Classroom Notes_business Ethics

BUSINESS 2 (Business Ethics)

Summer Classes_Year 2013

Chapter 1: THE BASICS OF ETHICS What is “Ethics?” “Ethics?” What is Business? What is Business Business Ethics? Ethics?

ETHICS are about what is right and what is wrong LAW is about what is lawful and what is unlawful of philosophy that ETHICS, also known as moral philosophy, is a branch of philosophy involves systematizing, systematizing, defending, defending, and recommending concepts of right and wrong conduct conduct.. The term comes from the Greek word ethos ethos,, which means "character". Ethics is a complement to Aesthetics in the philosophy fiel field d of Axiology Axiology.. In phil philos osop ophy hy,, ethi ethics cs stud studie ies s the the mora morall beha behavi vior or in humans, and how one should act. MORALITY (from (from the Latin

moralitas

"manne "manner, r, charact character, er, proper proper behavi behavior" or")) is the differentiation of intentions, decisions, and actions between between those that are "good" "good" (or right) and those that are "bad" (or wrong). The philosophy of morality is ethics ethics.. A moral code is a system of morality (according to a particular philosophy particular philosophy,, religion religion,, culture culture,, etc.) and a moral is any one practice or teaching within a moral code. Morality may also be specifically synonymous with "goodness" or "rightness." Immorality is the active opposition to morality (i.e. opposition to that which is good or right), while amorality is variously defined as an unawareness of, indifference toward, or disbelief in any set of moral standards or principles. An example of a moral code is the Golden Rule which states that, "One should treat others as one would like others to treat oneself."

Elements Determining Morality 1. The The Act Act itse itself lf

In order to judge the morality of a human act, we must first consider the act itself. itself. Selling Selling products, products, can initially initially seem to be morally morally good, good, but using defective weighing scale, spraying harmful insecticides to frui fruits ts,, mixi mixing ng pala palay y and and rice rice,, etc. etc. The The act act itse itself lf is tain tainte ted d with with deception, and therefore, no longer considered as a morally good act. 2. Purp Purpos ose e or End End

The differentiation of intentions, decisions and actions determines the the purp purpos ose e and and end end of an acti action on.. Some Some peopl people e tend tend to perf perfor orm m 1|Page

Discussion Notes of Mr. JASPER V. DULOSA, M.M.



acti action ons s with with the the best best inte intent ntio ions ns but but some someti time mes s reso resort rt to immo immora rall means in order to arrive at the best results or end. 3. Circ Circum umst stan ance ces s

“Cir “Circu cums msta tanc nces es alte alterr case cases. s.” ” From From the the mora morall poin pointt of view view,, the the circumstances of a human act are those factors, distinct from the act itself and and fro from the purp purpo ose, se, whic which h may may affec ffectt the mora morali lity ty of the the act. act. Euthanasia (from the Greek word meaning "good death") refers to the practice of intentionally ending a life in order to relieve pain and suffering suffering.. Case Study No. 1: The Case of the Boss’ Boss’ Daughter Daughter As head of the Human Resource Department, you received a phone call from your Boss who was also the board president and your godfather, aski asking ng to dete determ rmin ine e whet whethe herr or not not you you rece receiv ived ed his his daug daught hter er’s ’s application for a current job opening. opening. You indicated that it had had indeed, come come in, in, but that that the the clo closin sing date ate for for the the pap paper erwo work rk// fili filing ng of application has passed. “Oh, “Oh,” ” he said said,, “you “you are are not not goin going g to let let a qual qualif ifie ied d cand candid idat ate e be excluded because of of a closing date, are you?” you?” Then he added quickly, “but let me not interfere.” interfere.” As you hung up the phone, you replayed the conversation in your mind and pondered the implications. Later that day, day, your senior manager manager asked to see you. Despite offering him a chair, he chose to stand by the door that he just closed and said, “I heard that that the boss’ daughter daughter has has applied for for the opening. opening. You are going to consider her, are you? She worked here years ago, ago, and there were problems. The place will be up in arms if you take her her back.” He smilingly smilingly added, added, “I just wanted to let let you know and to help.” help.” Then he turned on his heel and left. The Concept of Responsibility The general principle relating with responsibility is that whatever hurts the individual or the institutions necessary for his growth may be looked upon as evil in some way. Similarly, whatever truly truly promotes the the growth of the individual individual and means means available available to him is morally good. good. For instance, instance, the employer who must fire an employee knows that the man’s family will suffer. Is he responsible for this effect? Guide Question:

1. What was the the intent intent of firing firing the employee? employee? 2|Page




2. Was it for the commo common n good or was it becaus because e he poses a threat threat to the employer on some extent? 3. Does the the employ employee ee really really deserve deserve to be be fired? fired? What else should should be done before firing the employee? The Principle of Double Effect The principle of double effect justifies certain actions that produce “ind “indir irec ectl tly” y” cert certai ain n evil evil cons conseq eque uenc nces es,, prov provid ided ed at leas leastt four four (4) (4) conditions are met: 1. The The acti action on,, by itsel itselff and and inde indepe pend nden entl tly y of its its effe effect ct,, must must not not be morally evil; 2. The evil effect effect must must not be a means means to producing producing the good good effect; effect; 3. The evil is sincerely sincerely not not intended, intended, but merely merely tolerate tolerated; d; and 4. There is a proport proportionat ionate e reason for for performing performing the action, action, in spite spite of its evil consequences. The Concept of Proportionality Proportionality The fourth condition of the principle of double effect mentions the importance importance of proportio proportionate nate reason reason in performing performing a moral action. What do we mean by proportionality? Proportionality is to be judged by:

1. 2. 3. 4. 5.

The type of goodn goodness ess or evil invol involved. ved. The urge urgency ncy of of the situ situati ation. on. The certai certainty nty or or probabilit probability y of the the effects. effects. The intensit intensity y of one’s one’s influen influence ce on the the effects. effects. The availabilit availability y of of alternate alternate means. means.

In the abstract, a necessary goodwill outweighs a merely useful good. For example, something necessary to keep a business in existence will take precedence over a cut in the ordinary dividend. In the concrete, necessity is influenced by the urgency of the situation. Thus, staying in business nowadays involves both research and the ability to meet one’s one’s payroll. However, since research can be postponed postponed without irre irrepa para rabl ble e harm harm,, it woul would d take take seco second nd plac place e to meet meetin ing g the the payr payrol olll because both the company and the employees depend on this for their existence. The intensity of one’s influence must be considered since often something or someone else is the major cause of the evil side effect. In firing a man 3|Page




for absenteeism, the employer foresees some hardship hardship in the the family. The major cause is not the employer but the employee whose fault created the situation. The availa availabil bility ity of altern alternate ate means means must must be cons consid ider ered ed.. If the the good good effects can be obtained by a method which involves lesser or no evil effects, it would be irrational and therefore unethical not to choose the alternate means, all other things being equal. The Ethical Concerns in Business Public concerns about ethical practices in Embezzlement is the act of dishonestly dishonestly busi busin ness ess usual sually ly re rela late te to issu issues es like like withholding assets for the purpose of or conversion (theft emb embezzl ezzlem emen entt, accep ccepti ting ng brib bribes es theft)) of such assets by one Such or more individuals to whom such assets poisoning the environment. exam exampl ples es sugge suggest st mana manage gers’ rs’ prob proble lems ms have been entrusted, to be held and/or used for other purposes. with with ethics ethics consist consist of nothin nothing g more more than than violations of clear-cut, well-defined laws, rules and codes of conduct. One One set set of rela relati tion onsh ship ips s and and resp respon onsi sibi bili liti ties es is dire direct ctly ly rela relate ted d to employees, and includes such areas as discipline, performance appraisal, safe safety ty,, and and the the admi admini nist stra rati tion on of rewa reward rd syst system em.. Anot Anothe herr set set is conc concer erne ned d with with cust custom omer ers s and and supp suppli lier ers, s, and and incl includ udes es the the intr intric icat ate e aspects aspects of such elements elements of timing, quality quality and price. price. Ethical Ethical dilemmas dilemmas also arise when when manage managers rs have have confli conflicts cts in As a businessman, it is essential essential valu values es with with supe superi rior ors s or peer peers s over over such such that you do not lose your ethical things as strategy, goals, policy and perspective when making decisions. administration. The Implications of Managerial Action Those who were engaged in business sometimes appear to lose their perspective perspective when making making decisions decisions that affect people. people. Perhaps Perhaps they are busy, or maybe they just don’t take time to think through the implications of their their acti action ons. s. It seems seems unli unlike kely ly they have have not not had had some some ethica ethicall training. Whatever the reason, reason, the outcome is the same – an employee or or group of employees, ends up being treated treated arbitrarily and unfairly. Ethics is sacrificed for the expedient accomplishment of a goal. Case Study No. 2: Harass Him Until Until He Quits Quits Danilo Danilo Magtanggo Magtanggoll is 62 years old and has been with the company company for 28 years. He has had a varied varied career, career, and possesses possesses a number number of skills and abilities. Mr. Magtanggol is quite quite set in his his ways and somewhat eccentric. His supervisor and other senior managers would like to see him retire or 4|Page




let him go, but his performance meets the standards of the company in all respects respects and he has has no interest interest in retirement. retirement. No one has been been able to identify any deficiencies that would warrant discharge. The senior manager in Mr. Magtanggol’s department recently decided to create a work environment for him that would be so uncomfortable that it would ultimatel ultimately y cause Mr. Magtanggo Magtanggoll to quit. The manager manager presented presented the idea to Mr. Magtanggol’s immediate supervisor who accepted the idea readily. readily. They began began to give Danilo thankles thankless s assignments assignments and assigning assigning him the “graveyard “graveyard” ” shift. Younger Younger employees employees with less experienc experience e and service were were given better better assignments assignments and shifts. shifts. Danilo Danilo appealed appealed the decision but was told by his manager that “the assignments have all been made; if you don’t don’t like yours, you can look elsewhere.” There is no union or employee problem-solving process. Chapter 2: Principles and Forces that Shape Ethical Behavior When and where do we develop ethical values? Over time, time, codes codes of conduct conduct were developed developed to ensure ensure survival. survival. These codes included the nurturing of children, forming of family and tribal units, and huntin hunting g rituals. rituals. Below Below are few of the “influ “influenc encers” ers” of a person person’s ’s conduct: 1. Father 2. Mother 3. Brot Brothe her/ r/ Sist Sister er 4. Othe Otherr rela relati tive ves s 5. Friend 6. Teacher 7. Reli Religi giou ous s Lea Leade derr 8. Yout Youth/ h/ Peer Peer Group Group 9. Spor Sports ts Idol Idol 10. Military Hero 11. Movie Idol 12. Books 13. Religious Writings Sources of Ethical Values 1. Experience. The values we hold are inseparable from the endlessly changing experiences of our lives 2. Culture. Human Nature Orientatio Orientation n / Environment Environment Orientation Orientation / Time and Activity Orientation 5|Page




3. Science. Scie Scienc nce e help helps s make make judg judgme ment nt only only if we can can rela relate te scientific information to value assumptions made on other bases. 4. Religion. Religion involves not only formal system of worship but prescription for social relationships. Identifying values (acquired) in life: Thru

experience:

_______________________ __________________________________ _______________________ _______________________ _______________________ __________________ ______ __ Thru culture: _______________________ __________________________________ _______________________ _______________________ _______________________ __________________ ______ __ Thru Science: _______________________ __________________________________ _______________________ _______________________ _______________________ __________________ ______ __ Thru Religion: _______________________ __________________________________ _______________________ _______________________ _______________________ __________________ ______ __ List all your values acquired from each of the sectors of society as listed above: Identifying your own stand on different moral and social issues: What are the influences/ issues/ values you can think of on the issues below? Say something about each of the terms listed: 1. Poverty 2. Labo Laborr Uni Union ons s 3. Whistl Whistle e blowin blowing g (infor (informin ming g the public public about about the illegal illegal or immora immorall behaviour of an employee or organization 4. Abusing Abusing the the environ environment ment for profit profit 5. Graft Graft and Corrup Corruptio tion n 6. Exposi Exposing ng workers workers to unheal unhealthy thy and unsafe unsafe conditi conditions ons (hazardo (hazardous us workplace) 7. Job discrimi discriminatio nation n and exploit exploitation ation of workers workers 8. Wages

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We are not always good (We neglect the real meaning of the Issue) 1. We would would never never steal money money from from the cash drawer, drawer, but but we use the company car to run personal errands “while doing our tasks.” 2. We observe observe working working hours hours scrupu scrupulou lously sly and often put in overti overtime, me, so te tell llin ing g th the e bo boss ss we ge gett ca caug ught ht in tr traf affi fic, c, wh when en we ac actu tual ally ly overslept, seems excusable enough. 3. We give out best best to the the company company and and work hard, hard, so gossiping about my su supe perv rvis isor or to fe fell llow ow em empl ploy oyee ees s ju just st he help lps s me le lett of offf a li litt ttle le steam. 4. We know know our co-worke co-workerr is running running a small busine business ss of her own on the side using the company’s company’s resources resources (machines, (machines, etc.) but we’ve been friends for years, and she is a single parent with a son in college. No one knows it but me. Ethical values on the Job

VALUES/ ISSUES

1 2 3 4

Very Importan t

Somewh at Importan t

Not Importan t

Honesty Fairness Obedience to Law Compassion (con (conce cern rn for pain pain of others)

5 Respe spect for others 6 Loyalty 7 Dependability 8 Courage 9 Helpfulness 1 Self-Control 0 1 Truthfulness 1 1 Tardiness and Punctuality 2 1 Deference to Authority 3 Ethical Conflicts Conflicting loyalties, fear or or fai failure, and/or fear Confli Con flicti cting ng loy loyalt alties, ies, fear failur lure, e, and and/o /orr fea fear r of being being fired fired put our ethi ethica call valu values es on the the line line.. This This time, time, we will check check some some actu actual al job situa sit uati tion ons s that that woul would d test test our our ethi ethica call stan standa dard rds. s. Hone Honest st and and brie brief f situ si tuat atio ions ns explanation is required for each situation. 7|Page




Would you:

1. Alter a financial report at your boss’ direction? 2. Protect a friend whose drinking is causing problem in the company? 3. Take credit for work done/ prepared by someone someone else? 4. Put off safety measure because the cost will affect profitability? Change a performance appraisal to reflect more positively on an individual whose advancement is important to your supervisor? What are the things that YOU WOULD NOT DO , even at the risk of being fired ? I would refuse to: 1. ______________________ ___________ _______________________ _______________________ _______________________ _______________________ ____________ _ _________________________________ _______________________ _____________ _____________ ___________ __ _____________ 2. ______________________ ___________ _______________________ _______________________ _______________________ _______________________ ____________ _ _________________________________ _______________________ _____________ _____________ ___________ __ _____________ 3. ______________________ ___________ _______________________ _______________________ _______________________ _______________________ ____________ _ _________________________________ _______________________ _____________ _____________ ___________ __ _____________ 4. ______________________ ___________ _______________________ _______________________ _______________________ _______________________ ____________ _ _________________________________ _______________________ _____________ _____________ ___________ __ _____________ 5. ______________________ ___________ _______________________ _______________________ _______________________ _______________________ ____________ _ _________________________________ _______________________ _____________ _____________ ___________ __ _____________ Case Study Study No. 3: Using the Office Phone Suppose a Makati-area manager, Mr. Toledo, learns that his assistant, Miss Mary Telebabad, is using the office phone at least once a week to talk to her sister in Cebu for an hour or so. The manager manager confront confronts s her with the discovery discovery by asking asking Mary, if, in fact, she is making the long distance personal telephone calls. Mary answers, answers, Yes. Yes. Why? Why? Have Have I done done anythi anything ng wrong? wrong? What is so terrib terrible le about my using using the phone phone anyway? anyway? The company is big enough to afford it; what is one phone call or Feeling g expans expansive ive,, she adds, adds, I phon two to Cebu? Feelin phoned ed my mother a couple of time last week because I wanted to find out her trip trip to Hong Kong. Kong. What is the problem? problem? 1. If you are Mr. Toledo, Toledo, how would you you respond respond? ?

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2. What are your your views views on using the the company company phone phone to make personal personal calls? 3. What are are your views views on employees employees using using company company resources/ resources/ small small items? Case Study No. 4: The Dilemma at Affordable Homes Company Company Affo Afford rdab able le Home Homes s comp compan any y is in stif stiff f competition for the dwindling amount of prime residential building land available available near a fast-growing urban urban area. Although the law of supply and demand has drive hous house e pric prices es to astr astron onom omic ical al heig height hts, s, costs of building have kept rapid pace, and profit margins for Affordable Homes are narrow. A thicke thickett of local local buildi building ng regula regulatio tions, ns, enviro environme nmenta ntall impact impact report reports, s, developer fees and permits complicate the process, but they have also provided provided for special special “arrangemen “arrangements” ts” with two discreet discreet municipal municipal officials who who will will expe expedi dite te tran transa sact ctio ions ns for for an added added grat gratui uity ty.. It is comm common on practice with some of Affordable Homes’ competitors. Affordable Homes’ President, Gene Aguila, has wrestled with the question of gratuities for some some time. There is increasing legal risk in the situation. situation. Also, Mr. Aguila has provided himself through the years for being totally honest. honest. He is also an active active member member of the Knights Knights of Columbus Columbus in his church church and a lay minister minister.. But now now that compet competiti ition on has never never been together, and Mr. Aguila is starting to suffer economically because his projects move slower than those of competitors. Mr. Agui Mr. Aguila la call calls s in Robe Robert rt,, who who has has resp respon onsi sibi bili lity ty for for obta obtain inin ing g the the necessary permits. We need to stay competitive, says Mr. Aguila, We’ve got nearly 300 people on the payroll, and that is lot of jobs to lose if we cannot compete. compete. See who you can talk to, Robert. I don’t care what you need to do to get the permits approved... just do it. Guide Questions to answer using the standard format of Case Analysis: 1. What is the present present situati situation on of the case? case? Give the highligh highlights ts of the case. 2. Provide Provide a competit competitive ive analysis analysis on on the situati situation. on. 3. What actions actions are are demand demanded? ed? Specify Specify all all action actions s required required.. 4. What ethical ethical issues issues are visible visible on this case? case? 9|Page




5. How would you sol solve the problem of the Affordable Homes company? 6. How How do you thin think k Rober Robertt shoul should d respon respond? d? Cite Cite all all the possi possibl ble e responses of Robert. 7. How How sho should uld Gene Gene act act and and re reac actt to the the prob roblem? lem? Cite ite all all the the possible reactions of Gene. 8. What solutions solutions can can you you think think for this case? case? 9. What advise advise can can you give to to both both Robert Robert and Gene. 10. What should Affordable Homes do in order to avoid encountering same problem in the future? Case Study No. 5: Taking Other Other People’s Credit Mr. Adan, a supermarket Manager, asks Henry to submit a report whic which h is to incl includ ude e a back backgr grou ound nd anal analys ysis is of some some data data,, and and recomme recommenda ndatio tions ns based on the interp interpret retati ation on of that that data. Mr. Adan asks asks Henry to get the the report togethe togetherr within two weeks. weeks. Off Henry goes. He delegates the the research, analysis, analysis, and report report writing to one of his subordinates, Rhoda, who completes the work in ten days days and gives the report report to Henry. Henry. Henry Henry takes takes Rhoda’s Rhoda’s work, work, reads it, is satisfied with the content, retypes the cover page to show his name, not Rhoda’s, and then submits it to Mr. Adan as if it were his own work. He accepts praise praise and gives no credit to to Rhoda, who, in fact, did the research and wrote the report. Class Discussion Discussion: What What is your your reac reacti tion on to not not bein being g give given n acknow acknowled ledgme gment nt for work work that that you have have done done and then then seeing seeing someone else being praised for it? The Norm of Morality (Characteristics)

1. Norms are purely internal. Internal norms, such as conscience, make sense only if they are based on something outside of us as individuals, which can rightfully lay total claim to us. based on current opinions and customs. customs. “ Everybody 2. Norm based Everybody is doing thus it is right,” but right is still right no matter how many people people are wrong. wrong. (Ex: annulment; annulment; Marriage Marriage of the same same gender; gender; Pre-Marital Sex; Graft and Corruption; formal and liberal courtship; drugs and abuses; etc.) Norm of expedi expedienc ency. y. Other 3. Norm Other people people regula regulate te their their action actions s in accordance with what is useful at the moment rather than what is 10 | P a g e




object objective ively ly right right or wrong. wrong. (Case (Case No. 4 – bribin bribing g two municip municipal al officials to facilitate speedy registration) 4. Norm of preference. There are others who act in accordance with what is desirable, what one “prefers” doing rather than what is right or wron wrong. g. (Ex: (Ex: Tax Tax coll collec ecti tion on is mos mostt ofte often n done done with with fraud fraud – frie friend nds s and and relat relativ ives es are are comp comput uted ed less less taxe taxes; s; othe otherr sales sales and and incomes are not declared so as to avoid taxes) 5. Situation ethics. There are no standards for human activity; we must always act in what we perceive to be right, by letting the situation situation speak speak to us. We must always always do what we feel is right right for us. Discret Discretion ion and proper proper judgmen judgmentt of the situati situation on makes makes the situation itself a valid basis of next actions. 6. Evaluation. Ethics and morality is not a matter of current opinions or acti action ons s of the the majo majorit rity. y. Prop Proper er eval evalua uati tion on of the “pot “poten enti tial al action” will guide to ethics. Moral and Nonmoral Standards Some Some action actions s are contra contrary ry to “norma “normally lly-ac -accep cepted ted” ” acts acts are oftenl oftenly y considered nonmoral provided they do not pose a serious threat to human well-being: 1. Wear Wearin ing g shor shorts ts to form formal al gath gather erin ings gs is an “un “unacce accept ptab able le” ” gesture 2. Murdering Murdering the british british-englis -english h with the commonly commonly used “Tag-Lish” “Tag-Lish” 3. Photog Photograp raphin hing g the finish finish of a high-s high-spee peed d race race with with a low-sp low-speed eed camera 4. Wearing Wearing red-color red-colored ed clothing clothing or garments garments during during funerals funerals 5. Whistl Whistling ing durin during g night-t night-time imes s 6. Pointi Pointing ng at at the the rain rainbow bow 7. Playing Playing music music or singin singing g during during bereavem bereavement ent But the violation does not pose a serious threat to human well-being. Characteristics of Moral Standards

1. They They concern concern behavio behaviour ur that can be of seriou serious s consequ consequenc ence e to human welfare 2. Thei Theirr vali validi dity ty depe depend nds s on the the adeq adequa uacy cy of the the reas reason ons s that that support or justify them

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Morality and Etiquette Etiquette refers to any special code of behaviour or courtesy. Etiquette refers to what is “socially appropriate.”

Examples: 1. Eating using using one’s one’s fingers fingers during formal formal dinner dinner or fine-dining fine-dining (no (no etiquette) 2. Saying Saying “please” “please” or “thank “thank you” (good (good etiquet etiquette) te) 3. Giving Giving a knife with the sharpsharp-poi point nt facing facing the other other person person (no etiquette) 4. Carrying Carrying one’s one’s elbows on the the table while while eating eating (bad etiquette etiquette)) 5. Cleaning Cleaning one’s one’s nostrils nostrils in in public public (bad etiquette) etiquette) 6. Chewin Chewing g food food with you yourr mouth mouth open open 7. Assisting Assisting ladies ladies in going going in and out out of the the door door 8. Whis Whistl tlin ing g to lad ladie ies s 9. Observing Observing proper proper telepho telephone ne manners manners 10. 10. Commu ommuni nica cati tio on et etiqu iquette ette (wh (when to talk alk and and when when to list listen en,, maintaining eye contact) 11. Responding to invitations (RSVP) 12. Formal greetings to strangers

Morality and Law Law can be defined as follows: follows : 1. A rule of conduct or procedure establ establish ished ed by custom custom,, agreem agreement ent,, or authority. 2. The body of rules and principles governing the affairs of a community and enforced by a political authority. 3. The condit condition ion of social social order and justice justice created created by adheren adherence ce to such a system. 4. A set set of rules rules or prin princi cipl ples es dealin dealing g with with a spec specif ific ic area area of a lega legall system. 5. The system system of judici judicial al adminis administra tratio tion n giving giving effect effect to the laws of a community.

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C C

C

C


Statutes are laws enacted by legislative bodies. Ordinances are laws enacted by local governing bodies like city councils. Common Law refers to laws applied in the English-speaking world before there were any statutes. Constitutional Law refers to court rulings on any law.

Relationship between Law and Morality: In theory theory and practi practice, ce, law codifi codifies es custom customs, s, ideals, ideals, beliefs, beliefs, and a society’s outlooks, its views of of right and wrong, good good and bad. But it is a mistake to view law as sufficiently establishing the moral standards on an individual, individual, a profession, profession, an organization, organization, or society. Law simply cannot cover the variety of individual and group conduct. Although useful in alerting us to moral issues and informing us of our righ rights ts and and resp respon onsib sibil ilit itie ies, s, law law cann cannot ot be take taken n as an adeq adequa uate te standard standard of ethical ethical or moral conduct. conduct. Conformit Conformity y with law is neither requisite nor sufficient for determining moral behaviour, any more than conformity with law is not necessarily immoral, for the law disobeyed may be unjust.

Chapter 3: RESPONSIBILITIES OF THE CORPORATION Case Study Study No. 6: Building a Dam A dam was proposed to be built on a certain river in a natural sett settin ing g that that woul would d prod produc uce e hydr hydroe oele lect ctri ric c powe powerr and and crea create te recreational activities, such as boating, swimming and water-skiing. The only problem, as environmentalist see it, is that there is a certain species of small fish found only in this river that will become extinct extinct if the dam is built. The fish is not used used for food or sport; sport; in fact, no one knows what purpose it serves by being in the river. Should Should the dam be be built built or not? not? Why or why not? not? Would it make make a difference to your answer if the small fish were a good food fish or could it be used in some other commercial way, or is its extinction 13 | P a g e




suffici sufficient ent reason reason not to build build the dam? dam? detail.

Explai Explain n your answer answer in

A. The Purp Purpose ose of of Busine Business ss Firm Firm Two Points of Views relating to the firm’s purpose: 1. Social Point of View. The firm exists to supply goods and services to consumers as efficiently as possible. 2. Individual Point of View. The firm exists to supply income, power, prestige, prestige, creative satisfaction, satisfaction, or a combination combination of these to work for it or with it.

“The manager must reconcile claims and harmonize means so that all legitimate goals are obtained by ethical means.” B. Ethical Ethical Considerati Considerations ons in Transactio Transactions ns with Employee Employees s 1. Identifyin Identifying g ethical concerns concerns in employee transact transactions. ions.

a

Selecting new employees

h

Terminating employee services b Awarding merit increases i Communicating c Sett Settin ing g goa goals ls and and per perfo form rman ance ce j Supporting employee ideas standards and efforts d Evaluating performance k Delegating work e Giving performance feedback l Arranging, training and dev’t opportunities f Disciplining m Providing health, safe working conditions g Selecting personnel for n Granting time off with or promotion without pay 2. Hiri Hiring ng Employers generally hire people who will maximize the efficiency of the firm, which is an organizatio organizational nal ideal. In meeting meeting this obligation, obligation,

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employers must be careful to honor the moral ideal of treatment of employees. 2.1 Screening. When done done properly, properly, screenin screening g ensures ensures a competent competent pool of candidates and guarantees that everyone is dealt with fair fairly ly.. But But when when scre screen enin ing g is done done impr improp oper erly, ly, it unde underm rmin ines es effective recruitment and invites injustices into the hiring process. 2.2 Tests. Tests Tests are generall generally y designed designed to measur measure e the applicant applicant’s ’s verbal, quantitative, and logical skills.



Aptitude Tests help determine job suitability



Skill Tests Tests measure measure the applicant applicant’s ’s proficien proficiency cy in specific specific areas such as typing and shorthand.



Personality Tests help determine the applicant’s maturity and sociability



Dexterity Dexterity Tests Tests help help to determ determine ine how nimbly nimbly applic applicant ants s can use their hand and fingers.

2.3 Interviews. When ethical issues arise in interviewing, they almost always relate to the manner in which the interview was conducted. The literature of personnel management rightly cautions against rudeness, coarseness, hostility, and condescension in interviewing job applicants. In guarding these qualities, personnel managers would do well to focus on the humanity of the individuals who sit across the desk from them, mindful of the very human need that has brought those people into the office. 3. Prom Promot otio ions ns

One essential criterion that applies to hiring also applies in promotion: job qualification. The “other” “other” factors involved involved in this process are: a) b) c) d)

How long long have have you been been with with the the firm? firm? How well well are you like liked? d? Whom Whom you you know know? ? When were you last promoted promoted? ?

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To highlight ethical issues in promotion, the following factors serve as bases for promotion: 3.1 Seniority. It refe refers rs to the the long longev evit ity y on a job job or with with a firm firm.. Frequently, job transfers or promotions are made strictly on the basis of seniority; individuals with the most longevity automatically receive the promotion. “A policy that provides for promotions strictly on the basis of qualifications seems heartless, whereas the ones that promotes seniority alone seems mindless”...

3.2 Inbreeding. It is the practice of promoting exclusively from within the firm. firm. In theory, theory, whenever whenever managers managers must must fill positions, positions, they they should should look only only to compete competence nce.. The most most competen competent, t, whether whether within or without the firm, should receive the position. position. In this way, responsibilities to owners are best served. 3.3 Nepotism. It is the practice of showing favouritism to relatives and close friends. For instance, when a firm is strictly a family corp corpor orat atio ion n and and has has its its purp purpos ose e prov provid idin ing g work work for for fami family ly members, members, nepotistic nepotistic practice practices s are generally generally justified. justified. But, even if rela relati tive ves s and/ and/or or clos close e frie friend nds s qual qualif ify y the the posit positio ion, n, respo respons nsib ible le management must also consider the impact of nepotistic hiring:

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Will the selection breed resentment and jealousy among other employees? Will it discourage qualified outsiders from seeking employment with the firm? Will Will it crea create te prob proble lems ms in futu future re plac placem emen ent, t, sche schedu duli ling ng,, or dismissal of the relation? Will it make the relation an object of distrust and hostility within the organization?

Discip ipli line ne and and Disc Discha harg rge. e. 4. Disc Person Personnel nel depart departmen ments ts establ establish ish guid guidel elin ines es for for beha behavi viou ourr base based d on such such fact factor ors s as appearance, Discharge punctuality, dependability, efficiency, and cooperation. should go through 3 processes: reprimand, suspension, suspension, termination.

Ethical approaches to maintaining discipline: 16 | P a g e




a. Make Make sure your people people know know the standa standards rds of the perform performanc ance e desired b. Teach them how to mainta maintain in standar standards ds c. Encourage Encourage them them as they they progres progress s in the direction direction desired desired

Disciplinary Guidelines (Rating Sheet): CRITERIA 1. I dete determ rmin ine e whet whethe herr or not the the empl employ oyee ee has been been warned warned and underst understand ands s the conseq consequen uences ces of such such conduct. 2. I assu ssure mysel yselff that the the order rder or rule rule viola iolate ted d is reasonably related to safe, ethical, legal or efficient operations. 3. I make make sure sure disc discip ipli lina nary ry acti action on is not not take taken n unti untill a complete investigation has been completed. 4. I make every every effort effort to assure assure that the investi investigat gation ion is fair, objective and includes the employee’s input. 5. I analyze analyze the evidenc evidence e carefully carefully to determin determine e whether whether or not it provides substantial proof of guilt. 6. I check check to see if if the rules rules or orders orders violated violated have have been been consistently enforce in the past. 7. I make sure sure that penal penalty ty is reasona reasonably bly relate related d to the seri seriou ousn snes ess s of the the offe offens nse, e, and and it appl applie ied d even even-handedly and without discrimination. TOTAL SCORE

5 4

3 2 1

Instructions:

1. Add and the total your score: _________ _____________ ________ ________ ________ ________ ______ __ 2. If you scored 28 or above, you seem to be on target in admini administe sterin ring g disciplin discipline. e. If you scored scored between between 21 and 27, you have the right idea but need to work harder in those areas where your your score is 3 or lower. lower. If you score scored d under under 21, you need need to reexamine your approach to discipline and seek appropriate training. 5. Wages. From the ethical point of view, it is very easy to say that CONSTITUTES firms should pay a fair and just wage, BUT WHAT CONSTITUTES SUCH A WAGE ? Variables involved in setting wage rates and establishing salaries: salaries : 17 | P a g e



1. 2. 3. 4. 5. 6.


The emplo employee’s yee’s contri contributio butions ns to the the firm firm The mark market et for for labor labor and produ products cts The compet competitive itive position position of of the company company The creati creative ve power power of the firm firm and and its union union Season Seasonal al fluctu fluctuati ations ons Employ Employee’ ee’s s indivi individua duall needs needs

Fair Wage is one that significantly help individuals individuals satisfy their basic needs. Ethical Guidelines in Setting Wage System: 1. What is the prevailing wage in the industry? The salaries of simil similar ar posi positi tion ons s in the the indu indust stry ry can can prov provid ide e some some dire direct ctio ion n for for arriving at a fair wage. 2. What is the community wage level? Highly urbanized cities have higher rates than in the countryside. 3. What is the nature of the job itself? Some jobs require more training, experience, education; some are physically or emotionally demanding; some are downright dangerous; risky or unskilled jobs often attract the least educated and most desperate for work. 4. Is the job secure? Compensation could take the form of higher pay, fringe fringe benefits, benefits, or a sensible sensible distribut distribution ion of the two. two. On the othe otherr hand hand,, guar guaran ante tees es of job job secu securi rity ty are are grou ground nds s for for wage wage compromises by labor. 5. What are the employer’s financial capabilities? What can the organi organizat zation ion afford afford to pay? Can it afford afford wages higher higher than the minimum wage? 6. What is the law? The law requires that businesses pay at least the minimum wage. Non-Agriculture Agriculture (Plantation & Non-Plantation) Non-Plantation) Private Hospitals with bed capacity of 100 or less Retail/ Service Establishments regularly employing 15 workers or less Manufacturing Establishments Establishments regularly employing less than 10 workers

P 456.00 419.00 419.00 419.00 419.00

Ethical Implications in Choosing Between People Manager’s Bottlenecks in Choosing between People: 18 | P a g e




1. Am I biased biased toward toward an employee employee for for any reason? reason? 2. Am I evaluating demonstrated ski skills bona fide against job requirements? 3. Am I being overly overly influe influence nced d one way or the other other by irrele irrelevan vantt or surface characteristics? 4. Am I being being pushed pushed in a direction direction not not of my choic choice e by someone someone else? 5. Am I measurin measuring g all people people against against the same same criteria? criteria? 6. Is age or salary salary level influenc influencing ing my thinking thinking more more than it should? should? 7. Am I really really analyzi analyzing ng the importa important nt elements elements of this transact transaction ion or am I simply following a past practice that should be tested? 8. Would I be be willing to to have my decisio decision n criteria criteria applied applied to me under under similar circumstances? Ethics and Performance Appraisal Business managers sometimes resist doing performance appraisal on the grou ground nds s they they do not not want want to be judg judge e and and jury jury with with resp respec ectt to an employee’s career. Some feel positive feedback will cause employees to let down. Other think that that negative feedback feedback is demoralizing, demeaning, demeaning, and perhaps unethical, so they often give employees better performance appraisals than they deserve. Mana Manage gers rs who who foll follow ow corr correc ectt perf perfor orma manc nce e eval evalua uati tion on and and feed feedba back ck procedures create an environment in which there are no surprises, and employees have the opportunity to correct deficiencies and grow. Case Study No. No. 7: The Dance on on the Lemons Lemons When Romeo Mendoza joined the Swerte Corporation, he sat down with Elsa Cruz, the senior executive to whom he reported, to learn the the goal goals s of the the orga organi niza zati tion on,, and and to find find out out as spec specif ific ical ally ly as possible possible what was expected expected of him. him. As the discussion discussion progressed progressed,, Rome Romero ro beca became me incr increa easi sing ngly ly ill ill at ease ease.. Miss Miss Cr Cruz uz seem seemed ed reluc relucta tant nt to talk talk in spec specif ific ics, s, and and avoi avoide ded d shari sharing ng conf confid iden enti tial al information pertinent to Romeo’s position. As the discus discussio sion n progre progressed ssed and and Romeo’ Romeo’s s frustra frustratio tion n grew, grew, he asked Miss Cruz about the new assignment his predecessor had been given. “Oh,” Miss Cruz said with a sly grin, “he has has joined the Danc Dance e of the the Lem Lemon ons.” s.” “Wha “Whatt do you you mea mean? n?” ” aske asked d Rome Romeo. o. “Well,” said Miss Cruz, “he was not performing effectively, so we moved moved him to another another assignm assignment ent.” .” “Will “Will he do better better there? there?” ” asked Romeo. Romeo. “Who knows?” knows?” said Miss Cruz Cruz “but at least least he is out of my hair.” 19 | P a g e




“Was there any particular reason why you assigned him to another posit positio ion, n, rath rather er than than term termin inat ate e him? him?” ” Rome Romeo o aske asked. d. “Oh, “Oh, we seldom terminate senior employees, we just move them around the organi organizat zation ion hoping hoping we will find find a place place they they will fit in. All of us know these moves happen – we call it Dance of the Lemons.” Sixt Sixty y days days late later, r, afte afterr havi having ng loca locate ted d anot anothe herr posit positio ion, n, Rome Romeo o Mendoza resigned.

1. Why do do you thin think k Romeo Romeo resign resigned? ed? 2. What would would you have have done done under under similar similar circumstance circumstances? s? 3. Does this case involve involve manage managerial rial ethic ethics? s? Why or why why not? not?

Improve Your Ethical Batting Average You can be successful at performance appraisal and have a clear cons consci cien ence ce,, or be a miser miserab able le fail failur ure e fill filled ed with with doub doubtt and and remo remorse rse.. Below are the factors that make the difference:

No.

SUCCESSFUL APPRAISERS

MISERABLE FAILURES

1.

Leaders who engage in mutual Those who establish arbitrary, goal-setting and open unilat unilatera erall perfor performan mance ce goals goals or communication. standards. They may or may not communicate them to employees.

2.

Leaders who establish clear, Those who have not though meas measur urab able le expe expect ctat atio ions ns and and thro throu ugh what what they hey exp expect ect or provid provide e a climat climate e conduc conducive ive to don’t know how to measur sure success. success ess, thereby creating a threatening atmosphere in which to work.

3.

Leaders who ask questions, Those who never seek the ideas listen listen carefu carefully lly,, and apprec appreciat iate e of othe others rs or list listen en,, yet yet have have a and use the ideas of others. sol solution for everyone else’s problems.

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4.

Leaders who publicly recognize Those who spend too much time positive performance, and looking for things that are wrong privately correct improper and and too too litt little le time time look lookin ing g for for performance when it occurs. things that are right.

5.

Leaders who give honest Those who accept substandard feedback on performance perfor performan mance ce or misrep misreprese resent nt it agai again nst mutu mutual ally ly unde unders rsto too od in providing feedback. goals.

6.

Leaders who follow through on Those who do not take their their commitments commitments seriously.

An ethical appraisal is a fair and honest assessment of performance against mutually established and understood goals g oals and standards goals that leave both parties feeling that have gained something.

Ethics and Communication with Employees When employees discuss how trust is built in work groups, they stress the importance of open open and honest honest communication. They refer to this kind of communication as leveling, or telling it like it is. Managers wanting to be fairer and open in their communication should ask themselves the following questions frequently: 1. 2. 3. 4.

What What do empl employe oyees es workin working g for me me need to know? What What do empl employe oyee e workin working g for me me want to know? How How do I pro provi vide de it? it? When do I get someon someone e else to to provide provide it? it?

Most people “listen” by interpreting and judging what the other person says and them preparing responses or thinking about something else. This behaviour is unconscious, but it obstructs the ability of the other side to be able to reach him. Administering Reward Systems Ince Incent ntiv ive e syst system ems s are are desi design gned ed to rewa reward rd peop people le on the the basi basis s of performance and their overall contribution to to the organization. Managers must be honest. honest. They must understand understand the work work being performed and be able to differentiate clearly between levels of performance by individuals.

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They must also have some personal convictions about what is right and wrong, as well as the courage to stand behind their decisions. Guidelines for Ethical Administration of Reward System:

When I

administer rewards systems:

CRITERIA 1. I lay ground ground work work by ensuring ensuring there there is mutual mutual understa understanding nding about what is expected in terms of performance. performance. 2. I update update job descriptio descriptions ns as changes changes occur occur and insist insist that the the sala salary ry grad grade e of emplo employe yees es rema remain in appr approp opri riat ate e to thei theirr positions. 3. I consisten consistently tly monitor monitor perform performance ance against against expect expectation ations s and give all employees appropriate standards 4. I am aler alertt for for both both supe superi rior or and and infe inferi rior or perf perfor orma manc nce e as related to goals and standards. 5. I note note and and comm ommunic unicat ate e to othe ther empl employ oyee ees s effor forts to development and increase their potential. 6. I refuse refuse to let non-perf non-perform ormanc ance e factor factors s like like frien friendsh dship, ip, race, race, reli religi gion on,, fami family ly back backgr grou ound nd,, sex, sex, or age age infl influe uenc nce e my decisions. 7. I test my my decisions decisions to to be sure sure that are are based based on assumptio assumptions ns or impressions. 8. I make make deci decisi sion ons s on obje object ctiv ive e data data and and push push asid aside e any any unwillingness to help my employees face reality. 9. When When I obse observ rve e othe otherr who who are are unet unethi hica call in dist distri ribu buti ting ng awards, I resist the same impulse in myself. 10.I stri strive ve to main mainta tain in equi equity ty betw betwee een n empl employ oyee ees s and and am prepared to justify with facts my decisions to anyone. TOTAL SCORE

5 4 3 2 1 5 4 3 2 1 5 4 3 2 1 5 4 3 2 1 5 4 3 2 1 5 4 3 2 1 5 4 3 2 1 5 4 3 2 1 5 4 3 2 1 5 4 3 2 1

Note: Note: A score score below 40 sugges suggests ts you need need to do some some hard work work to improve the ethical administration of your reward system.

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Classroom Notes_business Ethics

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