SHS

BUSINESS ETHICS
Module 2
Business Ethics
Grade 12: Module 2
First Edition, 2021

Copyright © 2021
La Union Schools Division
Region I

All rights reserved. No part of this module may be reproduced in any form without
written permission from the copyright owners.

Development Team of the Module

Author: Medel L. Balino, T III

Editor: SDO La Union, Learning Resource Quality Assurance Team

Illustrator: Ernesto F. Ramos Jr., P II

Management Team:

Atty. Donato D. Balderas, Jr.

Schools Division Superintendent
Vivian Luz S. Pagatpatan, Ph.D
Assistant Schools Division Superintendent
German E. Flora, Ph.D, CID Chief

Virgilio C. Boado, Ph.D, EPS in Charge of LRMS

Lorna O. Gaspar, EPS in Charge of ABM
Michael Jason D. Morales, PDO II Claire
P. Toluyen, Librarian II
 Target
There are roles of business and non-profit organizations in social and
economic development of our country.
In your previous lesson, you are done with the different forms of business
organizations. You are already familiar with examples of them, some of which are
found in our locality. You also tackled how these organizations contribute to
socioeconomic development
This module would provide you with information and activities that will help
you understand how fairness, accountability, transparency and stewardship is
observed in business and non-profit organizations

After going through this module, you are expected to:

1. Illustrate how fairness, accountability, transparency and stewardship is observed

in business and non-profit organizations

Jumpstart

Activity 1: Guess Me!

Direction: Answer the following questions. Choose your answers from the options
inside the box. Write it on the space provided.

Transparent Blonde

Fair Pilot

Account Flight Steward

1. An individual who is a member of an aircrew employed by airlines aboard

commercial flights, primarily to ensure the safety and comfort of
passengers. _____________
2. Filipinos usually have a brown skin color. How about the skin color of most
Americans? _______________
3. Going to banks to open it, is often advised by financial analysts in order to
practice the habit of saving. What is it? _____________
4. It is the quality of being easily seen through? _______________
 Discover
Introduction

You have just finished answering your first activity. There are words in the
given choices which you will encounter in this module but will be discussed in the
context of business.

Business leadership affects the moral capability and performance of

organizations. Business leaders influence the scope and character of formal ethics
programs and integration of ethics into everyday organizational life. However, most
practicing business leaders in most countries most of the time are not accountable
for dysfunctional moral, social, and environmental performance. Many are seldom
held accountable for adverse impacts of their decision making, for example,
deepening poverty, social disintegration, and environmental degradation. There is a
need to convince managements that they should develop their “integrity capacity”
which is the individual and/or collective capability for repeated process alignment
of moral awareness, deliberation, character, and conduct that demonstrates
balance judgement, enhances sustained moral development, and promotes
supportive systems for moral decision-making. These four dimensions of integrity
capacityprocess, judgement, development, and system should present challenges
for business leaders so that they become more aware of moral concerns and thus
respond more effectively to the problems that arise (Petrick and Quinn, 2001).

Looking back in our objective on the previous pages, “Illustrate how fairness,
accountability, transparency and stewardship is observed in business and non-
profit organizations.”

Let as first try to understand the different concepts that are in our objective
by giving the principles their definitions and some discussions of each.

Fairness

The quality or state of being fair, especially: fair or impartial treatment: lack
of favoritism toward one side or another.

Fairness is the quality of being reasonable, right, and just.

In simple terms in Filipino, it is translated as

“Patas” and “Pagkamakatarungan”

FAIRNESS
It is the quality of making judgements that are free from discrimination.
 Judges, umpires and teachers should all strive to practice fairness. Fairness comes

from the old English faeger, meaning “pleasing, attractive.” This makes sense

given that the word is also used to describe physical beauty. Fairness can refer to
someone’s good looks, or if someone is very pale and blond, you might not notice the
fairness of her complexion. When someone shows fairness in making a decision, he is
pleasing all parties involved and offering a solution that is attractive to everyone.
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 amount
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.

Accountability

The quality or state of being accountable, especially: an obligation or

willingness to accept responsibility or to account for one's actions. It is the
obligation of an individual or organization to account for its activities, accept
responsibility for them, and to disclose the results in a transparent manner. It also
includes the responsibility for money or other entrusted property.

Accountability is taking or being assigned responsibility for something that

you have done or something you are supposed to do.
In simple Filipino terms, it is translated as “Pananagutan.”

To record on business leadership accountability is mixed at best. In Great Britain,

continental Europe, and Australia, the practice of social and environmental accounting
has gained a strong foothold and expanded the scope of business leader accountability
beyond maximizing shareholder wealth. The works of the Institute and Ethical
Accountability (an international professional body committed to strengthening social
responsibility and ethical behavior of the business community and non-profit
organizations) and other empirical research groups have demonstrated the corporate social
performance-financial performance link. Unfortunately, many of today’s business people
are not made to account for their activities and outcomes, especially for the things that go
wrong and for
their unethical actions.
Why is accountability important?
Sound accountability structures are most important aspect of prevention and detection
of corruption. A civil society organization without proper accountability systems is fragile
and open to rumours about mismanagement and abuse of power. Accountability – what
it is and what it is not:
 To be accountable is to be liable to explain or justify one’s actions and decisions.

 Accountability is the process of explanation and justification.

 Holding to account is the process of requiring explanation and justification, but it is
also about testing, forming a judgement, and if necessary, taking action.
 Accountability implies responsibility: it is reasonable only to hold people to account for
those things which they are responsible.
 It is not synonymous with responsibility. Although with responsibility comes
with being accountable or accountability. But still, the two words are with different
meanings.

Transparency

Lack of hidden agendas and condition, accompanied by the availability of full

information required for collaboration, cooperation, and collective decision making.

Minimum degree of disclosure to which agreements, dealings, practices and

transactions are open to all for verification.

Essential condition for a free and open exchange whereby the rules and
reasons behind regulatory measures are fair and clear to all participants.

Transparency in finance refers to the extent to which shareholders, investors

and other stakeholders have ready access to a company’s or market’s data, such as
audited financial reports, market depth, price levels, and the planned actions and
behaviors of its senior management.

Transparency is the quality of allowing light to shine through. A transparent

window allows you to see what's on the other side, and a transparent business
similarly keeps information visible rather than hidden. This openness usually
starts at the management level and applies to the ways that leaders treat
employees, especially with regard to sharing information.

The real meaning of transparency in business goes beyond rules and

guidelines with a genuine willingness to share information (information disclosure)
so employees feel kept in the loop and understand what is actually going on with
the company.

In simple Filipino terms, it is translated as “Panganganinag.” It has

something to do with honesty and some (if not all because of legalities with regards
to the nature of the business or non-profit organizations) information disclosure to
the stakeholders including the employees and concerned public.

Transparency has become increasingly popular word in recent times. In this context,
associated academic literature has recently analysed several issues associated with
corporate transparency such as the ethical justifications for information disclosure, the
ethical nature of corporate information transparency, or the use of transparency in
management-employee
relationships.
On the organizational level, the instrumental salience of transparency is referred
to in two instances. In the first case, transparency is identified as an important
mechanism for guaranteeing social accountability. In some non-profit organizations and
non-government organizations which do humanitarian acts of helping other people
during
times of crisis or calamities and also during non-crisis times appropriate information
disclosure is necessary to inform donors how their money is used by these
organizations.
Transparency allows stakeholders to understand whether the activities of social
institutions such as international organizations and non-government organizations
provide a genuine service to civil society and whether money is used properly.

Stewardship

The conducting, supervising, or managing of something, especially: the

careful and responsible management of something entrusted to one's care

Stewardship means the management or care of something, particularly the

kind that works. If your company is making money, there’s probably been careful
stewardship — or, a lot of luck.

Stewardship is the responsibility of looking after property.

In simple Filipino terms, it is translated as “Pamamahala” or

“Pangangasiwa.”

To be easily understood, in other books it is contradicted to ownership.

Because if you are a steward, you don’t own the thing or the business itself that
you are managing. You don’t own it, other people owned it. You are only there to
manage it. You are a steward.

Stewardship is closely related to managing one’s property with utmost diligence.

Like in managing other people’s business registered in their names. So you are a manager
or a steward. You are an employee of that business. But an employee with an utmost
diligence. Someone who cares for that business. Because stewardship has something to
do with servant leadership. Servant leadership focuses on serving the needs of others.
Servant leaders do not use their power to achieve ends; they emphasize persuasion. The
characteristic behaviors of a servant leader includes listening, empathizing, persuading,
accepting stewardship, and actively developing followers’ potential.
Business or Business Organization

An entity formed for the purpose of carrying on commercial enterprise. Such

an organization is predicated on systems of law governing contract and exchange,
property rights, and incorporation.

The term business organization describes how businesses are structured

and how their structure helps them meet their goals. In general, businesses are
designed to focus on either generating profit or improving society. The basic
categories of business organization are sole proprietorship, partnership, and
corporation.

A business organization is an individual or group of people that collaborate

to achieve certain commercial goals.

Non-profit Organizations

In the Philippines, not-for-profit organizations (NPOs) are typically organized

as "non-stock corporations" registered under the Corporation Code. Non-stock
corporations may be formed for charitable, religious, educational, professional,
cultural, fraternal, literary, scientific, social, civic service, or similar purposes, such
as trade, industry, agricultural and similar chambers, or any combination thereof
(Revised Corporation Code Section 87). The Securities and Exchange Commission
(SEC) of the Philippines serves as the registration authority for nonstock
corporations. Some non-stock corporations register as foundations.

Non-profit organizations are formed in order to conduct activities and

transactions for purposes other than shareholder financial gain, while at the same
time providing the same asset protections and limited liabilities of a standard
corporation. A non-profit corporation can make a profit, but this profit must be
used strictly to forward the goals rather than to provide earned income (in the form
of dividends) to its shareholders. It is understood that most of the transactions and
activities of a Non-profit Corporation will not be commercial in nature.

Explore

Enrichment Activity:
 1. Sketch/draw one scenario that shows/depicts any of the four principles
(Fairness, Accountability, Transparency and Stewardship). Label it
appropriately. Use a separate sheet of bond paper.

Principle: _________________________________________

Rubrics for the Sketch:

Criteria 1 2 3
Craftsmanship The drawing is The drawing The drawing is very
just fair. is polished. attractive to the eyes
and well-polished.
Relevance The drawing The drawing The drawing is very
somewhat depicts what clear depicting the
depicts what is is all about principle.
all about the the principle.
principle.
Creativity The drawing is The drawing The drawing is very
just fair. is creative in creative in ideas and
ideas and the way it is drawn.
the way it is
drawn.

Deepen
 At this point let’s read and analyze the case below. Make your stand and
write it in a separate sheet of paper.

CASE ANALYSIS

Hotel Prima is a four-star hotel employing 700 people. Peter,

Lawrence, and Alex are the major owners/top -level managers, and it
follows that they control the company. For several years, their hotel made big
profits, so they were inspired to introduce a scheme that allowed their
employees to buy stocks of their company which increased in value after five
years, and would continue to increase as the years went by. Their employees,
because of satisfaction for the way the three handled hotels finances, treated
the company as their own and did their best in doing respective jobs.

Although the hotel was doing well and the three major owners/top-
level manager practiced corporate social responsibility through the above-
mentioned scheme, the company was not law-abiding; this was because it did
not pay the correct taxes to the government. The company has ordered their
accountants to practice the so-called double accounting system. Through this
practice they were able to save millions of pesos which they used to increase
their capital and give additional benefits to all their employees.
Peter, Lawrence and Alex had shared the belief that the government was not
using taxpayer’s money properly, so the three agreed that their company
should not pay some of its taxes.

Rubrics

Criteria Excellent 4 Good 3 Fair 2 Poor 1

Grammar The sentences The sentences The sentences All sentences
were constructed were were constructed were
with constructed with many errors grammatically
correct grammar. with some in grammar. incorrect
errors in
grammar.
Clarity All the thoughts Most of the Some thoughts The thought
of were very clear. thoughts were were clear. can’t be
thoughts 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: Please answer the following questions bellow to test whether you have
finally grasped the lesson. Encircle the letter of your chosen answer.

1. It means “to be liable to explain or justify one’s action and decisions”.

A. Accountability B. Fairness
C. Stewardship D. Transparency
2. This principle implies responsibility, which means, it is reasonable only to hold
people to account for those things for which they are responsible.
A. Fairness B. Accountability
C. Stewardship D. Transparency
3. Which principle looks at the balance of benefits and burdens distributed among
members of a group?
A. Accountability B. Fairness
C. Stewardship D. Transparency
4. Which principle involves the balancing the interests involved in all decision
making including any decisions related to hiring, firing, and compensation and
rewards system?
A. Accountability B. Transparency
C. Stewardship D. Fairness
5. Which of the following has something to do with ethical justifications for
information disclosure?
A. Accountability B. Fairness
C. Stewardship D. Transparency
6. Which principle describes leaders who go beyond their self-interest and focus
on opportunities to help followers to grow and develop?
A. Accountability B. Fairness
C. Stewardship D. Transparency
7. The staff of the Accounting department of ABC Company received an increase
in salary this year while the other department staff of ABC Company did not.
What principle is violated in this scenario?
A. Accountability B. Fairness
C. Stewardship D. Transparency
8. The Accountant of DEF Corporation assigned some of his work to her
accounting staff. At the end of the month a much-needed report is already due
but the staff was not able to finish the said report. The management team and
the Board of Directors asked the accountant to answer for the glitch of work
done undone.
What principle is shown in this scenario?
A. Accountability B. Fairness
C. Stewardship D. Transparency
9. MBA Company Financial Report was shown to its employees and stakeholders
through printing it on a national circulation of a newspaper. What principle is
illustrated in this scenario?
A. Accountability B. Fairness
C. Stewardship D. Transparency
10. Mr. Ramirez, the manager of NSE Corporation was offered by Company G to
resign from his current position and be the President of Company G. during the
time NSE Corporation is having difficulties in producing profit. Instead of
accepting the offer, Mr.Ramirez turned it down and think of ways of increasing
the profit of NSE Corporation? What principle is exemplified?
A. Accountability B. Fairness
C. Stewardship D. Transparency
References
Printed Materials:
Department of Education, Bureau of Learning Resources (2016): Organization and Management (pp.
152): Pasig City, Philippines
Aleza Racelis (2017). Unit 1: Business Ethics and Social Responsibility (pp. 22-28): Sta. Mesa Heights,
Quezon City: Rex Printing Press Websites:
Translation of the word fair or fairness in Tagalog.
Retrieved July 24, 2020 from https://www.tagalog.com/words/patas.php
and https://www.tagalogtranslate.com/en_tl/3264/fair Translation of the word
accountability in Tagalog. Retrieved July 24, 2020 from
https://mymemory.translated.net/en/English/Tagalog/accountability-meaning
Translation of the word transparency in Tagalog.
Retrieved July 24, 2020 from https://glosbe.com/en/tl/transparency
and http://depinisyon.com/depinisyon-197954-transparency.php Translation of
the word stewardship in Tagalog. Retrieved July 24, 2020 from
https://mymemory.translated.net/en/English/Tagalog/stewardship
What is Accountability?
Retrieved July 23, 2020 from
https://www.merriam-webster.com/dictionary/accountability
http://www.businessdictionary.com/definition/accountability.html
https://www.yourdictionary.com/accountability
What is Transparency?
Retrieved July 23, 2020 from
http://www.businessdictionary.com/definition/transparency.html
https://marketbusinessnews.com/financial-glossary/transparency-definition-meaning/
https://bizfluent.com/info-8635618-meaning-transparency-workplace.html
What is Stewardship?
Retrieved July 23, 2020 from
https://www.merriam-webster.com/dictionary/stewardship
https://www.vocabulary.com/dictionary/stewardship
https://www.collinsdictionary.com/dictionary/english/stewardship What
is Business Organization? Retrieved July 23, 2020 from
https://www.britannica.com/topic/business-organization
https://www.encyclopedia.com/finance/encyclopedias-almanacs-transcripts-andmaps/
business-
organization#:~:text=The%20term%20business%20organization%20describes,generating%20p
rofit%20or%20improving%20society.&text=The%20basic%20categories%20of%20business,pro
prietorship%2C%20partnership%2C%20and%20corporation.
https://smallbusiness.chron.com/meaning-business-organization-
41925.html What are Non-profit organizations? Retrieved July 23, 2020 from
https://www.cof.org/content/nonprofit-law-
philippines#:~:text=In%20the%20Philippines%2C%20not%2Dfor,registered%20under%20the
%20Corporation%20Code.&text=The%20Securities%20and%20Exchange%20Commission,aut
hority%20for%20non%2Dstock%20corporations.
https://companiesinc.com/start-a-business/non-profit/ Column
https://insights.diligent.com/corporate-governance/the-principles-of-good-
corporategovernance https://company.meralco.com.ph/corporate-governance/corporate-
governance-in-meralco
https://smart.com.ph/About/docs/corporategovernance/smartcodeofbusinessconductethics.
pdf
https://www.sbgfc.org.ph/sites/default/files/SBCCODEOFCORPGOVERNANCEas%20revise
d2.pdf
https://www.pearse-trust.ie/blog/bid/108866/the-core-principles-of-good-
corporategovernance