CULTURE TRUSTWORTHINESS - A corporate culture in which obedience to laws and - The ability to be relied on. regulations is the prevailing model for ethical HAVING A BROAD ETHICAL AWARENESS behavior. - Showing concern for multiple stakeholders. VALUES-BASED CULTURE VISIBLE ETHICAL ACTION - A corporate culture in which conformity to a - Traits and behaviors must be socially visible and statement of values and principles rather than simple understood in order to be noticed and influence obedience to laws and regulations is the prevailing perceptions. model for ethical behavior. EFFECTIVE LEADERS VALUES - are leaders that are able to get followers to their - Those beliefs that incline us to act or to choose in one common destination way rather than another. ETHICAL LEADERS ETHICAL LEADERSHIP AND CORPORATE - creates a corporate culture in which employees are CULTURE empowered and expected to make ethically - If the goal of corporate culture is to cultivate values, responsible decisions expectations, beliefs, and patterns of behavior that SERVANT LEADERSHIP best and most effectively support ethical decision - Suggests that the best leaders are individuals who making, it becomes the primary responsibility of lead by the example of serving others, in a non- corporate leadership to steward this effort. hierarchical style PORNOBI, SHEKINAH REIGN P. BSBA – MM3  BUILDING A VALUES-BASED CORPORATE CULTURE - Each individual in an organization has an impact on the corporate culture, although no one individual can build or change the culture alone. CODE OF CONDUCT - A set of behavioral guidelines and expectations that govern all members of a business firm. MISSION STATEMENT OR CORPORATE CREDO - A formal summary statement that described the goals, values, and institutional aim of an organization. DEVELOPING THE MISSION AND CODE 1. Ask yourself what you stand for or what the company stands for. 2. Articulation of a clear vision regarding the firm’s direction. 3. Identify clear steps as to how the cultural shift will occur. 4. There must be a belief throughout the organization that this culture is actually possible and achievable. PORNOBI, SHEKINAH REIGN P. BSBA – MM3  (SOCRES – M4) CORPORATE SOCIAL law, ethics would demand that we not cause RESPONSIBILITY avoidable harm. 2. Is there a responsibility to prevent harm? CORPORATE SOCIAL RESPONSIBILITY (CSR) - A second, less binding, responsibility is to prevent - The responsibilities that businesses have to the harm even in those cases where one is not the cause. societies within which they operate. 3. Is there a responsibility to do good? - is a self-regulating business model that helps a - The third, and perhaps the most wide-ranging, company be socially accountable to itself, its standard of CSR would hold that business has a social stakeholders, and the public. responsibility to do good things and to make society a - Engaging in CSR means a company operates in ways better place. that enhance society and the environment instead of contributing negatively to them. PHILANTHROPIC MODEL OF CSR - This model of CSR suggests that business is free to TYPES OF CSR contribute to social causes as a matter of philanthropy ENVIRONMENTAL RESPONSIBILITY or charity, but has no strict obligation to contribute to - taking action to reduce their negative impact on the social causes. environment ETHICAL RESPONSIBILITY - they operate fairly and ethically in all aspects of their work PHILANTHROPIC RESPONSIBILITY - giving back to the community through donations or SOCIAL WEB MODEL OF CSR volunteer work - The view that business exists within web of social FINANCIAL RESPONSIBILITY relationships. - company uses its profits in ways that benefit society - The social web model views business as a citizen of the society in which it operates and, like all members BENEFITS OF CSR of a society, business must conform to the normal - Increased Employee Satisfaction range of ethical duties and obligations that all citizens - Customer loyalty face. - Increased employee engagement - Attract and retain top talent STAKEHOLDER THEORY - Enhanced brand position - A model of corporate social responsibility that holds - Increased revenue that business managers have ethical responsibilities to a range of stakeholders. CHALLENGES OF CSR - Lack of clear framework INTEGRATIVE MODEL OF CSR - Susceptible for unaccounted and non-transparency - For some business firms, social responsibility is fully - Long-term sustainability integrated with the firm’s mission or strategic plan. - EX. HUMAN NATURE THE ROLE OF BUSINESS IN ADDRESSING o Pro-Philippines SOCIAL AND ENVIRONMENTAL ISSUES o Pro-Poor - Businesses play a crucial role in addressing social o Pro-Environment and environmental issues through various strategies and initiatives. Does “Good Ethics” Mean “Good Business”? - This responsibility often referred to as Corporate - A larger question involves the possible correlation Social Responsibility or Corporate Sustainability between profits and ethics. Is good ethics also good business? One important justification offered for THREE DIFFERENT LEVELS OF CSR, what is often called enlightened self-interest, RESPONSIBILITIES presumes that it is, or at least it can be. 1. Is there a duty not to cause harm? - The strongest sense of responsibility is the duty not to cause harm. Even when not explicitly prohibited by PORNOBI, SHEKINAH REIGN P. BSBA – M3  REPUTATION MANAGEMENT - The practice of attending to the “image” of a firm. THE CONSTRUCTION OF CORPORATE REPUTATION PORNOBI, SHEKINAH REIGN P. BSBA – M3  (SOCRES – M5) STAKEHOLDER ENGAGEMENT KEY STAKEHOLDERS AND THEIR INTERESTS AND COMMUNITY RELATIONS IN THE CONTEXT OF THE ORGANIZATION’S OPERATIONS STAKEHOLDER ENGAGEMENT - Is a critical element in promoting social responsibility CUSTOMERS within an organization. Also known as Corporate - are interested in high-quality products or services, Social Responsibility (CSR), involves a company’s fair pricing, ethical business practices, and a positive commitment to conducting business ethically, customer experience. They may also care about the sustainably, and in a manner that benefits society as a company's environmental impact and social whole. contributions. EMPLOYEES ACCOUNTABILITY AND TRANSPARENCY - seek fair wages, safe working conditions, - Engaging with stakeholders, including customers, opportunities for career development, and a positive employees, investors, and the wider community, work culture. They are increasingly interested in their encourages transparency and accountability. employer's commitment to diversity, inclusion, and - By involving these groups in decision-making sustainability. processes and sharing information about the INVESTORS/SHAREHOLDERS company’s social and environmental efforts, - are concerned with financial performance and returns organizations build trust and credibility. on their investments. They may also be interested in the company's long-term sustainability and ethical IDENTIFYING CONCERNS AND PRIORITIES conduct. - Stakeholder engagement helps organizations identify SUPPLIERS the concerns and priorities of various groups. - want fair and ethical treatment, timely payments, and - This insight allows them to align their CSR initiatives long-term partnerships. They may also expect their with the needs and expectations of stakeholders, customers to adhere to ethical sourcing practices. increasing the effectiveness of their social LOCAL COMMUNITIES responsibility programs. - The local community where the organization operates has an interest in job creation, environmental impact, RISK MITIGATION and contributions to community development. They - Engaging with stakeholders can help organizations may also be concerned about issues such as noise identify and mitigate potential risks, including pollution or traffic congestion. reputational risks. REGULATORS AND GOVERNMENT - Addressing concerns and issues early can prevent - are interested in ensuring that organizations comply them from escalating and damaging the company’s with laws and regulations related to environmental reputation. protection, labor rights, and other social responsibilities. INNOVATION AND COLLABORATION NGOs AND ACTIVIST GROUPS - Fosters collaboration and innovation. - often advocate for social and environmental causes. - By involving diverse perspectives, organizations can They can exert pressure on organizations to adopt develop creative solutions to social and more responsible practices. environmental challenges leading to more effective COMPETITORS CSR initiatives. - may monitor an organization's social responsibility efforts and use them as a basis for competition or LEGAL AND REGULATORY COMPLIANCE differentiation. - Many countries have regulations and reporting requirements related to CSR. - Engaging with stakeholders can help organizations ensure they are in compliance with these regulations and avoid legal issues. PORNOBI, SHEKINAH REIGN P. BSBA – MM3  STRATEGIES TO ENGAGE STAKEHOLDERS 5. ETHICAL BUSINESS PRACTICES AND BUILD POSITIVE RELATIONSHIPS WITH SUPPORT LOCAL ECONOMY LOCAL COMMUNITY - Hire locally, source materials from local businesses, and invest in local suppliers to stimulate economic 1. UNDERSTAND COMMUNITY NEEDS AND growth. VALUES ENSURE FAIR PRACTICES CONDUCT NEEDS ASSESSMENTS - Implement ethical labor and environmental practices - Organize surveys, interviews, or focus groups to that demonstrate a genuine commitment to the understand the local community's needs and welfare of the community aspirations. RESPECT LOCAL CULTURE 6. INVOLVEMENT IN LOCAL EVENTS - Align your initiatives with the values, traditions, and SPONSOR COMMUNITY EVENTS interests of the community. - Participate in or sponsor local fairs, sports events, or festivals, showcasing the organization's support for 2. TRANSPARENT COMMUNICATION the community. OPEN DIALOGUE CREATE PLATFORMS FOR ENGAGEMENT - Maintain regular, transparent communication through - Host forums, educational workshops, or open houses meetings, newsletters, social media, or town halls to to invite stakeholders and community members to keep stakeholders informed. learn more about the organization. PROVIDE FEEDBACK CHANNELS - Encourage two-way communication by creating 7. LONG-TERM COMMITMENT avenues for community members to express SUSTAINABLE PROJECTS concerns, ask questions, and provide feedback. - Focus on long-term projects that have a lasting positive impact, such as building schools, healthcare 3. PARTNERSHIPS WITH LOCAL facilities, or green spaces. ORGANIZATIONS REGULAR EVALUATIONS COLLABORATE WITH NGOs AND CIVIC - Continuously evaluate the effectiveness of GROUPS engagement strategies and be open to adapting based - Work with local nonprofits, civic organizations, and on community feedback. schools to co-create projects that benefit the community. 8. PROMOTE INCLUSIVITY LEVERAGE LOCAL EXPERTISE DIVERSE REPRESENTATION - Engage local leaders and experts who understand the - Ensure that stakeholders from different community community's needs, ensuring solutions are relevant sectors, including underrepresented groups, have a and sustainable. voice in decision-making. INCLUSIVE INITIATIVES 4. CORPORATE SOCIAL RESPONSIBILITY - Design programs that cater to various age groups, (CSR) INITIATIVES genders, and cultural backgrounds to create a sense of DEVELOP LOCAL PROGRAMS belonging. - Create initiatives that address local issues, such as environmental conservation, health, education, or employment. EMPLOYEE VOLUNTEERING PROGRAMS - Encourage employees to participate in community service projects, building goodwill and strong ties with local residents. PORNOBI, SHEKINAH REIGN P. BSBA – MM3