Core Principles of

Good Corporate
Governance
Business Ethics and Social Responsibility
Sir Jerome Alan L. Natividad
Picture Analysis
• What ethical issue is conveyed in this
picture?
• Cite an instance in the Philippines that
exemplify this ethical issue. Give your
insight regarding this instance.
• Are there instances when this practice is
completely acceptable? Why are they
acceptable?
• Do you think the business enterprise is also
responsible for this condition? Why or why
not?
• Think of concrete ways on how we can
combat this kind of unethical business
practice.
Good Corporate Governance
• The main factor that determines the integrity of the company.
• It is the heart and soul of the company.
• A multidimensional issue.
• It involves managing the interests of all the stakeholders in a company.
Good Corporate Governance
• The following identifies the stakeholders and the respective benefits they gain:
• Stakeholders (owners and shareholders) – fair return on investments
• Management and all its employees – fair compensation for work and proper and
safe workplace
• Customers – good value products and services
• Suppliers – fair competition
• Investors and financiers – reliable information and payment
• Government – legal and ethical governance
• Community and the environment – social responsibility
Good Corporate Governance
• Company with good corporate governance operate more efficiently;
• Have better ability to attract customers;
• Lower costs of capital and interest rates on loans;
• Better access to external finance;
• Higher firm valuation and share performance;
• Mitigate risks and safeguard against mismanagement.
• All of these help sustain company growth.
Good Corporate Governance
• Good corporate governance makes companies more accountable and transparent
to investors and gives them the tools to respond to stakeholders concerns;
• This is also very important to the socio-economic development of the nation;
• Increased access to capital encourages new investment;
• Boost economic growth;
• An provides employment opportunities.
• Poor corporate governance can weaken the potential of the company, which may
lead to financial problems and cause long-term damage to a company’s
reputation.
Core Principles of Good Corporate Governance
• Fairness
• Accountability
• Transparency
Fairness
• Each decision made requires balancing the interest of different stakeholders.
• Fairness expresses the just and reasonable treatment of the stakeholders, free
from discrimination and according to the rules and principles of the corporation.
• Fair practices are able to establish longer-term relationships which are critical to
sustain the development of the corporation.
Accountability
• Each decision-maker in the corporation should assume complete responsibility to
take initiative and be answerable for his decisions, actions, and behaviors.
• Everyone must be able to reason and explain for his action and conduct.
Transparency
• Refers to the openness and willingness by the company to provide clear, factual,
and timely information that accurately reflects the financial situation,
performance, ownership, and corporate governance of the company.
• Trust from the stakeholders can be gained only through transparency.
• Stakeholders should be informed about the company’s activities, its plans in the
future, and the risk involved in its strategies.
Common Practices in Business Organizations
• Policies and procedures establish the rules of conduct within an organization.
• They are enforced to protect stakeholders of the corporation.
• Various policies and procedures are established to include issues on ethics,
marketing operation, customer service, finance;
• Personal policies including decorum, protocol, and employee conduct,
attendance, dress code, and privacy policies.
Employee Conduct (Accountability)
• Employee conduct policy sets the duties and responsibilities each employee must
follow as condition of employment.
• Examples are:
– Dress code
– Workplace safety procedure
– Harassment policies
– Policies on internet usage

• The policies also outline the procedures the company may utilize to discipline
inappropriate behavior, such as giving warnings or termination of employment.
Equal Opportunity (Fairness)
• Equal opportunity laws are policies that promote fair treatment in the workplace.
• Companies are expected to advocate anti-discriminatory policies and encourage
unprejudiced behavior within the workplace.
• The HR Department of a company normally organizes and establishes policies in
order to avoid discrimination against people in regard to race, gender, sexual
orientation, religion, or cultural beliefs.
Attendance and Time-Off (Accountability and
Fairness)
• Attendance policies not only outline the employees’ responsibility to adhere to
work schedules but also define how employees may schedule leaves or
notification of an absence or late arrival.
• It also discusses the disciplinary action employees face for noncompliance.
Computer Use (Transparency and Accountability)
• Companies may implement policies governing the use of computers and internet.
In the workplace to limit unnecessary and time-wasting internet surfing and
social media usage.
• Security conscious companies may require employees to sign a waiver that allows
employers to monitor e-mail or internet activities to ensure confidential
information are secured.
Noncompetition
• Some companies require employees to sign a non-compete agreement that limits
employee’s activity to look for the company’s direct competitions and prevent
disclosure of confidential information.
• The agreement may include exclusion to approach the company’s clients for a
specific period of time.
Finance and Accounting (Transparency)
• Accounting policies deal with how money is handled in the company and how
acquisitions and liabilities are recorded.
• A well-managed finance department should have clear guidelines on purchase,
petty cash disbursements, and recording.
• To gain the trust of investors, companies should also have their records audited
by an external auditor to assure compliance with government bodies and
accepted practices.
• Many corporations in the past have used the financial side of the business to hide
problems and wrongdoings.
Written Work and Mini Task No. 3
• Instruction: Browse through the articles of a recent issue of a broadsheet,
particularly in the newspaper’s business section. You will then:
• Identify at least two stories that have a connection with business ethical issues.
• Identify what business ethics issues are involved
• Report to the class your findings