Tuguegarao Archdiocesan Schools System

LYCEUM OF TUAO
Centro 02, Tuao, Cagayan, 3528
Email address: lyceumoftuao1965@yahoo.com.ph
BUSINESS ETHICS AND SOCIAL RESPONSIBILITY

NAME OF TEACHER: AMY LIBERTY P. CASIBANG, LPT / 0915-953-8600

MODULE NUMBER: 3 (1 WEEK)
MODULE TITLE: BUSINESS OPERATIONS AND STEWARDSHIP

Lesson 1.3 Business Operations and Stewardship

Learning Objectives
At the end of this lesson, you should be able to do the following:
● Define the core principles in business operations.
● Expound on how the core principles are practiced in business.
● Relate the core principles to stewardship in business.

Businesses provide goods and services to the people. Society allows businesses to exist because they contribute to
socioeconomic development by generating jobs, providing knowledge and training, improving the economy, and
contributing to community development.
To ensure that businesses contribute to society and the economy, they must abide by the core principles in their business
operations. The core principles serve as a fundamental guide that can lead organizations towards better stewardship.
The core principles in business operations and the duty of stewardship are relevant to public, business, and nonprofit
sectors.

Core Principles in Business Operations

While the objective of business operations is to generate wealth, businesses must not ignore the appropriateness of how
they fulfill this objective. Unfortunately, It is common knowledge that many organizations resort to bribery and other
illegal acts to maximize their profit. These practices have led to increased state oversight over businesses. To curb
corruption, the government regulates their operations.

In the course of business operations, various transactions with clients, customers, and stakeholders happen; thus, the
core principles of fairness, accountability, and transparency must be upheld at all times.

Fairness
Fairness is defined as the expression of neutrality. For instance, a person who is impartial and unbiased in making
decisions is said to be fair. In business, there is fairness when financial considerations are made not for the benefit of
specific individuals or groups, but for the welfare of all interested parties.

Fairness can be practiced in business operations. Following government policies, business organizations must treat their
employees, suppliers, and customers fairly. In particular, treating employees with equity exhibits fairness. Employers
should provide just wages and benefits, avoid favoritism and discrimination, and prohibit unethical hiring practices such
as backdoor hiring. Meanwhile, suppliers and vendors can be selected through competitive bidding. Businesses can
engage in honest and objective dealings with their clients and customers. Also, they can be in compliance with
government regulations.

However, fairness is subjective—what seems fair to one may seem unfair to another, and vice versa. Thus, the practice
of fairness requires careful evaluation and good judgment.

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 Tuguegarao Archdiocesan Schools System
LYCEUM OF TUAO
Centro 02, Tuao, Cagayan, 3528
Email address: lyceumoftuao1965@yahoo.com.ph
Accountability
Accountability is the principle of assuming responsibility for the outcome of one's action or performance. It should be
applied by executives, managers, and employees at every level of the business. Also, the whole organization should
also ensure accountability as it deals with external entities.

Accountability entails the process of setting expectations, performing tasks, and responding to the outcome. For
instance, the shareholders of a corporation delegate powers to their chosen board of directors. The group is expected to
perform its task to meet the shareholders' expectations. The members are answerable for the good and bad outcomes
of their undertakings.

Accountability is crucial; in a system where individuals are held accountable, abuse of power can be avoided. Doing
due diligence in performance and governance, as well as in safeguarding legitimacy, is a manifestation that an
organization adheres to the principle of accountability. Moreover, it is also a significant aspect in avoiding mischief
and fraud in finance and accounting. Accountability measures make it easy for any member of the organization to
monitor corruption in transactions and business dealings, and thus avoid mischief and fraud in finance and accounting.

Government also demands accountability from businesses by requiring them to undergo financial and compliance
audits. Audits affirm that the information reported is accurate and complete, and thus compliant with accounting
standards. They discourage the tampering of financial data and any maneuvering. As a result, the confidence of
investors and funders, customers and clients, and the general public is enhanced.

Transparency
The third core principle in business operations is transparency. Transparency entails honesty and openness in all the
undertakings in which an organization is involved. Organizations that conceal fraud and corruption often lose their
reputation and investors or funders. In a world that is becoming more competitive and integrated, organizations must
establish their credibility with their clients and stakeholders and gain their trust to make a lasting and meaningful
impact.

However, a clear line must be drawn between confidentiality and transparency. Confidentiality prohibits the sharing of
personal and sensitive information without the consent of those involved. On the other hand, transparency encourages
the dissemination of all readily available and relevant information to all users to allow them to make informed
decisions. Transparency matters when certain information is critical in acquiring knowledge, building confidence, and
making decisions. Transparency is especially important in financial accounting, where all transactions are recorded,
and money is accounted for.

Transparency is vital in fostering loyalty from people. When they appreciate that nothing is withheld from them, they
give a full commitment. When important pieces of information are clearly communicated, interested parties can make
sound and informed decisions.

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 Tuguegarao Archdiocesan Schools System
LYCEUM OF TUAO
Centro 02, Tuao, Cagayan, 3528
Email address: lyceumoftuao1965@yahoo.com.ph
CLOSER LOOK

Fairness in Hiring
Mr. de la Cruz is a human resource associate at Build Co., a big company engaged in construction, and is
responsible for processing applications of new hires. His nephew, who has recently graduated with an
engineering degree, is seeking a new job in construction. Mr. de la Cruz advised him to file his application at
Build Co. and inhibited himself from participating in the application process.

Even Presidents Are Accountable

The board of directors of an airline company has appointed its new president. The company is faced with
decreased demand and numerous challenges brought about by the worldwide health crisis. Being under
immense pressure to secure a recovery for the company, the president negotiated huge loan contracts to
sustain its business operations. He vowed to take responsibility for the results of his decisions.

Informing the Public

Winnie is the Vice President of Chicago Zoo, a world-renowned animal theme park visited by millions of
tourists annually. During the year, she discovered the purchase of exotic and endangered animals from
Africa. Management believed that the addition of these animals would increase the number of customers
for the zoo. The CEO wanted to release a memo stating that all animals were donated, but Winnie refused to
post it.

Stewardship
As businesses and nonprofit organizations must always observe fairness, accountability, transparency in their
operations, they strive to improve and maximize their wealth. Between these two objectives, how can organizations
maintain a balance while contributing to the overall development of society? The answer lies in the appropriate and
effective practice of stewardship.

Stewardship is the conduct, supervision, and management of one's resources that are entrusted to another's care.
Stewardship is an ethic that prioritizes organizational goals and the stakeholder’s well-being over individual or
sectarian interests. Thus, stewards recognize that they are responsible for the resources entrusted to them, exhibit a
strong attachment to the business, and have a strong desire to work towards its success. Without stewardship,
individuals only focus on their desires.

Business Stewards recognize that people, capital, and the environment are resources that need to be protected and
developed. Any action or decision that misuses or harms those resources is detrimental to the future of the business.
By exercising business stewardship, one prioritizes the growth and development of resources over the short-term
objective of raising profit. Stewardship success is measured by its positive impact on people, profit, and planet (or
environment). Any action or decision that misuses or harms those resources would be detrimental to the future of
business. Through stewardship, the growth and development of resources are prioritized over the short-term objective
of raising profit.

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 Tuguegarao Archdiocesan Schools System
LYCEUM OF TUAO
Centro 02, Tuao, Cagayan, 3528
Email address: lyceumoftuao1965@yahoo.com.ph
CLOSER LOOK
Taking Care of People, Profit, and Planet
Farmer’s Coffee Company upholds stewardship in its operations. It recognizes that its long-term success will
be determined by its management of resources—the people, profit and the planet. It ensures that the salaries
and benefits of its employees are fair, and the terms of contract with farmer-suppliers are mutually beneficial.
The owners and managers regularly assess their operations to ensure that the capital is used efficiently. It also
implements a strict policy on waste segregation and environmental protection. To minimize waste, it uses
recyclables and purely biodegradable materials for packaging and take out.

Sustainability is one of the most important effects of stewardship. Through good stewardship businesses can have
abundant resources, and their operations can become stable and profitable. As a result, businesses grow continuously
to meet the needs and demands of their customers without harming the world around them. Similarly, nonprofit
organizations that practice stewardship gain strength and create meaningful impact on their communities.

Organizations that adhere to the core principles of business operations and practice stewardship consider the impact of
their operations on the community and society. Thus, they observe fairness, accountability, and transparency in
managing people, capital, and the environment.