COMMON UNETHICAL PRACTICES OF BUSINESS ESTABLISHMENTS

Unethical problems in business ethics occur in many forms and types. The most common of
these unethical practices of establishments are misrepresentation and over-persuasion.

Misrepresentation may be classified into two types: direct misrepresentation may be classified
into two types: direct misrepresentation and indirect misrepresentation.

1. Direct misrepresentation is characterized by actively misrepresenting about the product

or customers. This includes:
a. Deceptive packaging
b. Misbranding or mislabeling
c. False or misleading advertising
d. Adulteration
e. Weight understatement or short weighing
f. Measurement understatement or short measurement
g. Quantity understatement or short numbering

2. Indirect misrepresentation is characterized by omitting adverse or unfavorable

information about the product or service.
a. Caveat emptor
b. Deliberate withholding of information
c. Passive deception

Over-persuasion
Persuasion is the process of appealing to the emotions of a prospective customer and urging
him to buy an item of merchandise he needs.

CORPORATE ETHICS

Unethical Practices of Corporate Management

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

Some Unethical Practices of the Board of Directors

1. Plain Graft. Some of the BOD help themselves to the earnings of that should be for others
stockholders. This is done (a) by voting for themselves huge per diems, large salaries, and
big bonuses that does not equal the value of their services; and (b) authorizing purchase of
goods or services for the company at a higher price than normal (commission is accrued to
them)
2. Interlocking directorship. This is often practiced by a person who holds directorial positions
in two or more corporation that do business with each other. This practice may involve
conflict of interest and can result to disloyal selling.
3. Insider trading. This occurs when a broker or another person with access to confidential
information uses that information to trade in shares and securities of a corporation, thus
giving him an unfair advantage over the other purchasers of these securities.
4. Negligence of duty. A more common failure of the members of the BOD than breach of
trust is neglect of duties when they fail to attend board meeting regularly. It is only in
regular attendance that they can protect the rights and interests of the shareholders and
their non-attendance of board meetings could result to betrayal of trust of the parties who
elected them to their positions.

Some Unethical Practices of Executive Officers and Lower-Level Managers

1. Claiming a vacation trip to be business trip.

2. Having employees do work unrelated to the business.
3. Loose or ineffective controls.
4. Unfair labor practices. The labor code lists the following as unfair labor practices
committed by an employer or employees or a group of employees who have organized
themselves into a union.
a. To interfere with, restrain or coerce employees in the exercise of their right to self-
organization.
b. To require as a condition of employment that a person or an employee shall not join
a labor organization or shall withdraw from one to which he belongs.
c. To contract out services or functions being performed by union members when such
will interfere with, restrain or coerce employees in the exercise of their rights to self-
organization.
d. To initiate, dominate, assist or otherwise in with the formation or administration of
any labor organization, including the giving of financial or other support to it.
e. To discriminate with regard to wages, hours of work, and other terms or conditions
of employment in order to encourage or discourage membership in any labor
organization.
f. To dismiss, discharge, or otherwise prejudice or discriminate, against an employee
for having given or being about to give testimony under the Labor Code.
g. To violate the duty to bargain collectively as prescribed by the Labor Code.
h. To pay negotiation or attorneys fees to the union or its officers or agents as part of
the settlement of any issue in collective bargaining or any other dispute.
i. To violate or refuse to comply with voluntary arbitration awards or decisions relating
to the implementation or interpretation of a collective bargaining agreement.
j. To violate a collective bargaining agreement.
5. Making false claims about losses to free themselves from paying the compensation and
benefits provided by law.
6. Making employees sign documents showing that they are receiving fully what they are
entitled to under the law when in fact they are only receiving a fraction of what they are
supposed to get.
7. Sexual harassment
Some Unethical Practices of Employees

1. Conflict of interest
Some common examples of conflict of interest
a. An employee who holds a significant interest or shares of stock of a competitor,
supplier, customer or dealer favors this party to the prejudice of his employer.
b. The employee accepts cash, a gift or a lavish entertainment or a loan from a
supplier, customer, competitor or contractor.
c. The employee uses or discloses confidential information for his or someone else’s
personal gain.
d. The employee engages in the same type of business as his employer.
e. The employee uses for his own benefit a business opportunity in which his employer
has or might be expected to have an interest.
2. Dishonesty