Ethical Issues and Problems in Business and the Corporate World

Business is a productive human activity that brings beneficial contribution to both people
and society. Business produces employment, fair deals, creativity, advancement of technology,
customer’s satisfaction among others. However, at the same time there exist a variety of ethical
issues that every business owners and manager should address to.
CORPORATE GOVERNANCE
Corporate governance is the system by which companies are directed and controlled by
the management in the best interest of the shareholders and others ensuring greater transparency
and better and timely financial reporting. The Board of Directors are responsible for governance
of their companies.
Corporate governance is needed to create a corporate culture of consciousness,
transparency and openness. It refers to combination of laws, rules, regulations, procedures and
voluntary practices to enable the companies to maximize the shareholders long-term value. It
should lead to increasing customer satisfaction, shareholder value, and wealth.
FOUR PILLARS OF CORPORATE GOVERNANCE
1. Fairness – The moral obligations arising from the core ethical value of fairness are
always associated with the exercise of power to render judgments that bestow benefits or
impose burdens. Fairness is making judgments without reference to your personal
feelings but solely based on what the business needs.
Fairness Protect Shareholders rights Treat all shareholders including minorities,
equitably Provide effective redress for violations
2. Accountability – In ethics and governance, accountability is answerability,
blameworthiness, liability, and the expectation of account-giving. It is also the obligation
of an individual or organization for its activities, accept responsibility for them, and to
disclose the results in a transparent manner.
Accountability Ensure that management is accountable to the Board Ensure that
the Board is accountable to shareholders
3. Transparency– Transparency implies openness, communication and accountability. It is
the lack of hidden agendas or conditions, accompanied by the availability of full
information required for collaboration, cooperation, and collective decision making.
Transparency Ensure timely, accurate disclosure on all material matters, including
the financial situation, performance, ownership and corporate governance
4. Independence - Procedures and structures are in place so as to minimize, or avoid
completely conflicts of interest Independent Directors and Advisers i.e. free from the
influence of others.
Ethical Issues and Problems in Business and the Corporate World includes:
 Sexual Harassment
 Workplace Romance
 A question of just wage
 Health and Safety in the Workplace
 Employees Rights and Responsibilities
 Gift-giving & Bribery
 Whistle blowing or Social Media Rants
 Non-disclosure & Corporate Espionage
 False Advertising

Sexual Harassment – is an issue in the corporate world that must be looked into because it can
create a hostile and unhealthy workplace for the employees. For this reason, the Congress of the
Philippines enacted the Anti-Sexual Act of 1995 or RA7877 declaring sexual harassment
unlawful in the employment, education or training environment, and other purposes.
Why Does Sexual Harassment Occur?
Sexual harassment occurs due to the power struggle between men and women as a
response to a real or imagined loss of power or as an expression of retaliation or a flexing of the
new power. This also happens because some organizations and managers allow it to happen.
1. Quid Pro Quo Harassment – “this for that” (something for something) is defined as
requiring a sexual favor or interaction as a condition of employment or in exchange for
an employment benefit (such as promotion, transfer, pay raise and the like).
2. Harassment that Creates a Hostile Environment – abuses include verbal, physical and
visual conducts that create an intimidating, offensive, or hostile environment in the
workplace that interferes with work performance. This type of harassment may be based
on race, religion, national origin, sex, age, mental status, veteran status, sexual orientation
or disability.
a. The victim as well as the harasser may be a woman or a man. The victim does not
have to be of the opposite sex.
b. The harasser can be the victim’s supervisor, an agent of the employer, a supervisor
in another area, a coworker, or a non-employee.
c. The victim does not have to be person harassed but could be anyone affected by the
offensive conduct.
d. The harasser’s conduct must be unwelcome.
A significant step an organization can take in preventing sexual harassment in the
workplace is through creating a safe, secure, and positive work environment by putting into
practice a strong sexual harassment policy.
 Imprisonment of not less than one (1) month but not more than six (6) months
  Fine of not less than Ten Thousand Pesos (P10, 000) but not more than Twenty Thousand
Pesos (P20, 000)
Bullying and Harassment
Bullying in the workplace is a health and safety issue. It can lead to health problems and
give rise to further safety issues. It is also an industrial relations matter – and may have legal
consequences. Employers have a duty of care to all employees, to ensure they are both mentally
and physically safe at work and that their health is not adversely affected by anything or anyone
in the working environment. This duty of care means employers must behave and respond
reasonably in such matters.

WORKPLACE ROMANCE - defined as a relationship between two people who are employed
by the same organization.
Benefits of Workplace Romance
These benefits include friendship, mutual support to each other at work and other personal
experiences. Employees involved in a love relationship sometimes overcome rough times at
work because of mutual support and inspiration.
Employees likewise tend to view work as fun even when pressures begin to pile up. Romance
becomes the reason to keep their jobs.
Disadvantages of Workplace Romance
 Damaged Professional Reputations
 Disturbed Co-workers
 Changes in productivity
 Dating the Boss
Extramarital Affairs
Survey says that more than half of married men and almost more than one-third of married
women at attest falling for adulterous affairs.

A Question of Just Wage

A Just Wage is defined as that remuneration which is enough to support the wage-earner
in reasonable and frugal comfort, “a just wage is the legitimate fruit of labor” Philippine
Constitution and Republic Act 6727 (The workers are entitled to a living wage)
The Wage Rationalization Act declared the policy of the State to rationalize the fixing of
minimum wages and to promote productivity-improvement and gain- sharing scheme to ensure a
decent standard of living for the workers and their families.
Factors to Consider in the Formulation of Fair Wages
1. External Market Factors – Refers to the supply and demand for labor and so economic
conditions and underemployment.
2. Laws and Regulation – Workers should be paid in accordance with laws and regulations
issued by the government. It requires that employers pay at least the minimum wage.
3. Cost of Living – The cost of living relates to basic maintenance needs and it must be
seriously considered in the formulation of wages.
4. Prevailing Industry Rate – Some claim that paying workers the average of what other
companies are paying for the same job results in a fair wage.
5. Organizational Factors – Assessment on what type of industry the organization
operates, the size of the company and the organization’s profitability to justify its ability
to provide fair wages to its workers should be considered.
6. Job Factors – The nature of the job itself entails the formulation of a just wage. Duties,
responsibilities, and the skill requirements of the job are probably the most considerable
determinants of fair wage.
7. Individual Performances – The trend suggests that individual performances or
productivity ratings affect the determination of wage/salary increases.

Health & Safety in the Workplace

Employers’ Duties
Employers have legal obligations to ensure a safe and healthy workplace for their employees in
the first instance – and also for anyone else who may visit the workplace such as customers,
contractors and members of the public.
Various DOLE/OWWA legislation and regulations require companies to provide information,
training and supervision to the employees in order to ensure their health and safety in the
workplace.
There should be an extra duty of care to specific members of staff, including new employees,
pregnant workers and young workers.
Providing the employees with health and safety training, as well as clear instructions,
information and advice, helps to:
 Reduce work-related illnesses and absence;
 Avoid the financial costs of accidents and occupational ill health;
 Develop a positive health and safety culture;
 Ensure that employees know how to work safely and without risks to their health.
Employees’ Rights & Responsibilities
The law establishes significant rights for employees – as well as responsibilities to co-
operate in appropriate behavior to protect their own well-being.
The right of employees to work in a safe and healthy environment is enshrined in law. As
such, it cannot be withdrawn or diluted by your employer. The most important rights and
responsibilities are set out below.
Common Workplace Problems
Space
Every room where people work should have sufficient floor area, height and unoccupied
space for purposes of health, safety and welfare. While additional accommodation may be
necessary if there is a need for wheelchair access, generally in offices 4.65 square meters is the
minimum amount of floor space required for each person working in a room (This includes the
area occupied by an office desk and chair but excludes filing cabinets and other office furniture).
Temperature
The regulations do not specify a maximum temperature but, as a guide, a minimum
comfortable working temperature for indoor sedentary workers is reckoned to be 16º Centigrade
within one hour from the start of work with the maximum comfortable working temperature at
27º Centigrade (when undertaking light duties).
Ventilation
Workplaces need to be adequately ventilated. Windows or other openings may provide
sufficient ventilation but, where air conditioning is provided this should be regularly maintained.
Natural light
Lighting should be sufficient to enable people to work and move about safely. If
necessary, local lighting should be provided at individual workstations and at places of particular
risk such as corridors and stairs. Lighting and light fittings should not create any hazard.
Automatic emergency lighting, powered by an independent source, should be provided where
sudden loss of light would create a risk.
Workstations and breaks away from the screen
Employers must plan work at visual display units (VDUs) so that it is interrupted
periodically by breaks or changes in activities to reduce exposure to the VDU. Although
regulations set no required breaks, no single continuous period of work at a screen should not
exceed one hour. If you use a VDU as a significant part of your daily work, you have a right to
seek appropriate eye tests which must be made available and paid for by your employer.
Gift-giving & Bribery
Gift-giving is merely an act of extending goodwill to an individual in an effort to share
something with them.
Businesses usually engage in gift-giving for the following reasons
 To show appreciation for a favor received
 To effectively establish goodwill with business partners
 To advertise, and
 To compete effectively against competitors.
Things to Consider in Gift-giving:
1. Value of the Gift
2. Purpose of the Gift
3. Circumstances under Which the Gift was given or received
4. Position between or the Relationship of the Giver and Receiver
5. Acceptable Business Practice in the Industry
6. Company Policy
7. Laws and Regulations

Whistleblowing or Social Media Rants

Business owners must respect and not penalize employees who are deemed
whistleblowers to either regulatory authorities or on social media. Essentially, employees are
encouraged and cannot be penalized for raising awareness of Workplace violations.
Ex. A Yelp employee wrote an opinion piece on a blog website that described the poor
working conditions at Yelp. The employee was fired for her negative views on the company.
However, states are increasingly passing off-duty conduct laws to protect employees for stating
opinions on social media when they are not at work.

Nondisclosure and Corporate Espionage.

Non-disclosure – Non-disclosure agreements are legal contracts that prohibit someone from
sharing information deemed confidential.
The confidential information is defined in the agreement which includes, but not limited to,
proprietary information, trade secrets, and any other details which may include personal
information or events.
Employers are at risk of employees and former employees stealing information. This might be
client data used by organizations in direct competition with the company.
When intellectual property is stolen or private client information is sold on the black market, it is
corporate espionage. Employers may require employees to sign
Non-disclosure agreements with stiff financial penalties to discourage these types of ethics
violations.
One of the biggest violations of corporate espionage exists with manufacturers who outsource
technology products in China where the patents are stolen, re- engineered, and sent into the
markets to compete with the companies that originally hired the factory
Types of industrial espionage
 Trespassing onto a competitor’s property or accessing their files without permission
 Posing as a competitor’s employee in order to learn company trade secrets or other
 Wiretapping a competitor
 Hacking into a competitor’s computers
 Attacking a competitor’s website with malware

False Advertising
Advertising – any paid form of non-personal presentation and promotion of ideas, goods, or
services by an identified sponsor. Advertising is not totally immoral. It only becomes unethical
when the advertisement becomes misleading, deceptive, and manipulative.
False Advertising - makes a false statement or misrepresents the product uses trickery or by
devious means
Deceptive Advertisement - It does not misrepresent, does not make false claims but it makes
claims such a way that a normal person looking at it comes up with the wrong conclusion.
Deceptive advertising, or false advertising, is any type of advertising that is false, misleading, or
has the effect of deceiving consumers. An ad can be deceptive in many aspects, including: Price
of a product, quality, usage, etc.
Manipulative Advertising - The manipulative advertising intends to do that by using facts,
arguments and plying with consumers emotions in a misleading and deceptive manner. It uses
misguided promises of desired results to convince customers to purchase a product. Advertisers
try to convince consumers that the most claims used in manipulation through advertising are the
exaggeration of the quality of product, fallacious arguments and emotional appeals. Ex. Lose
Weight without Diet, Miracle cures
The Morality of Advertising
Ethics in advertising is important, because by acting ethically with their advertising, a company
is being responsible towards the needs of the customer. Companies need to show they have
morals when advertising to consumers, because that makes consumers' feel like the
company cares about what they need.
Consumer act of the Philippines (RA 7394)
The state shall protect the consumer from misleading advertisements and fraudulent sales
promotion practices.
Special Requirement for Food, Drug, Cosmetic, Device or Hazardous Substances The following
rules must be followed:
a. No claim in the advertisement should be made that is not contained in the label or
approved by the Department of Health (DOH)
b. It is unlawful to advertise any food, drug, cosmetic, device or hazardous substance that is
false erroneous impression regarding its character, value, quantity, composition, merit, or
safety.
c. Where a standard has been prescribed for a food, drug, cosmetic or device, no person
shall advertise any article or substance in a manner that is likely to be mistake for such
product unless the product actuality complies with the prescribed standard.
d. Advertisements of any food. Drug, cosmetic, device or hazardous substance may not
make use of any reference to any laboratory report of analysis required to be submitted to
the Department of Health.
e. No advertisements for any food, drug, cosmetic, device, or hazardous substance may be
allowed unless such product is duly registered and approved by DOH.