Target

The business community is confronted with a great deal of challenges and

opportunities. Being part of the social order and as society expects, businesses are
prodded, asked or encouraged to improve their business practices in ways that
respect ethical values, people, communities and the environment. In response to
these challenges, businesses recognize that, aside from making profit, they are
morally obliged to become more innovative, competitive, productive and responsible
members of the society. It is morally obligatory even if not legally required for
businesses to protect and uphold the interest of their stockholders and meet the
tests of good corporate citizenship.

This module would provide you with information and activities that will help
you understand what social responsibility is all about with regards to issues and
ethical principles in entrepreneurship like basic fairness, personnel and customer
relations distribution dilemmas, fraud, unfair competition, unfair communication,
non-respect of agreements, environmental degradation, etc.

After going through this module, you are expected to:

1. Formulate a morally defensible position on ethical issues in entrepreneurship like

basic fairness, personnel and customer relations distribution dilemmas, fraud,
unfair competition, unfair communication, non-respect of agreements,
environmental degradation, etc. (ABM_ESR12-IVi-l-3.2; ABM_ESR12-IVi-l-3.3)
 Jumpstart

Activity 1:

Direction: Tell something about the picture below in one paragraph consisting of 5
sentences. Write in a separate sheet of paper.

https://s3.amazonaws.com/lowres.cartoonstock.com/environmental-issues-business-money-finances-
investment-investing-cgon453_low.jpg
 Discover
Introduction

What you did in the previous activity is somewhat related to what we are going
to study in this lesson.

The fundamental reason for examining the activities of business from the
moral perspective is for the promotion of the common good, protection of the
individual’s interests and the preservation of the human society in general. Without
ethics, business will be chaotic because there will be no understanding and
agreement about what is wrong and right in the human conduct. Ethics in any field
must be rooted in a sense of morality and justice that is associated with human
action. Social responsibility is a moral obligation of each and every individual,
institution, business and organization since they all compose the society.

Looking back in our objective on the previous pages, “formulate a morally

defensible position on ethical issues in entrepreneurship like basic fairness,
personnel and customer relations distribution dilemmas, fraud, unfair competition,
unfair communication, non-respect of agreements, environmental degradation, etc.”
Let as first try to understand the issues buy discussing them one by one.
1. Basic Fairness

Let’s try to review back about the terminology “fairness.”

Fairness in the context of a business organization involves balancing the

interests involved in decision making including any decisions related to hiring, firing
(including the investigatory process), and the compensation and rewards system.
Recent research has expanded the meaning of equity or fairness. Historically, equity
theory focused on distributive justice, the employee’s perceived fairness of the
number of rewards and who received them. However, organizational justice draws a
bigger picture. Employees perceived their organizations as just when they believe
rewards and the way they are distributed are fair. In other words, fairness or equity
can be subjective; what one person sees as unfair may be perfectly appropriate for
another. In general, people see allocations or procedures favoring themselves as fair.

Overall, fairness has to do with justice, which is to give to another that which
is due him or her. More concretely, justice: (1) looks at the balance of benefits and
burdens distributed among members of a group; and/or (2) can result from the
application of rules, policies, or laws that apply to a society or a group. In general,
the results of actions override utilitarian results.

2. Personnel and Customer Relations

 There are two subjects here, the first is about personnel relations and the
second is on customer relations. Let us first discuss the former, then the next will
be the latter.

What is Personnel Relations?

Personnel is synonymous to the word “employee” and also to “human

resource.”

So, we can use the word employee relations in replace of the word personnel
relations. It’s just the same and when we search topics on personnel relations,
employee relations will be the one to appear.

The term employee relations refer to a company's efforts to manage

relationships between employers and employees. An organization with a good
employee relations program provides fair and consistent treatment to all employees
so they will be committed to their jobs and loyal to the company. Such programs also
aim to prevent and resolve problems arising from situations at work.

What is Customer Relations?

The way a business relates to its customers, clientele and patrons is known
as customer relations. Also called customer service, some companies hire people
specifically to manage how the company interacts and communicates with people.
The goal is to retain existing customers and to gain new ones by providing the best
customer relations they can, and – hopefully, to find better customer services than
those their competitors provide. There are several components that go into superb
customer relations.

Customer relations is the process and manner by which a business develops,

establishes, and maintains relationships with its customers. Businesses rise and fall
through the support of their customer bases. Consequently, it is absolutely essential
that you develop effective customer relations. On a practical level, customer relations
is effectively communicating with your customers and promptly addressing
complaints and treating them as opportunities for improvement. In other words,
listen to your customers!

3. Fraud
Let’s take a look what is the meaning of fraud in the dictionary.

It means intentional perversion of truth in order to induce another to part

with something of value or to surrender a legal right. It also means an act of
deceiving or misrepresenting.

Fraud is synonymous to deception, deceit, treachery, and swindling. In

simple terms in Filipino, it is translated as “Pandaraya” and “Panloloko.”
Business Fraud

Business fraud consists of dishonest and illegal activities perpetrated by

individuals or companies in order to provide an advantageous financial outcome to
those persons or establishments. Also known as corporate fraud, these schemes
often appear under the guise of legitimate business practices. An array of crimes fall
under business fraud, including the following:

▪ Charity fraud: Using deception to get money from individuals believing they
are making donations to legitimate charity organizations, especially charities
representing victims of natural disasters shortly after the incident occurs.
▪ Internet auction fraud: A fraudulent transaction or exchange that occurs in
the context of an online auction site.
▪ Non-delivery of merchandise: Fraud occurring when a payment is sent but the
goods and services ordered are never received.
▪ Non-payment of funds: Fraud occurring when goods and services are shipped
or rendered but payment for them is never received.
▪ Overpayment scheme: An individual is sent a payment significantly higher
than an owed amount and is instructed to deposit the money in their bank
account and wire transfer the excess funds back to the bank of the individual
or company that sent it. The sender's bank is usually located overseas, in
Eastern Europe for example, and the initial payment is found to be fraudulent,
often after the wire transfer has occurred.
▪ Re-shipping scheme: An individual is recruited to receive merchandise at their
place of residence and subsequently repackage the items for shipment,
usually abroad. Unbeknownst to them, the merchandise was purchased with
fraudulent credit cards, often opened in their name.

4. Unfair Competition

Is competition good or bad? Competition is healthy and can be a motivation

for firms to produce better products or offer better services. Without competition,
firms can just relax and quality will suffer. Thus, competition becomes bad only when
it eliminates a competitor in a cutthroat competition. Some practices include under
cost selling or selling their products below cost just to get rid of their competitors.

Difference between Fair and Unfair Competition

Fair competition is doing business under ethical rules of conduct, behavior and
judgement. It is attaining success in business through the merits of its products or
services while unfair competition is unethical business practice. It is doing business
with the goal of profit without regard to others. In general, unfair competition
consists of:

➢ Deceptive trade practices such as misrepresentation and false advertising;

➢ Business interference to prevent a competitor from continuing with its
business process or business contract;
➢ Anti-competitive market practices such as under cost selling to kill the
competitor;
➢ Defamation of a competitor or badmouthing a competitor to a customer;
 ➢ Caveat emptor or indirect misrepresentation by withholding information from
the buyer; and
➢ Violation of Intellectual property right such as copyrights, patents,
trademarks and service marks.

Article 168 of R.A. 8293 (Intellectual Property Code of the Philippines) is

specifically about unfair competition on the use of trademarks, service marks and
trade names. Under this R.A. and article. The following shall be deemed guilty of
unfair competition:

a. Any person who is selling his goods and gives the general appearance of the
goods of another, either in the goods of themselves or in wrapping of the
packages, which would likely influence buyers to believe that the products
being offered are those of the manufacturer or dealer other than the actual
manufacturer.
b. Any person who, by any artifice, or device, induces the false belief that such
person is offering the services of another who has identified such services in
the mind of the public.
c. Any person who shall make false statements in the course of trade or shall
commit any other act in bad faith to discredit the goods, services or business
of another.

5. Unfair Communication

Communication is an important tool for a small business owner.

Communications with employees, customers and vendors may involve product
promotions, job offers, contract negotiations and discussions regarding the
competition. Using such an important business tool requires a sense of
responsibility on the part of the communicator to adhere to ethical guidelines.

Legal Violations

While the concept of ethics generally relates to a person's responsibility to

communicate fairly, without bias and with respect to those affected by the
communication, violations of ethics in communications can become legal violations.
Breaching confidentiality or purposely communicating lies about a person or an
organization, for example, can be considered a legal issue as well as an ethical
issue. Legal violations of communications, such as slander, can result in sanctions
by governing bodies or criminal ramifications.

Truthfulness

Sometimes, an untruthful piece of communication is just an oversight.

However, not checking facts is a violation of ethics, particularly when
communicating information about a product, competitor, customer or employee,
into the piece of communication. A lack of fact-checking shows a lack of
responsibility to verify information that is being communicated. If the information
might prove detrimental to the subject, the communicator has an obligation to
make certain the information is accurate. For example, stating that a competitor
uses a substandard material in his product without verifying the information
violates ethics and may result in legal consequences.

Confidentiality

Relaying information that was provided in confidence or that was overheard

in someone else's conversations is a violation of communication ethics. The act of
spreading rumors is degrading to a small business owner who needs to earn the
trust and respect of his employees and customers to be successful. In addition,
some breaches of confidentiality can also carry legal consequences. Many contracts
are written with confidentiality clauses. Business owners working in the medical
industry may be subject to HIPAA regulations that forbid them from disclosing any
information about medical providers or clients.

Offensive Messages

Communication that is offensive to the receiver or to anyone affected by the

information contained in the message violates ethical communication guidelines.
The communication may offend others because of references to race, gender,
income level, background or education level. Stories and jokes are prime examples
of communication that have the potential to offend the recipients. Any topic to
which others may be sensitive should be avoided in business communication,
including religion and political issues, to avoid offending others and possibly
committing a violation of communications ethics.

Communication is an extremely important part of every society. In this lesson,

we're going to talk about unethical communication and see what sort of behaviors
harm ethical interactions.

Communication Ethics
The communications revolution of the last decade has fundamentally changed
the ways that modern people interact, share information, and otherwise
communicate. Communication is a big part of our lives, and this means that it is
powerful. Anything with that much power needs to be examined, which is why a
number of scholars spend their time examining issues of communications ethics.

Ethical and Unethical Communication

Scholars of communications ethics, along with historians, sociologists,

psychologists, and others, have long noted that language has power. Our societies
are built around shared systems of communication; we develop culture through the
ways we communicate our ideals with each other, and even our personal identities
and psychological well-being can be impacted by our ability to communicate with
others. Language can be used to support an ideology, emotionally wound, rally the
masses, or inspire devotion. Keep in mind that language is only a small portion of
communication, and that non-verbal forms of communication can be just as
influential.

So, communication is powerful, and therefore has ethical boundaries.

Communication used to improve interpersonal relations or to bring moral changes
to society is ethical communication. Communication used to undermine
relationships or encourage social immorality is unethical communication. The exact
definitions of these depend on the ethics system of your culture, but most people
agree that ethical communication builds positive relationships, while unethical
communication impairs them.

Interpersonal Communication

Unethical communication can be very damaging, but impacts people

differently at different levels. Let's start with interpersonal communication, or the
systems of exchange between individuals. Communication is the centerpiece of
interpersonal relationships, through which people build trust, express emotions, and
establish connections. Ethical communication encourages this, while unethical
communication undermines interpersonal relationships. This can be extraordinarily
damaging, as much of or psychological and social well-being depends on healthy
relationships.

Institutional Communication

While unethical communication can hurt interpersonal relationships, it can

also undermine healthy social relationships. Institutions, from companies to entire
governments, have moral and ethical obligations to communicate transparently and
without bias or prejudice. As groups of authority, institutions have the power
through their communication habits to influence the communication systems within
a large group of people. Unethical communication practices at the institutional level
tend to favor a few people over the majority, specifically those in power.

Unethical Behaviors

Now that we understand the ways that unethical communication can impact
people on personal and social levels, let's explore some behaviors commonly accepted
to be unethical.

Plagiarism

Our first unethical communication behavior is plagiarism. Plagiarism

describes the un-credited use of someone else's ideas. We see it often in writing,
when an author steals from other writers. Plagiarism hurts trust and the credibility
of publishing institutions, undermining a society's ability to communicate openly
and freely. However, plagiarism is about more than just writing. In the colonial era,
European empires had a strong habit of taking responsibility for any positive event
or development, while blaming negative events on the local populations. This created
a structure of power that was biased against local populations. It has only been with
the on-going post-colonial studies of the 20th and 21st centuries that many
instances of cultural or social plagiarism are being uncovered.
Ethics in Business Communication

As business practices become more transparent and the people behind those
businesses become more public, customers and patrons begin to expect more from
these businesses. It’s no longer a faceless corporation trudging along making a profit
and paying their investors. Because of this, in order to be successful in today’s
environment, a company has to be socially conscious and to behave ethically.

That’s a trend whose thread is woven into every aspect of business, and that’s
not a bad thing. Communicators should absolutely be cultivating a level of trust and
integrity in each of their messages. They should be socially conscious and inclusive
in their communications. It’s what audiences expect and, frankly, what they should
have.

Guidelines for Ethical Communication

It’s not enough for a communicator to craft a message that’s clearly understood by
his audience, leveraging the seven principles of business communication:
• Clear
• Concise
• Objective
• Consistent
• Complete
• Relevant
• Understanding of Audience Knowledge
In reality, if you adhere to the seven principles, you will communicate
ethically. For instance, if you craft a message that is not clear and concise, and you
use tricky language that manipulates your consideration for your audience’s
knowledge, then you are not being ethical. If you’re not being objective, and you are
trying to communicate your opinion (or the opinion of others) as fact, then you are
not being ethical. If you purposely do not disclose complete information, then you
are not being ethical.

You don’t have to look too far today to see examples of unethical
communication; they’re all over the media. “Fake news” media sites abound, even
though social media outlets like Facebook and Twitter are making efforts to prevent
them from being posted and shared.

6. Non-respect of Agreements

The synonym of the word agreement is “contract” and “treaty”.

The Basics of Business Contracts and Agreements

Contracts and agreements are important for conducting business for all sizes
of companies. In earlier decades, there were few written business contracts, and
many business and personal deals were done with a handshake. If a problem arose,
the two parties could take the issue to court, and a judge would hear the case even
if the contract was not put into writing.

While a verbal contract is still legal (except for in specific situations), most
contracts are documented in written form. Contracts have become increasingly
detailed these days, and every effort is made to make all possibilities and
eventualities clear.

Enforceable Contracts

In addition to being clear and specific, a contract must meet certain criteria
to make it legally enforceable. A legally enforceable contract can be used in court to
support a decision on a disputed item. If a contract does not have certain essential
ingredients, it is not legally enforceable.

Most contracts never see a courtroom and they could easily be verbal unless
there is a specific reason for the contract to be in writing. When something goes
wrong, a written contract protects both parties. If one party to a valid (enforceable)
contract believes the other party has broken the contract (the legal term is breached)
the party being harmed can bring a lawsuit against the party who it believes has
breached the contract.

The legal process, or litigation, determines whether the contract has been
breached or whether there are circumstances that negate the breach. The court,
however, will only hear a contract dispute if the contract is valid.
Contracts vs. Agreements

Many people use the terms contract and agreement interchangeably, but they
are not precisely the same thing. Black's Law Dictionary defines an agreement as "a
mutual understanding between...parties about their relative rights and
responsibilities." It defines a contract as "An agreement between...parties creating
obligations that are enforceable."

Essentials of Business Contracts

There are six required, essential elements for a contract to be valid

(enforceable by a court). The first three, considered here together, relate to the
agreement itself, and the other three relate to the parties making the contract.
Offer, Acceptance, and Mutual Consent

Every contract must include a specific offer and acceptance of that specific
offer. Both parties must consent to their free will. Neither party can be coerced or
forced to sign the contract, nor must both parties agree to the same terms. Implied
in these three conditions is the intent of the parties to create a binding agreement. If
one or both parties are not serious, there's no contract.
Consideration

There must be something of value exchanged between the parties. The thing
of value may be money or services, but both parties must give something (otherwise,
it is a gift, not a contract).
Competence

Both parties must be of "sound mind" to comprehend the seriousness of the

situation and understand what is required. This definition requires that neither party
be minors, both must be sober (not under the influence of drugs or alcohol when
signing the contract), and neither can be mentally deficient. If one party is not
competent the contract is not valid and the non-competent party can disavow (ignore)
the contract.

Legal Purpose

The contract must be for a legal purpose. It cannot be for something illegal,
like selling drugs or prostitution. Remember that it is not illegal to enter into a
contract that doesn't have all of these essential items; it just means that if an
essential is missing the contract cannot be enforced by a court.

When a Contract Must Be in Writing

As noted above, verbal contracts can have the force of law, but some types of
contracts must be in writing, like long-term contracts and contracts for marriage
(pre-nuptials). There is also such a thing as an implied contract. You can
unknowingly enter into a contract with someone and be forced to abide by its terms.

Nevertheless, agreements may not be the same as contracts. The first may not
be enforceable, and the latter is enforceable. But not doing or following what’s in the
agreement creates not good relationship among those parties contracted or agreed.

Business Contracts & Ethics

While business contracts are legally binding documents, they are only
effective within an ethical framework that assumes most parties observe and fulfil
their contractual obligations. Competing for, obtaining and satisfying contracts
ethically is the basis for an efficiently functioning economy. If your company
engages in unethical behavior, you may lose contracts, especially those with
governments, and waste valuable resources in legal entanglements with contractual
partners seeking damages.
Determining Prices Ethically

You have to have some basis for determining your prices, such as cost-plus
profit or market levels. Setting the prices for your contracts in this way is ethical,
while basing your prices on manipulation or hidden factors is not. Once you have
calculated the contract price, you have to ensure that you present it in a
transparent fashion, without hidden costs. An ethically negotiated contract strikes
a balance between the benefits to the supplier and purchaser. The successful
execution of such a contract delivers advantages to both parties, and both parties
have a stake in avoiding problems.
Avoiding Conflicts of Interest

Some conflicts of interest are ethically unacceptable, such as bidding on

work for which you decide who is awarded the contract, but you can avoid other
types of conflict of interest with transparency. When a conflict of interest arises
because of factors beyond your control, such as your company considering a
contract with a supplier in which a member of your family has an interest, you have
to address the issue publicly. Ideally, you declare the conflict and refrain from
participating in the relevant decisions, possibly asking the family member to do the
same.

Competing Fairly

A competitive market gives you feedback on the value you are offering to
customers as compared with your competitors. When you obtain a contract through
fair competition, you know that you have been successful in presenting exceptional
value. When a competitor receives the contract, you have to work on reducing prices
or increasing quality. Unfair competition through collusion or price fixing, when
you secretly agree on elevated bid prices with your competitors, is not only
unethical but hurts the effectiveness of the market. Companies that don't present
good value receive orders at the expense of those with the best prices and highest
quality. Market signals are distorted and all market participants lose out in the
long term.

Observing Laws and Regulations

Laws and regulations protect the consumer, employees and other market
participants. When you develop an offer and sign a contract, you have to keep legal
and regulatory constraints in mind. Even if your adherence to laws is not likely to
be verified, an ethical company prepares and executes contracts within such
constraints. When you are in doubt as to the legality of contract provisions, it is
good ethical practice to err on the safe side and avoid legal problems that come with
trying to define the exact legal limits and coming too close to borderline practices.

Breach of Contract and Lawsuits

In a perfect world, business contracts would be entered into, both sides would
benefit and be pleased with the outcome, and no disputes would arise. But in the
real world of business, delays happen, financial problems can crop up, and other
unexpected events can occur to hinder or even prevent a written contract from being
carried out and one party ends up suing the other. The following is a discussion of
the legal concept of "breach of contract" and an overview of your legal options should
such a breach occur.

What Is a Breach of Contract?

A business contract creates certain obligations that are to be fulfilled by the

parties who entered into the agreement. Legally, one party's failure to fulfil any of its
contractual obligations is known as a "breach" of the contract. Depending on the
specifics, a breach can occur when a party fails to perform on time, does not perform
in accordance with the terms of the agreement, or does not perform at all.
Accordingly, a breach of contract will usually be categorized as either a
"material breach" or an "immaterial breach" for purposes of determining the
appropriate legal solution or "remedy" for the breach.

Remedies for a Breach of Contract

When an individual or business breaches a contract, the other party to the

agreement is entitled to relief (or a "remedy") under the law. The main remedies for a
breach of contract are:

A. Damages,
B. Specific Performance
C. Cancellation and Restitution

Damages

The payment of damages — payment in one form or another — is the most

common remedy for a breach of contract. There are many kinds of damages,
including the following:
A. Compensatory damages aim to put the non-breaching party in the
position that they would have been in if the breach had not occurred.

B. Punitive damages are payments that the breaching party must make,
above and beyond the point that would fully compensate the non-
breaching party. Punitive damages are meant to punish a wrongful
party for particularly wrongful acts, and are rarely awarded in the
business contracts setting.

C. Nominal damages are token damages (small amount of damages)

awarded when a breach occurred, but no actual money loss to the non-
breaching party was proven.

D. Liquidated damages are specific damages that were previously

identified by the parties in the contract itself, in the event that the
contract is breached. Liquidated damages should be a reasonable
estimate of actual damages that might result from a breach.

Specific Performance

If damages are inadequate as a legal remedy, the non-breaching party may

seek an alternative remedy called specific performance. Specific performance is best
described as the breaching party's court-ordered performance of duty under the
contract.

Specific performance may be used as a remedy for breach of contract if the

subject matter of the agreement is rare or unique, and damages would not suffice to
place the non-breaching party in as good a position as they would have been in had
the breach not occurred.
Cancellation and Restitution

A non-breaching party may cancel the contract and decide to sue

for restitution if the non-breaching party has given a benefit to the breaching party.

"Restitution" as a contract remedy means that the non-breaching party is put

back in the position it was in prior to the breach, while "cancellation" of the contract
voids the contract and relieves all parties of any obligation under the agreement.

7. Environmental Degradation

The Valdez Principles

The Coalition for Environmentally Responsible Economics (CERES) in Boston,

USA drafted in 1990a Guide to The Valdez Principles. This is a list of principles that
explains how to deal with environmental issues. From the business and management
points of view, this list is like the ten commandments of environmental protection.

The Valdez Principles were formulated after a major oil spill from an Exxon
tanker – the Exxon Valdez which ran aground near Valdez, Alaska, on March 24,
1989 and spilled 240,000 barrels – 11 million gallons of crude oil which eventually
covered 2,600 square miles of Prince William Sound and the Gulf of Alaska, Although
the Exxon spill was not the largest ever, it was one of the worst in terms of
environmental damage and long-term effects.

The ten Valdez Principles that ask companies to agree which includes the
following actions:

A. Protection of the Biosphere

1. Minimize or eliminate the release of any pollutant.

2. Safeguard habitats in rivers, lakes, wetlands, coastal zones, and
oceans.
3. Minimize contributions to the greenhouse effect, depletion of ozone
layer, acid rain and smog.

B. Sustainable Use of Natural Resources

1. Make sustainable use of natural resources.

2. Conserve non-renewable natural resources through efficient use and
planning.
3. Protect wildlife habitat, open spaces, and wilderness while preserving
biodiversity.

C. Reduction of Disposal Waste

1. Minimize creation of hazardous waste.

2. Recycle Materials.
3. Dispose waste through safe methods.
 D. Wise use of energy

1. Use environmentally safe and sustainable energy source.

2. Invest in improved energy and conservation in our operation.
3. Minimize energy efficiency of products we produce and sell.

E. Risk Reduction

1. Minimize the environmental, health, and safety risks to our employees

and the communities where we operate.

F. Marketing of Safe Products and Services

1. Sell products and services which have minimum adverse environmental

impact, and safe for consumption.
2. Inform consumers of the environment impact of our products and
services.

G. Damage Compensation

1. Take responsibility for any harm we cause to the environment while

making every effort to fully restore the environment.
2. Compensate those who are adversely affected.

H. Disclosure

1. Disclose to our employees and to the public incidents relating our

operations that cause environmental harm.
2. Take no action against employees who report any condition that creates
a danger to the environment.

I. Environmental Directors and Managers

1. Commit management resources to implement the Valdez Principle.

2. Establish a Committee of Board of Directors for Environmental Affairs

J. Assessment and Annual Audit

1. Conduct and make public an annual self-evaluation of our progress in

implementing the Valdez Principles
2. Work towards the timely creation of interdependent environmental
audit procedures to be completed every year and to be made available
to the public.
8. The Problem of Just Wage

Work and Compensation

 Work is said to be for the purpose of obtaining economic gain for laborer. Most
Agree that work is directed to the promotion of life. The duty to preserve one’s life
implies the duty to work and that each has a personal duty to take care of himself
and not to be a burden to others.

Being compensated for a work done or for services rendered is part of the
essence of work. One is willing to work in exchange for remuneration of rewards he
will receive from working. Such remuneration may include both financial and non-
financial compensation. It can be in the form of wages, shares on profit, harvest or
commercial goods, in-kind payments, and other remunerative fringe benefits.

The main objective of compensation is to create a system of reward that is

equitable to the employer and employee. Thus, the general concern is that justice
should be a substance of compensation.

The Question of Just Wage

The question of “What is a just wage?” or “How do you define a fair wage?” has
a long history. A number of people all over the world commented on its definition and
have argued on the appropriate criteria to consider in setting the so-called just wage.
A just wage is defined as that remuneration which is enough to support the wage-
earner in reasonable and frugal comfort. The Catholic Church teaches us that “a just
wage is the legitimate fruit of labor.”

Philippine Constitution and Republic Act 6727

Spread in various parts of the 1987 Philippine Constitution are specific

pronouncements and mandates on the protection and promotion of the rights of
workers in the public and private sectors.

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. The
minimum wage rates shall be adjusted in a fair and equitable manner, considering
existing regional disparities in the cost of living and other socioeconomics factors.

Government Agencies Involved

In our country, determination of wages must also be equitable and just. The
National Wage and Productivity Commission (NWPC) and the Regional Tripartite
Wages and Productivity Boards (RTWPB) determine the minimum wage for Filipino
workers. They handle the minimum wage rates of the workers of each and every
region of the country. It is their duty that wage shall be as nearly adequate as is
economically feasible to maintain the minimum standards of living necessary for the
health, efficiency and general well-being of the workers.

Factors to Consider in the Formulation of Fair Wages

Every employer faces the problem of setting wage rates and salaries.
a. External Market Factors

Refers to the supply and demand for labor and the so-called economic
conditions and underemployment. The Principle behind this is that wages are
relatively high if there is scarce supply of labor, and the same is low if there are more
opportunities for labor.

b. Law 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. The
government usually determines the minimum wage for its country. But still, the
minimum wage is not always acceptable as fair and just.

c. Cost of Living

The cost of living relates to basic maintenance needs and it must be seriously
considered in formulation of wages. A fair wage should be sufficient to meet the
increase in cost of living. Thus, if the cost of living goes up by 10%, the wage should
also go up by 10%. Unfortunately, it is a fact that majority of the employers cannot
automatically adjust wages with the increase of cost of living. However, it is certainly
clear that ignoring the cost-of-living means jeopardizing the welfare of workers.

d. 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. However, such claim is not universally
valid because not all companies have a minimum wage high enough to maintain a
decent standard of living.

e. 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. Likewise, determining if the organization is
unionized or not and if the company is capital or labor-intensive could contribute to
the establishment of fair wage.

f. 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. An employee should be paid based on the
complexity and difficulty of his job. This concept, however, is not perfectly similar
and true to all employees due to difference in interpretation of skills and tasks.

g. Individual Performances
 The trends suggests that individual performances or productivity ratings
affect the determination of wage/salary increases. One who performs well in his job
deserves to receive a proportionate increase in pay.

9. Gift-Giving and Bribery

Gift-Giving

Gift-giving is merely an act of extending goodwill to an individual in an effort

to share something with them. Giving gifts to customers, clients, and business
partners is a common practice in the business community. It is normally observed
during special occasions like Christmas, New Year, and sometimes even during
birthdays.

Business usually engages 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.

The following are the common forms of gift-giving:

➢ Samples
➢ Raffle Coupons/certificates
➢ Rebates/cash funds
➢ Padding
➢ Premiums
➢ Prizes
➢ Patronage awards (rewards)
➢ Tie-up promotions
➢ Allowance
➢ Free Goods
➢ Tips

Is Gift-Giving Ethical or Unethical?

Business gifts of clients and business associates can raise conflict-of-interest

problems, and knowing where to draw the line, between what is right and wrong, is
not always easy. The clear point is that those who cross that line, intentionally or
not, end up in big trouble.

Factors in Determining the Morality of Gift-Giving

a. Value of the Gift
b. Purpose of the Gift
c. Circumstances under which the gift was given or received
d. Position between or relationship of the Giver and Receiver.
e. Acceptable Business Practice in the Industry
f. Company Policy
g. Laws and Regulations
 Still, the ultimate moral judgement hinges on whether an objective partly
could reasonably suspect that the gift might lead the recipient to sacrifice the interest
of the firm for his own personal gain.

Bribery

Bribery is defined as a practice of giving remuneration for performance of an

act that is consistent with the work contract or the nature of the work one has been
hired to perform. It is intended to induce people inside the business or other
organization to make decisions that would not be justifiable according to normal
business or other criteria. It was then identified to be a form of corruption and is
generally immoral and for most is illegal. Remunerations, termed as bribes, can be
in the form of money, gifts, entertainment, or preferential treatment.

Examples of bribery:
➢ A motorist offers a certain amount of money to a police officer in order not to
be issued a ticket for over speeding;
➢ A citizen seeking paperwork or utility line connections gives an expensive gift
to a functionary in exchange for a faster service;
➢ A construction company sharing percentage of its income to a civil servant in
order to win a contract; and
➢ A narcotics smuggler bribes a judge to lessen criminal penalties.

In some cases, the briber holds a powerful role and controls of the transaction;
in other cases, a bribe may be effectively extracted from the person paying it.

Bribery is obviously unethical because of the following reasons.

➢ It is generally used as an instrument to gain personal or corporate advantage;

➢ It corrupts the concept of justice and equality;
➢ Bribery produces cynicism and general distrust of institutions;
➢ It destroys people’s trust in the integrity of professional services, of
government and the courts, of law enforcements, religion, and anything it
touches; and
➢ It treats people as commodities whose honor can be bought and sold. It thus
tends to degrade the respect we owe to other human beings.

10. Morality of Advertising

Advertising plays a very significant role in marketing goods and services.

Without advertising, the consumers would not be aware of the presence of diverse
products and services available in the market. Sometimes, even the mere presence
of advertising can sell a product due to consumer perception that a heavily advertised
product is a product of good value.

Advertising has far reaching effects, sociology and economically, and it is

important to note that it does not only dominate our environment but it also becomes
part of our culture. Recognizing the effectiveness of advertising in generating sales,
companies allocate an enormous amount of their budget for advertising.
 The primary purpose of advertising is to inform potential buyers of the
availability of a certain product by providing relevant information on its uses, benefits
and how it might serve the needs and wants of individuals. However, the use of
advertising today has not been serving its intended purpose since very little
information is conveyed to consumers and more often the information is not even
useful. The economic system is characterized by high degrees of business
competition where every producer would want to have a piece of the consumer’s
demand; as a result, advertisements typically end making misrepresentations or
false claims.

From the point of morality, advertising in itself is not bad or immoral since it
helps achieve the goals of both the seller and buyer. It only becomes immoral when,
in the attempt to persuade consumers, the advertisements become deceptive,
misleading, and manipulative.

There is only one criterion in evaluating the morality of advertising, and that
is, “to tell truth.” An advertisement that conveys truthful information is morally
permissible. If an advertisement contains false statement and lies then it is said to
be immoral.

Philippine Laws on Advertising

Consumer Act of the Philippines (R.A. 7394)

Article 108 of the Act declares that “The State shall protect the consumer from
misleading advertisements and fraudulent sales promotion practices.” The
Department of Trade and Industry is responsible for enforcing the provisions of the
Act. With respect to food, drugs, cosmetics, devices and hazardous substances, the
Department of Health is the agency that oversees these products.
 Explore
Enrichment Activity:

Direction: In a coupon bond, draw or paste a caricature of a business ethical issue.

Label with the issue related to it. Write a short reflection.

Ethical Issue: ________________________________________

My Reflection: __________________ ________________________________

________________________________ ________________________________
________________________________ ________________________________
________________________________ ________________________________
________________________________ ________________________________
________________________________ ________________________________
RUBRICS FOR THE CARICATURE/ DRAWING:
________________________________ ____________
Criteria 10 7 5 3
____________
Relevance The caricature/ The caricature/ The caricature/ The
drawing very drawing clearly drawing somewhat caricature/
clearly depicts the depicts the issue. depicts the issue. drawing does
issue. not depict the
issue.
RUBRICS FOR REFLECTION
Above Expectations Meets Approaching Below
Expectations Expectations Expectations
4 3 2 1
The reflection The reflection The reflection The reflection
explains the explains the attempts to does not address
student’s own student’s thinking demonstrate thinking the student’s
thinking and about his/her own about learning but is thinking
Reflective
learning processes, learning processes. vague and/or
Thinking
as well as unclear about the
implications for personal learning
future learning. process.

The reflection is an The reflection is an The reflection The reflection

in-depth analysis of analysis of the attempts to analyze does not move
the learning learning experience the learning beyond a
experience, the value and the value of the experience but the description of the
of the derived derived learning to value of the learning learning
Analysis learning to self or self or others. to the student or experience.
others, and the others is vague
enhancement of the and/or unclear.
student’s
appreciation for the
discipline.

Deepen

Direction: From the following ethical issues in entrepreneurship, pick two (2) which
you think are the most prevalent issues. Explain. Write it on a separate sheet of
paper.

Morality of Environmental
Advertising Degradation

Unfair Fraud
Competition Gift-giving
and Bribery Unfair
Communication
The problem
of Just Wage
Personnel and Non-respect of
Customer Agreements
Relations
Basic
Fairness
Rubric:

Criteria Excellent 10 Good 7 Fair 5 Poor 3

Clarity of All the thoughts Most of the Some thoughts The thought
thoughts were very clear. thoughts were were clear. can’t be
clear understood.
Reasoning The stand was The stand is The stand is not The stand is
well reasoned somewhat so reasonable. completely
out. reasonable. unreasonable.

Gauge

Directions: Choose what issue is related to the statements. Write the letter of the
correct answer in your answer sheet.

1. A shampoo ad on the television claim to make your hair straight even if you
have a curly hair.
A. Basic Fairness B. Morality of Advertising
C. Gift-giving and Bribery D. The Problem of Just Wage

2. An accountant receives a big amount money in transacting faster the

transaction of a client who is at the last of the queuing line.
A. Basic Fairness B. Morality of Advertising
C. Gift-giving and Bribery D. The Problem of Just Wage

3. An insurance agent who does not disclose all the important matters on the
policy that it sold to a customer.
A. Fraud B. Basic Fairness
C. Unfair Communication D. Environmental Degradation

4. A competitor who bad mouths another competitor just to sell more of its
services than the other.
A. Fraud B. Basic Fairness
C. Unfair Competition D. Unfair Communication

5. A Private hospital which does not segregate properly its waste and dumps it
directly on the rivers nearby.
A. Fraud B. Basic Fairness
C. Unfair Communication D. Environmental Degradation
6. An employee who has no SSS, Pag-ibig HMDF and Philhealth contribution?
A. Basic Fairness B. Morality of Advertising
C. Gift-giving and Bribery D. The Problem of Just Wage
7. A supplier was chosen by the Bids and Awards Committee because each
member of the committee will be receiving something in exchange of the favor.
A. Basic Fairness B. Morality of Advertising
C. Gift-giving and Bribery D. The Problem of Just Wage

8. A Hotel in Boracay has a septic tank which waste goes directly to the sea.
A. Fraud B. Basic Fairness
C. Unfair Communication D. Environmental Degradation

9. A newspaper report of a business owner accusing him to be dishonest and

lacks integrity without substantial evidence.
A. Fraud B. Basic Fairness
C. Unfair Competition D. Unfair Communication

10. Company C received a deposit from Client D as a payment of the goods bought
online, but the former didn’t deliver the said goods to the latter.
A. Fraud B. Basic Fairness
C. Unfair Communication D. Environmental Degradation