Almodiel, Campoy, Catacutan, Sapio, Villegas
Topic 7: Encouraging Ethical Behavior
Introduction
Generally, all professions require the existence
of a code of ethics for its members to adhere. This
signifies the professions acceptanceof the
responsibility that comes with working for people in
need of their service.
Ethics in General
Ethics are moral principles that guide a person’s
behavior and conduct. This deals with the study of
the rightness or wrongness of human actions.
Reason Why People Act Unethically
There are two primary reasons why people act
unethically:
1. Person’s Ethical Standards Differ from General
Society
2. Selfish Interests of a Person
Professional Code of Ethics
All professions adhere to codes of behavior
known as professional ethics. The purpose of
having such are:
 to ensure high standards of competence
among the professionals
 regulate and strengthen relations among the
members
 and promote and protect the welfare of the
community relying unto the profession
Common Characteristics of Professional
Ethics
All of the recognized professions have a similar
framework when it comes to the codes of conduct
that it imposes unto its members:
1. Responsibility to Serve the Public
2. Standards of Admission to the Profession
3. Need for Public Confidence
Code of Ethics for Professional Accountants
- the approval of Resolution No. 263, Series
of 2015, the professional code of ethics for
professional accountants in the Philippines
came into existence and was made effective
on April 6, 2016.
Section 100.5: A professional accountant shall
comply with the following fundamental
principles:
a. Integrity
b. Objectivity
c. Professional Competence and Due Care
d. Confidentiality
e. Professional Behavior
Corporate Scandals
These corporate scandals happened because of
violation of professional code of ethics:
1. Enron Scandal
- as the company faced increased competition
within the energy industry and as a result of
pressures coming from shareholders, company
executives began to rely on unethical accounting
practices.
2. Arthur Andersen, LLP
- was the external auditor and the consultant of
Enron corporation.
3. WorldCom
- a telecommunications company that went
bankrupt after being charged guilty of fraudulently
capitalizing billions of dollars of operating expenses
that led to a $4 billion increase in profits.
Corporate Culture
What Is Corporate Culture?
Almodiel, Campoy, Catacutan, Sapio, Villegas
-beliefs and behaviors that determine how a
company's employees and management interact and
handle outside business transactions
- amalgamation of values, vision, mission,
and the day-to-day aspects of communication,
interaction, and operational goals that create the
organizational atmosphere that pervades the way
people work.
History of Corporate Culture
*1960- awareness of a corporate culture emerged
*the term “Corporate Culture” emerged in the
1980s and became known by the 1990s
*In 2015, Corporate is already influenced by
national cultures and traditions, economic trends,
international trade, company size, and products
Examples of Contemporary Corporate Cultures
Google, Apple Inc. (AAPL) and Netflix Inc.
(NFLX) – fostering creativity, collective problem
solving, and greater employee freedom
Zappos(AMZN) – utilizes Holacracy
Holacracy- an open management philosophy that,
among other traits, eliminates job titles and other
such traditional hierarchies
Spotify – uses the principle of agile management
Agile Management- focuses on deliverables with a
flexible, trial-and-error strategy that often groups
employees in a start-up environment approach to
creatively tackle the company’s issues at hand
Characteristics of Successful Corporate Cultures
 Vision
 Values
 Practices
 People
 Narrative
 Place
Corporate Values
- also known as company values or core
values, are the fundamental beliefs upon which your
business and its behavior are based. They are the
guiding principles that your business uses to manage
its internal affairs as well as its relationship with
customers.
Why corporate values important?
A strong set of company values gives your
company direction and helps it build a reputation.
They set the tone for how your business interacts
with customers, markets its products, and makes
important decisions.
How do you define your Corporate Value?
You can incorporate your corporate values in
your mission statement or write a separate
statement of core values. The process starts
through a brainstorming session.
You can start and guide the process with questions
like:
 What core values will resonate with our
customers?
 What principles should guide our choices?
 What do we want our company to be known
for?
 How will our values distinguish us from
competitors?
 What qualities do we value in employees?
Values Employees should Strive to Emulate
 Values are purposeful.
 Values are choices.
 Values will cost you.
 Values require action.
 Values are timeless.
Almodiel, Campoy, Catacutan, Sapio, Villegas
Companies are expected to share their
values publicly. Let consumers know what you
stand for and how you run your company. Make
sure your employees are familiar with your
company values. Set values employees can put
into practice, and give them the tools and
incentives to do so.
Corporate Values Examples
Examples of Company Values from successful
companies, such as the following:
 American Express: Customer commitment,
quality, integrity, teamwork, respect for
people, good citizenship, a will to win,
personal accountability.
 Facebook: Focus on impact, move fast, be
bold, be open, build social value
 H&M: We believe in people, we are one team,
straightforward and open-minded, keep it
simple, entrepreneurial spirit, constant
improvement, cost-consciousness
 Virgin Airlines: We think customer, we lead
the way, we do the right thing, we are
determined to deliver, together we make a
difference.
THE BASIC APPROACH TO ETHICAL
BEHAVIOR
1. UTILITARIAN APPROACH
a. This approach was actually derived
from the utilitarianism theory.
Conceived in the 19th century by
Jeremy Bentham and John Stuart
Mill. The theory suggested that
ethical actions are those that would
provide the greatest balance of good
over evil.According to Carroll and
Buchholtz (2009), utilitarianism is an
ethical doctrine that the moral worth
of an action is determined by the fact
that the theory can be founded on the
ability to predict consequences of an
action.To analyze an issue using the
utilitarian approach, we first identify
the various courses of action
available to us. Second, we ask who
will be affected by each action and
what benefits or harms will be
derived from each. And third, we
choose the action that will produce
the greatest benefits and the least
harm. The ethical action is the one
that provides the greatest good for
the greatest number.
 DISADVANTAGE: It
considers the course of action
that benefits most of the people
as ethically correct.
2. INDIVIDUAL RIGHTS APPROACH
a. This approach on the other hand had
its roots in the philosophy of
Immanuel Kant. According to him ,
humans have the ability to freely
choose what they do with their lives
and have a fundamental moral right
to have these choices to be respected
by others.. To determine whether an
action is ethical or not in using this
approach, one must ask if the course
of action to be performed or
performed respects the moral right of
everyone.
 DISADVANTAGE:
“Fundamental rights” is broad
and it differs from one culture
from another. Also , one may
perceive their “personal
wants” as rights.
3. JUSTICE APPROACH
a. Proposes that decision makers must
be equitable, fair, and impartial in
the distribution of cost and benefits
to individuals and groups. It includes
distributive justice which allows a
hierarchy, fairness for all people,
retributive justice and compensatory
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justice which makes the punishment
and retribution fit the crime.
 DISADVANTAGE: This may
lead to favouritism and
discrimination.