Day /Session 15

Lesson title:
Business Ethics: Classification of Just Wages
The issue of just and fair wage is another hotly contested issue in the Philippines. It has
become ordinary for us to hear from the news about workers demanding for increase in
their wage. From the top management to the janitor, and the security guard, from the
principal of the school to the ordinary teacher, from government employees to private
employees, the question of just and fair compensation has always been debated upon.
The dilemma arises mainly because the employer and the worker usually come from
opposing interests. The main interest of the employer is to reduce the cost of his or her
business, and worker’s salary is part of at cost. On the other hand, the main interest of the
worker is to increase his or her wage because it is usually his or her main way of supporting
his or her family

TERMS:

Just Wage - A wage level for a job that is set by market dynamics and justified by the
requirements in terms of the worker's experience, education and skills.

Minimum Wage - is a legally mandated price floor on hourly wages, below which non-
exempt workers may not be offered or accept a job.

Living Wage - A theoretical wage level that allows the earner to afford adequate shelter,
food and the other necessities of life.

Cost of Living - is the cost of maintaining a certain standard of living.

CBA (Collective Bargaining Agreement) - is a special type of

commercial agreement, usually as one negotiated "collectively" between management (on
behalf of the company) and trade unions (on behalf of employees). The collective agreement
regulates the terms and conditions of employees in their workplace, their duties and the
duties of the employer.

Legalistic - strict adherence, or the principle of strict adherence, to law or prescription,

especially to the letter rather than the spirit.

Labor Contractualization

Manuel Velasquez identifies at least Seven factors that must be considered in determining a
fair and just.

 Comparative wage. A business owner must consider the prevailing wage in the industry
and in the area.

For example, a bank owner must have sufficient data on the predominant wage rates in the
banking industry. In determining the salary of a newly hired bank teller, the bank owner must
have compared his or her salary scheme to those of other banks. If the bank teller is given a
salary that is way below what other bank teller receive, the salary may be unjust. However, we
must bear in mind that comparative wage is not the only determinant of just wage.

 Capability of the business. A business owner must consider the capability of his of her
business.
 For example, one can easily understand that a start-up business cannot at once give huge
salary. However, when the business is already profitable, the owner has the moral duty to also
increase the salary of his or her workers. The business owner cannot simply say that his or her
only duty is what is stipulated in the contract, or that he or she is not violating the law.

Profits must be shared because workers are partly responsible for the increase of owner’s
profits.

 A business owner must consider the nature of the job. Velasquez says: “Job that involve
greater health risks, offer less security, require more training or experience, impose heavier
physical or emotional burdens, or take greater effort should carry higher levels of
compensation.”

In the Philippines, many critics question the salary of a public school teacher. The nature of
their job and the condition of public schools make their job very challenging.

 A business owner must be cognizant of the laws on minimum wage. Obeying the law on
minimum wage is the least that the business owner can do for the workers. Yet, there are
still many reports of violation of this law. Usually, workers do not dare to report their
situation because of their fear of losing their job or because they are just contractual
workers that can easily be replaced. A business owner must also be sensitive enough to see
whether a minimum wage is sufficient for the needs of his or her workers.

 A business owner must take into consideration the relative proportionality and
similarity of the nature of the job of the workers within the organization. For example,
if the work of a guidance counselor is roughly like the work of a regular teacher, then their
salary must not differ significantly.

Substantial difference in salary between two employees who perform similar work duties
may lead to the loss of morale among the employee with the lower salary.

 Both the employer and the employee must consider the fairness of wage negotiations.

Collective Bargaining Agreement (CBA) between the employer and the workers must be
done in good faith. If the wage is a result of coercive and deceitful negotiations, then it is
usually unjust and unfair. The situation becomes more problematic if there are no formal
avenues for wage negotiations.

 A business owner must account for the cost of living within the specific locality where his
or her business operates. This is called the “living wage” as opposed to the “minimum
wage.” Compared to those who live in Metro Manila are confronted with the high cost of
other commodities. However, the minimum wage board, which differs from one area to the
other, may not really reflect the current state of living therein. Every business owner must
take this into consideration in determining the salary of his or her workers. Furthermore, a
strict compliance with the minimum wage law may not be
necessarily be fair for the worker.

We must remember that in determining a just wage, one consideration cannot be

absolutized in favor of the other considerations. Rather, the business owner is tasked to be
prudent in combining and relating these various concerns. Every business owner must be
convinced that the worker is an integral part of his or her business. The worker is human
person usually with a family to feed and support. The determination of wage must not be
confined to a strictly legalistic framework.
Day /Session 16

Lesson title:
Business Ethics: Right to Form Union and Strikes

TERMS:
Labor union - an association of employees that advances member interests through
collective bargaining with an employer. Areas of negotiation typically include wages,
benefits, work rules, and other conditions of employment, such as hiring, discipline, and
termination of employees.

Democratization of wealth refers to the labor union’s objective of ensuring that the
workers receive just wage and safe working conditions. A labor union must assure that the
employer does not abuse and exploit the workers.

Democratization of power pertains to the labor union’s objective of balancing the power
between the employer and the employee. In the absence of a labor union, the employer is
generally more powerful than the worker. If there is a union, there is a sort of equality
and interdependence between the employer and the worker.

Humanizing the working class pertains to the function of the labor union to educate the
workers, the employers and the society as a whole regarding the value of human labor and
the dignity of the workers.

Labor unions must not only be concerned with obtaining material benefits from the
employers. Labor leaders must raise the consciousness of the workers about their dignity.

UDHR) Universal Declaration of Human Rights

The right to organize is part of the fundamental human rights enshrined in the 1948 United
Nation’s Universal Declaration of Human Rights (UDHR). Art. 20 of UDHR states: “Everyone
has the right to freedom of assembly and association.”. Furthermore, our 1987 Constitution
reiterates this right. Art. 3 or bill of Rights declares: The right of people, including those
employed in the public and private sectors, to form unions, associations, or societies for
purposes not contrary to law shall not be abridged. The main objectives of a union are
democratization of wealth, democratization of power and humanizing the working class.

Denis Collins said: Labor unions perform an essential equalizing function, leveling the
playing field between powerful business owners and organizational managers, who seek to
minimize employee wages and benefits and dictate workplace rules, and individual
employees who lack the power to adequately represent their own interests. Unions typically
arise in circumstances where employees are continually dissatisfied with wages, benefits,
and working conditions. They counteract managerial power by providing a unified employee
voice.

When all attempts to reach agreement between the employer and workers fail, the workers
usually resort to a labor strike. “A strike occurs when an organized body of workers
withholds its labor to force the employer to comply with its demands.”

Just as the right to organize and form a union is a basic right to the workers, the right to
strike is also a basic right. However, there are economic and social disadvantages when
workers decide to stop working. That is why the right to strike must also be tempered with
conscientious duties of the workers. Some employers may view the labor union as
counterproductive and as a hindrance to the success of a business. However, building a
healthy relationship between the employer and the labor union would, in turn, improve
workers’ efficiency and productivity.
Workers Go on Strike for different reasons:
 For higher compensation
 To improve the workplace
 For shorter working days
 To stop their wages from going down
 For more benefits
 Because they think their company has been unfair

Types of Strike
 A sit- down striker (sit-in)
 General Strike
 Sympathy strike
 Unfair labor practice strike
 Jurisdictional Strike
 Economic Strike
 Wildcat Strike
 Slow-down
 Recognition Strike

Reasons for strike to be moral:

 There is a sufficient and just reason for it.
 Intended good results must be proportionate to the evil effects
 The means employed are lawful.

Day /Session 17

Lesson title:
Business Ethics: Fiduciary Duty of Employees

If the employees have fundamental rights to ensure that their work and working condition
improve their lives and well-being, they also have corresponding moral duties toward the
employer that they serve. The basic principle that underlies the duties of the employees
toward the employer is captured in what is now famously known as the Theory of Agency.
The online Legal Dictionary defines the theory of agency this way: “a consensual relationship
created by contract or by law where one party, the principal, grants authority for another
party, the agent, to act on behalf of and under the control of the principal to deal with a third
party.”

Let me clarify with you three important words in the statement above, when we say agent, it
is the employees hired by the owner of the business, while the principal is the owner of the
business and the third party, may it be the customers, suppliers, government officials, and
other stakeholders.

Fiduciary Duty - is the legal and technical term to refer to the obligations of the employee
(agent) to always act on behalf of his or her employer (principal).

The online Business Dictionary defines fiduciary duty as: “a legal obligation of one party to
act in the best interest of another. The obligated party is typically a fiduciary, that is,
someone entrusted with the care of money or property.”

John Boatright discusses the three main principles of fiduciary duty: candor, care, loyalty.

Candor refers to the agent’s moral duty to be always truthful and honest to his or her
principal. The employer or the owner of the business has the largest stake on the business
because of his or her investment of money, time, effort and other psychological factors. If the
business fails, it is the owner who usually incurs the greatest loss. Thus,the fiduciary must
always disclose all relevant and vital information to the principal.

Care refers to the duty of the employee to take good care of all the assets entrusted to him or
her by the owner of the business. These assets include money and properties. Company theft
even of small things of value is a violation of the duty of care expected from the employee.

The duty of loyalty is a very broad obligation that covers many things. If somebody is
maligning the company, loyal employee finds ways in order to support, protect, and defend
the company from malicious and false accusations.

The owner has the right to know what is happening to his or her business, hence, the
employee has a duty to be truthful and honest by disclosing to the owner all information
pertinent to the business activities.

Protection of copyrights, patent rights, trade secrets, and other intellectual properties is also
expected from the employee. The employee must not be negligent about company time,
company property, and other company assets.

As far as fiduciary is concerned, the duty of loyalty mainly pertains to employee’s obligation
“to act in the interest of the beneficiary and to avoid taking any personal advantage of the
relationship.”

Day /Session 18

Lesson title:
Business Ethics: Conflict of Interest and Whistle Blowing

Conflict of interest - is a situation in which an individual has competing interests or

loyalties. A conflict of interest can exist in many different situations

Whistleblowing - can be defined as raising a concern about a wrongdoing within an

organization. The concern must be a genuine concern about a crime, criminal offense,
miscarriage of justice, dangers to health and safety and of the environment

A conflict of interest - is an actual or a potential violation of a fiduciary duty of loyalty to the

business owner. One simple definition of conflict of interest states that it exists when “the
independence and impartiality of decision makers is compromised due to competing interests
influencing the outcome of a decision, for personal benefit in particular.”

The easiest way to explain conflict of interest is by using some examples.

With a public official whose personal interests conflict with his/her professional position;

With a person who has a position of authority in one organization that conflicts with his or
her interests in another organization;

With a person who has conflicting responsibilities.

In the Philippines, nepotism (favoring one’s relatives and friends) is a common practice in
the organization. There is also a conflict of interest when the purchasing office favors
buying the supplies from a company that he or she is also a part-owner.

John Boatright identified the following other examples of conflict of interest: self-dealing,
acceptance of bribes, direct competition, and use of confidential information. Self-dealing
activities are those transactions wherein the employee (usually, somebody who has power
in the company) uses his or
Direct competition happens when the employee has another business activity that directly
competes with his or her current employer. The employee may even use the knowledge,
skills and other assets that he or she gets from the company in order to use it for his or her
own business undertaking.

Some employees especially in the top-level position of the firm possess confidential and
valuable information. Examples of confidential information are trade secrets and patent
rights. When an employee uses this information for his or her personal interest, then he or she
is also disloyal to the company

Bribery
One of the most common unethical practices that involve conflict of interest is accepting
bribes. Bribes in the form of money or privileges would always work for the advantage or
interests of the employee who receives it. However, interest conflict with the interest of the
business owner. It is not only the bribed employee that may lose integrity when caught; the
company’s reputation is at stake as well. Again, accepting a bribe is a violation of the
fiduciary duty of loyalty toward his or her principal.

Bribe vs. Gift

A dilemma may arise when one finds it difficult to distinguish between a bribe and a gift. The
employee must be knowledgeable enough about the policies of the company about gift-
giving in order to avoid the possible conflict of interest.

Whistle Blowing
Indeed, the employee has the moral duty to be loyal to the employer. But what if the
employee discovered company activities and operations that are illegal, unethical, and
harmful to the public or to the environment? In some instances, the employee has the moral
duty to break its loyalty towards the company and think of his/her greater responsibility
towards the public. This leads to the rise of the phenomenon that we now call
whistleblowing. “Whistleblowing is an attempt by a member or former member of an
organization to disclose wrongdoing in or by the organization.”

Velasquez maintains that whistleblowing is morally justifiable under certain

conditions:
1. The whistleblower must have enough and accurate evidences of the wrongdoing.
2. The whistleblower must have already exhausted all means to resolve the issue internally
with his or her superiors.
3. There should be a high probability that whistleblowing would lead to the correction of the
wrongdoing.

Effects of Whistle Blowing

Whistleblowing has financial and psychological effects. As regards the financial effect, the
whistleblower may lose his or her job. Even if relevant laws may prohibit a company from
terminating a whistleblower, it would still be very difficult for the employee to prove that he
or she is being discriminated upon. Based on a study, the psychological and physical effects
of whistleblowing include “restless sleep, fatigue, headaches, insomnia, increased smoking,
anger, anxiety, and disillusionment.” Another study revealed that “alcohol problems,
nightmares, paranoid behavior at work, and overwhelming distress were just some of the
problems reported by whistleblowers and those they reported.
Types of Whistle Blowing
1. Internal whistle-blowing (loob ng organization)
2. External whistle blowing (labas ng oraganization)
3. Current (kasalukuyan)
4. Alumni (former employee/dati)
5. Open (has an identity/kilala)
6. Anonymous (di kilala/tago ang identity)
Day /Session 19
Lesson title:
Business Ethics: Issues in relation to the Natural Environment

The debate on whether humanity confronts problems regarding the natural environment is
over. Case closed. It is now resolved that humanity has an unprecedented environmental
crisis that is always on the verge of becoming an environmental catastrophe. As early as
1988, former United States vice-president and environmentalist Al Gore said: “The fact that
we face an ecological crisis without any precedent in historic times is no longer a matter of
any dispute worthy of recognition.”

The term environmentalism generally refers to “a concern with safeguarding the natural
world and its various elements and the differing ways in which such a concern is expressed
by people.” When this concern for the natural environment is brought into the field of moral
philosophy, this would give rise to what is now commonly known as environmental ethics>
are the central fact on earth.”

Anthropocentrism - This refers to the view that human beings are the central fact on earth.”

Biocentrism - which literally means the ‘centrality of life,’ is “an ethical perspective holding
that all life deserves equal moral consideration or has equal moral standing.”
This approach maintains that the human being is not the only existent that has intrinsic
value. Everything that has a life has values independent from the concerns of human beings.

Ecocentrism derived from the Greek words oikos (house) and kentron (center). Literally
means “house-centered.” Ecocentrism is another approach to environmental ethics.

MENTAL ETHICS
Generally speaking, business was not originally concerned with the
preservation and conservation of the natural environment. Because of the drive for profit
coupled with the idea that the world is for the absolute taking of the supreme human being,
the natural environment was usually compromised.

Businesses used to believe that the earth’s resources such as air and water are not just free
but also inexhaustible and unlimited.

NATURAL ENVIRONMENT

ANTHROPOCENTRISM
The implication of anthropocentrism is that other existent (lower forms of animals, plants,
minerals, etc.) are taken to be of inferior nature in comparison to human beings. You are
more important than a dog, a frog, a Narra tree, or a mushroom. Men and wo
men are deemed to be in a privileged position within the natural environment. In its mild
form, it implies that we have an intrinsic right to use the natural environment.

The anthropocentric approach

to environmental ethics is anchored on the idea that only human
beings have moral value and deserve to be the object of moral deliberation. The natural
environment has no moral value itself. It only becomes valuable in relation to human beings.
You cannot talk of ethical duty toward animals, plants, and minerals. To care for the
environment is our responsibility because not doing so would eventually lead to the
destruction of humanity. Nonhuman beings are valuable only if valued by human beings.

BIOCENTRIC AND ECOCENTRIC APPROACHES TO ENVIRONMENTAL ETHICS

Environmentalists further realize the limitations of the stance of scholars advancing the
welfare rights of animals. Biocentrism approach maintains that the human being is not the
only existent that has intrinsic value. Everything that has a life has values independent from
the concerns of human beings.

For ecocentrism, the ecocentric argument is grounded in the belief that compared to the
undoubted importance of the human part, the whole. Ecosphere is even more significant and
consequential: more inclusive, more complex, more integrated, more creative, more
beautiful, more mysterious, and older than the time.

SOCIAL ECOLOGY AND ECOFEMINISM

Social Ecology and Ecological feminism (ecofeminism) bring the issues of justice,
oppression, and domination into the realm of environmental ethics. For these two groups,
environmental concerns cannot be understood independently of economic and political
issues. There are relevant links between power relationships in the society and
environmental problems. Hence, environmental problems cannot truly be solved without
social and economic justice.

Day /Session 21
Lesson title:
Concept of Corporate Social Responsibility

Corporate Social Responsibility is a management concept whereby companies

integrate social and environmental concerns in their business operations and
interactions with their stakeholders. CSR is generally understood as being the way
through which a company achieves a balance of economic, environmental and social
imperatives (“Triple-Bottom-Line- Approach”), while at the same time addressing
the expectations of shareholders and stakeholders. In this sense it is important to
draw a distinction between CSR, which can be a strategic business management
concept, and charity, sponsorships or philanthropy. Even though the latter can also
make a valuable contribution to poverty reduction, will directly enhance the
reputation of a company and strengthen its brand, the concept of CSR clearly goes
beyond that.

The Concept of Corporate Social Responsibility

Corporate social responsibility (CSR) is a self-regulating business model that helps a
company be socially accountable—to itself, its stakeholders, and the public. By practicing
corporate social responsibility, also called corporate citizenship, companies can be
conscious of the kind of impact they are having on all aspects of society, including economic,
social, and environmental.

To engage in CSR means that, in the ordinary course of business, a company is operating in
ways that enhance society and the environment, instead of contributing negatively to them.

Understanding CSR
Corporate social responsibility is a broad concept that can take many forms depending on
the company and industry. Through CSR programs, philanthropy, and volunteer efforts,
businesses can benefit society while boosting their brands.

As important as CSR is for the community, it is equally valuable for a company. CSR
activities can help forge a stronger bond between employees and corporations; boost morale;
and help both employees and employers feel more connected with the world around them.

For a company to be socially responsible, it first needs to be accountable to itself and its
shareholders. Often, companies that adopt CSR programs have grown their business to the
point where they can give back to society. Thus, CSR is primarily a strategy of large
corporations. Also, the more visible and successful a corporation is, the more responsibility
it must set standards of ethical behavior for its peers, competition,
CSR can be thought of as your company’s triple bottom-line, or “people, planet and profits”.
It is about maintaining and even enhancing profitability while embedding social and
environmental considerations in the business—and making CSR part of the company’s
culture.

Day /Session 22
Lesson title:
History and Perspective on Corporate Social Responsibility
At this juncture, we are in a better position to understand what CSR is all about. In the
worldwide discussion of corporate social responsibility (CSR), much attention is being
given to cities and countries on the rise. Quickly developing nations and metropolitan
areas have opportunity to grow sustainably in ways that developed areas cannot. The
world is watching for lessons in sustainability, for new players in the green economy, for
market opportunities and for the next set of hints on how best to create a successfully
sustainable society

HISTORICAL ROOTS OF CORPORATE SOCIAL RESPONSIBILITY

The Ancient and Medieval period

The origins of the social component in corporate behavior can be traced back to the ancient
Roman Laws and can be seen in entities such as asylums, homes for the poor and old,
hospitals and orphanages. This notion of corporations as social enterprises was carried on
with the English Law during the Middle Ages in academic, municipal and religious
institutions.

Period of Mercantilism
It expanded into the sixteenth and seventeenth centuries with the influence of the English
Crown, which saw corporations as an instrument for social development.

In the following centuries, with the expansion of the English Empire and the conquering of
new lands, the English Crown exported its corporate law to its American colonies where
corporations played a social function to a certain extent.
 Mercantilism was an economic system of trade that spanned from the 16th century to the
18th century.

Mercantilism is based on the principle that the world's wealth was static, and consequently,
many European nations attempted to accumulate the largest possible share of that wealth by
maximizing their exports and by limiting their imports via tariffs.

The Industrial Revolution

 The Industrial Revolution marked a period of development in the latter half of the 18th
century that transformed largely rural, agrarian societies in Europe and America into
industrialized, urban ones.

During the eighteenth and nineteenth centuries, the Christian religious philosophy and
approach to the abiding social context were a response to the moral failure of society, which
was visible in terms of poverty of the overall population in the English Empire and some
parts of Europe. This religious approach gave way to social reforms and to the Victorian
philanthropy which perceived a series of social problems revolving around poverty and
ignorance as well as child and female labor. The religious roots of the Victorian social
conscience gave Victorian Philanthropists a high level of idealism and humanism, and by the
late 1800’s, the philanthropic efforts focused on the working class and the creation of
welfare schemes with examples that could be seen in practice both in Europe as in the
United States of America.

During this period, there was a growing level of urbanization and industrialization marked
by large-scale production.

This brought new concerns to the labor market such as: new challenges for farmers and
smalls corporations to keep up with the new interdependent economy, the creation of
unions of workers looking
for better working conditions, and a middle class worried for the loss of religious and family
values in the new industrial society

After the Period of Depression

By the 1920’s and early 1930’s, business managers begun assuming the responsibility of
balancing the maximization of profits with creating and maintaining an equilibrium with the
demands of their clients, their labor force, and the community.

This led to managers being viewed as trustees for the different set of external
relations with the company, which in turn translated into social and economic
responsibilities being adopted by corporations.

Later, with the growth of business during World War II and the 1940’s, companies begun to
be institutions with social responsibilities and a broader discussion of such responsibilities
began taking
place.

1950’s and 1960’s: the early days of the modern era of social responsibility
The period after World War II and the 1950’s can be considered as a time of adaptation and
changing attitudes towards the discussion of corporate social responsibility, but also a time
where there were few corporate actions going beyond philanthropic activities. Perhaps the
most notable example of the changing attitude towards corporate behavior came from
Bowen (1953), who believed that the large corporations of
the time concentrated great power and that their actions had a tangible impact on society,
and as such, there was a need for changing their decision making to include considerations
of their impact.
FOUR PARTS OF CORPORATE SOCIAL RESPONSIBILITY

Economic Responsibility
The lowest level of the pyramid represents a business’s first responsibility, which is to be
profitable. Without profit, the company would not be able to pay their workers, employees
will lose their jobs even before the company starts CSR activities. Being profitable is the only
way for a company to be able to survive long term, and benefit society. Additionally, this also
means that it is a company’s duty to produce goods and services that are needed/wanted by
the customers, at a reasonable price.

Legal Responsibility
The second level of the pyramid is the business’s legal obligation to obey the law. This is the
most important responsibility out of the four levels as this will show how companies
conduct their business in the marketplace.

Employment laws, competition with other companies, tax regulations and health and safety
of employees are some examples of the legal responsibilities a company should adhere to.
Failing to be legally responsible can be very bad for businesses.

Ethical Responsibility
The ethical layer of the pyramid is described as doing the right thing, being fair in all
situations and also avoiding harm. A company should not only be obeying the law, but it
should also do their business ethically.

Unlike the first two levels, this is something that a company is not obligated to do. However,
it is best for a company to be ethical as this not only shows their stakeholders that they are
moral and just, but people will feel more comfortable purchasing goods/services from the
company as well. Being environmentally friendly, treating suppliers/employees properly are
a few examples of being ethically responsible.

Philanthropic Responsibility
At the top of the pyramid, occupying the smallest space is philanthropy.

Businesses have long been criticized for their carbon footprint, their part in pollution, using
natural resources and more.

To counterbalance these negatives, they should “give back” to the community they take from.

Even though this is the highest level of CSR, it should not be taken lightly as many people
would want to do business with companies that are giving back to society.

Philanthropic Responsibility is more than just doing what is right, but it is something that
holds true to the company’s values, to give back to society.

P.s. CAN’T COPY-PASTE MODULES 23-24 REFER TO YOUR HARD COPIES NALANG PO,

GOOD LUCK
-joji:).