Chapter 5

Ethics can be defined broadly as a set of moral principles or values that govern the actions and decisions
of an individual or group.

CHARACTERISTICS AND VALUES ASSOCIATED WITH ETHICAL BEHAVIOR

The following list of ethical principles incorporates the characteristics and values that most people
associate with ethical behavior.

INTEGRITY- Be principled, honorable, upright, courageous, and act on convictions; do not be two-faced
or unscrupulous or adopt an end-justifies-the-means philosophy that ignores principle.

HONESTY- Be truthful, sincere, forthright, straightforward, frank, candid; do not cheat, steal, lie,
deceive, or act deviously.

TRUSTWORTHINESS AND PROMISE KEEPING- be worthy of trust, keep promises, full commitments,
abide by the spirit as well as the letter of an agreement;

LOYALTY (FIDELITY) AND CONFIDENTIALLY- Be faithful and loyal to family, friends, employers, client and
country; do not use disclose information learned in confidence;

FAIRNESS AND OPNEESS- be fair and open- minded, be willing to admit error and, where appropriate,
change positions and beliefs, demonstrates a commitment to justice, the equal treatment of individuals,
and tolerance for acceptance of diversity; do not overreach or take advantage of another’s mistakes or
diversities.

Caring for Others- Be caring, kind, and compassionate; share, be giving, be of service to other=ers; help
those in need and avoid harming others.

Respect for Others- Demonstrate respect for human dignity, privacy, and the right to self-determine of
all people: be courteous, prompt, and decent; provide others with the information they need to make
informed decisions about their own lives; do not patronize, embarrass, or demean.

Responsible Citizenship- Obey just laws; if all law unjust, openly protest it; exercise all democratic rights
and privileged responsibly by participation (voting and expressing informed views), social consciousness,
and public service; when in position of leadership or authority, openly respect and honor democratic
processes of decision making, avoid unnecessary secrecy or concealment of information, and assure that
others have all the information the need to make intelligent choices and exercise their rights.

Pursuit of Excellence- in all matters; in meeting your personal and professional responsibilities, be
diligent, reliable, industrious and committed;do not “ win at any cost”

Accountability- Be accountable, accept responsibility for decisions, for the foreseeable consequences of
actions and inactions, and for setting an example of others.

WHY IS ETHICAL BEHAVIOR NECESSARY? Ethical behavior is necessary for society to function in an
orderly manner. It can be argued that ethics is the glue that holds a society together.

Business decisions influence employees, customers, suppliers, and competitors, while company
operations affect communities, governments and the environment.
WHY DO PEOPLE ACT UNETHICALLY? Most people defined unethical behavior as conduct that differs
from the way they believe would have been appropriate given the circumstances.

There are two primary reasons why people act unethically:

1. the person’s standards are different from those of society as a whole, or

2. the person chooses to act selfishly.

In many instances, both reasons exist.

1. Person’s Ethical Standard differ from General Society – Extreme examples of people whose behavior
violates almost everyone’s ethical standards are drug dealers, bank robbers, and larcenists.

2. The Person Chooses to Act Selfishly – A considerable portion of unethical behavior results from selfish
behavior.

CATEGORIES OF ETHICAL PRINCIPLES

Principles of Personal Ethics include among others

 Basic justice, fairness

 Respect for the right of others
 Concern for the right of others
 Concern for the well – being on welfare of others
 Benevolence, trustworthiness, honest
 Compliance with the law

Professional Ethics include among others

 Integrity, impartiality, objectivity

 Professional competence
 Confidentially
 Professional behavior
 Avoidance of potential or apparent conflict of interest

Business Ethics include among others

 Fair competition
 Global as well as domestic justice
 Social responsibility
 Concern for environment
The focus of this book is on Business Ethics.

The Need for Professional Ethics

To understand the importance of a Code of Ethics to professionals, one must understand the nature of a
profession as opposed to other vacation.

All recognized professions have several common characteristics. The most important of these
characteristics are:

1. A responsibility to serve the public

2. A complex body of knowledge
3. Standards of admission to the profession
4. A need for public confidence

Careless work or lack of integrity of a professional may lead the public to a negative view toward the
entire profession.

Code of Good Governance for the Profession in the Philippines (E.O. No. 220, June 23, 2003)

This code is adopted by the Professional Regulation Commission (PRC) and the 42 Professional
Regulatory Boards to cover an environment of good governance in which all Filipino professionals shall
perform their tasks.

General Principle of Professional Conduct

Professionals are required not only have an ethical commitment, a personal resolve to act ethically, but
also have both ethical awareness and ethical competency.

Specific Principle of Professional Conduct

1. Service to Others

Professionals are committed to a life of service to others. They protect life, property, and public welfare.

2. Integrity and Objectivity

To maintain and broaden public confidence, professionals shall perform their responsibilities with the
highest sense of integrity and imbued with nationalism and spiritual values.

3. Professional Competence

In providing professional services, a certain level of competence is necessary, i.e., knowledge, technical
skills, attitudes and, experience.

4. Solidarity and Teamwork

Each profession shall nurture and support one organization for all its members.
5. Social and Civic Responsibility

Professionals shall always carry out their professional duties with due consideration of the broader
interest of the public.

6. Global Competitiveness

Every Professional shall remain open to challenges of a more dynamic interconnected world.

7. Equity of all Professions

All professionals shall treat their colleagues with respect and shall strive to be fair in their dealings with
one another.

Examples of Code of Conduct and Ethics for Professionals are shown in:

Appendix A – For Professional Teachers

Appendix B- For internal auditors

Appendix C- For Management Accountants

Examples of Code of Business Conduct and Ethics for Private Enterprises are presented in:

Appendix D- Telecommunications Company

Appendix E- Manufacturing Company

Appendix F- Commercial Bank

CHAPTER 6

Business ethics is based on the personal values and standards of each persons engaged in business.

PURPOSES OF BUSINESS ETHICS

Main Purpose

The main purpose of business ethics is help business and would- be business to determine what
business practices are right and what are wrong.

Special Purpose

There are other purposes which are corollary to the main purpose. These purposes include the
following:

1. To make businessmen realize that they cannot employ double standards to the actions of other
people and their own actions.
2. Two show businessmen that common practices which they have thought to be right because
they see other businessmen doing it, are really wrong.
3. To serve as a standard or ideal upon which business conduct should be based.
SCOPE AND IMPACT OF BUSINESS ETHICS

Business ethics covers all conduct, behavior and judgement in business.

Generally, actions that are not forbidden by law are ethical.

The businessman who provides fair business competition is the most likely to observe the business
ethical rules conduct, behavior and judgement.

Economic Impact

A business has an economic impact on society though the wages it pays to its employees, the materials
that it buys from their suppliers and the prices it charges its customers.

Social Impact

The social impact of corporate governance contributes to the ethical climate of society.

Environmental Impact

Environmental protection is a key area of business influence on society.

Impact on Business Managers

The concepts and principles for the ethical conduct in business are relegated to the managers of the
business enterprise.

In particular, a manager should:

ETHICAL CHALLENGES IN TODAY’S WORLD

In an article, “Ethical Challenges in Today’s World” written by Ms. Mercedes B. Suleik published in the
business Mirror on February 13, 2018 the author expresses her insights on “ Business Ethics” where an
inherent conflict between ethics and the pursuit of profit is more pronounced.

Cited in this article is the message of Pope Francis in his Ecumenical, ‘ Evangeli Gaudium

Humanity is experiencing a turning point in its history as can be seen from the advances occurring in the
sciences and technology

She also quoted Pope Benedict XVI’s Caritas in Veritate

Humanity has a mission and the means to transform the world in justice and love in human relations,
even in the social and economic field.

Chapter 7 Common Unethical Practices of Business Establishments

Common Unethical Practices of Business Establishments

Unethical problems in business ethics occur in many forms and types. The most common of these
unethical practices establishments are misrepresentation and over- persuasion.
Misrepresentation may be classified into two types: direct misrepresentation and indirect
misrepresentation.

Direct Misrepresentation is characterized by actively misrepresenting about product or customers. This

includes:

Deceptive Packaging. Take many forms and is of many types.

Misbranding or Mislabeling. Is the practice of making false statements on label of a product or making
its container similar to a well- known product for the purpose of deceiving the customer as to the quality
and/ or quantity of a product being sold.

False or Misleading Advertising. Advertising serves a useful purpose if it conveys the right information.

Examples are:

 Advertisements with pictures or statements that convey exaggerated impressions of the

product’s reliability or quality.
 Advertisement that claims that the product is the “fastest selling brand” or the “product of the
year”
 Advertisements using fictitious or obsolete testimonials.

Adulteration- is the unethical practice of debasing a pure or genuine commodity by imitating or

counterfeiting it, by adding something to increase its bulk or volume, or by substituting an inferior
product for a superior one for purpose of profit or gain.

Weight understatement or Short weighing- in short weighing, the mechanism of the weighing scale is
tampered with or something is unobtrusively attached to it so that the scale registers more that the
actual weight.

Measurement understatement or Short measurement- in short measurement, the meaning stick or

standard is shorter than the real length or smaller in volume than the standard.

Quantity understatement or Short numbering- in this unethical practice, the seller gives the customer
less that the number asked for or paid for.

Indirect misrepresentation - is characterized by omitting adverse or unfavorable information about the

product or service.

Caveat emptor- is a practice very common among salesmen. Translated, caveat emptor means “let the
buyer beware”.

Deliberate Withholding of Information - Following the argument that caveat emptor is unethical, the
deliberate withholding of significant information in a business transaction, is also unethical.

Passive deception- Direct misrepresentation gives business a bad name while indirect misrepresentation
or passive deception in not as obvious, it nonetheless contributes to the impression that businessmen
are liars and are out to make a fast buck.
Over- Persuasion – is a process of appealing to the emotions of a prospective customer and urging him
to buying item of merchandise he needs.

The common instances of over- persuasion include the following examples:

1. Urging a customer to satisfy a low priority need for merchandise.

2. Playing upon intense emotional agitation to convince a person to buy.
3. Convincing a person to buy what he does not need just because he has the capacity or money to
do so.

CORPORATE ETHICS

Unethical Practices of Corporate Management

Practices of corporate management that involve ethical considerations may be classified into two:
practices the Board of Directors and practices of executive officers.

Some Unethical Practices of the Board of Directors

1. Plain Graft – Some of the board of directors help themselves to the earnings that otherwise would
go other stockholders.

2. Interlocking Directorship- is often practiced by a person who holds directorial positions in two or
more corporation that do business with each other.

3. Insider Trading- occurs when a broker or another person with access to confidential information uses
that information to trade in shares and securities of a corporation, thus giving him an unfair advantage
over the other purchasers of these securities.

4. Negligence of Duty- a more common failure or the members of the board directors that breach of
trust in neglect of duties when they fail to attend board meetings regularly.

Some an ethical practices of executive officers and lower level managers

To a lesser extent executive officers may also guilty of unethical practices all the unethical practices of
the members of board of directors discuss are activities they are also capable of engage in in the
purpose to a lesser degree because of certain limits to their authority.

Unethical practices that are more common to executive officers and lower level managers are:

1. Claiming a vacation trip to be a business trip. The president or vice president report his personal
vacation in europe are there in the united states as a business trip so he can get reimbursement for his
expenses including those of his families

2. Having employees do work and related to the. Executive officers and lower managers are many
employees to do personal things for them all company time such as having the company janitors water
and mow their lawns having the maintenance men do house or appliance repairs for them and having
subordinate employees secure a license or types letters pertaining to there other businesses.
3. Loose or infective controls. Managers do not provide adequate controls to remove temptation and to
prevent or discourage employees from engaging in unethical practices.

4. Unfair labor practices. The labor code list the following as unfair labor practices committed by
employer on employees or a group of employees who have organize themselves into a union.

a. To interfere with, restrain or coerce employees in the exercise of their right to self organization;

b. To require as a condition of employment that a person or employee shall not join a labor
organization or shall withdraw from 1 to which you belongs;

c. The contract out services or functions being performed by union members when such will interfere
with restrain or coerce employees in the exercise of their rights of their rights to self organization

d. To initiate, dominate, assist or otherwise in with the formation or administration of any labor
organization including the giving of financial or other support to it;

e. To discriminate with regard to wages hours of work and other terms or conditions of employment in
order to encourage or discourage membership in any labor organization.

f. To dismiss discharge or otherwise prejudice or discrimination against an employee for having giving
are being about to give testimony under the labor;

g. To violate the duty to bargain collectively have prescribed by the labor;

h. To pay negotiation or attorneys fees to the union or its officers or agents as part of the settlement of
an issue in collective bargaining or any other dispute;

i. The violet or refuse to comply with voluntary arbitration awards or decisions relating to the
implementation or interpretation of a collective bargaining agreement;

j. To violate a collective bargaining agreement

5. Making false claims about losses to free themselves from paying the compensation and benefits
provided by law. There are employers who claim and existent losses so they can be exempted from
paying the minimum wage and emergency cost of living allowances required by law.

6. Making employees line document showing that they are receiving fully what they are entitled to
under the law when in fact they are on the receiving a fraction of what they are supposed to get.

7. Sexual. Work education or training related sexual harassment is committed by employer-employee

manager supervisor agent of the employer teacher instructor professor coach trainer or any other
person who having authority influence our moral ascendancy over another in a work or training or
education environment demands requests or otherwise acquire sexual favor from the other regardless
of whether the demand requests or requirements for submission is accepted or not by object. Some
unethical practices of employees There are some employees who are not mindful of their moral
obligations to their employers.

1. Conflict of interest- arises when employee who is duty bound to protect and promote the interest of
his employer violates this obligation by getting himself into a situation where his decision or actuation is
influenced by what he and gain personally from its rather than what if and flower can give from it.
Some common examples of interest are:

a. An employee who holds a significant interest or shares of stock of a competitor supplier customer or
dealer favors this party to do prejudice of his employer.

b. The employee accept cash a gift or a lavish entertainment or a loan from a supplier customer
competitor or contractor.

c. The employee uses or discloses confidential company information for his or someone else personal
gain.

d. The employee engage in the same type of business as his employer.

e. The employee uses for his own benefit a business opportunity in which his employer has or might be
expected to have an interest.

2. Dishonesty- business ethics is not just limited to business transactions with outside parties. It also
covers employee employer relationship especially with respect to an employee's honesty as he carries
out his assigned duties in the office. Examples of dishonest acts of employees are:

a. Taking office supplies home for personal use.

b. Budding an expense account through the use of fake reciepts when claiming reimbursement.

c. Taking credit for another employees idea.