ETHICS AND SOCIAL

RESPONSIBILITY

By: Mrs. Belen Apostol

 Ethics
Ethics refers to the study of
morals and moral choices of
human being.

 The behavior of individuals

and groups which are
governed by standards, rules,
and codes of conduct consist
of the subjects covered by
ethics.
What is Business Ethics?
The moral principles defining right and
wrong behavior of businesspersons and
their agents
It implores them to adhere to certain ethical
conduct when dealing with anybody
especially those affected by their business
activities.
The Need for Ethical Behavior
Ethical behavior is needed to make the
“playing field” free and orderly. If the
business person does not adhere to ethical
principles, public opinion may pressure
the government to act. It may turn out,
later, that the business person will be in a
worse situation then when no law is
passed to force him to act ethically.
 Areas of Concern for Business
Ethics
Ethics covers all areas encompassed by
business transactions. The ethical conduct of a
business person may be measured against how
the following are adhered to:
1.Laws and regulations
promulgated by the
government; and
2. Specific ethical
conduct not yet passed into law
Laws and regulations requiring
ethical behavior
Product safety and quality;
Fair employment practices;
Fair marketing and selling practices;
The use of confidential information for
personal gain;
Community involvement;
Bribery; and
Illegal payments to foreign governments
to obtain business.
Product safety and quality
Fair
employment
practices;
Fair marketing and selling practices;
The use of confidential information for
personal gain;
Community involvement;
Bribery
Illegal payments to foreign governments to
obtain business.
 Current Issues in Ethics
 Owners of food stalls serving spoiled food to customers;
 Business owners making “fictitious insurance claims”;
 School awarding diplomas to undeserving persons;
 A contractor bribing a government official to
manipulate the bidding of contracts;
 A drug manufacturer making false claims regarding the
efficacy of his product; and
 A television station copying the format of a rival
station’s show.
 Coverage of Company Sponsored
Ethics Program
A very important listing of problem areas which
may be used as a basis for formulating company
policies on ethical conduct is as follows:
Drug and alcohol abuse
Employee theft
Conflict of interest
Quality control
Misuse of proprietary information
Coverage of Company Sponsored
Ethics Program
Abuse of expense accounts
Plant closings and layoffs
Misuse of company assets
Environmental pollution
Methods of gathering competitor’s information
Inaccuracy of books and records
Receiving excessive gifts and entertainment
False or misleading advertising
The Improvement of Ethical
Performance
Improvement in the ethical conduct
of business and those involved in it may
be made through any of the following
ways:
1. Ethics training
2. Ethical advocates
3. Ethical codes; and
4. Whistle blowing.
Ethics Training

Learning takes two forms:

1. Through formal classroom instruction,

and
2. Through actual hands-on experience and
observation
Ethical Advocates

An ethical advocate is a person who

is knowledgeable about business ethics,
employed by the company, and acts as the
company’s conscience. He sits at the
board of directors and sees to it that every
policy adapted conforms to ethical
standards.
Ethical Codes

A code of ethics is a formal

document that provides clear direction to
management and employees in the
performance of their duties.
 Whistle-Blowing
There are instances when employees
are helpless that they cannot implement the right ethical
conduct required in specific situations. When almost
everybody from top to lower management acts outside
of ethical norms, the employee who feels he must do
something that resorts to reporting the perceived
unethical practice to outsiders such as the press,
government agencies like the ombudsman and the
Presidential Anti-Graft commission, or public
interest groups.
 What is Social Responsibility
Social responsibility refers to the concern of
business for the welfare of the society.
 that the firm must perform its function without
harming the community
 improve the quality of life
 produce goods or services that will not adversely
affect any component of the society
 make profits but not to the public detriment of
society.
Interested Groups

There are various groups with interests

that are different from one another. These
interests must be properly considered by
the business firm it will have to be
successful.
Owners
The interest of the owners (the sole
proprietor, the partners, or stockholders)
is expected to be of highest priority.
 Consumers
Consumers, like any other group, have
rights. The basic rights of consumers
include those concerning representation,
information, a healthy environment, safety,
basic goods and services, choice, consumer
education and redress.
 Employees
Among the specific points of interest in caring
about employees are:
1. Health and safety;
2. Appropriate salaries and employee benefits;
3. Right to speak out;
4. Right to privacy; and
5. Right to job security except when discipline is
concerned. (security of tenure)
Minority Groups

Management must avoid treating

them outright as inferior so as not to affect
their employment and promotion chances.
Women

The view that management must have is

to regard women as a force with potentials
“to lead” as much as “to follow”
Older People

Older people have distinct needs that

must be the concern of business. Many of
them are highly qualified and able to
perform special tasks which younger
persons cannot do.
The Handicapped

The firm’s management must be

responsible for removing hazards and
obstacles which prevent them from doing
their jobs effectively.
The Community at large

There are business activities that may

affect any of the widely diverse interest of
people. The modern manager must have
multiple abilities and an open mind if he
wants to succeed in his endeavor.
Benefits and costs of Social Actions

Benefits
Improved employee satisfaction and
motivation
Company becomes more aware of changing
consumer tastes and preferences;
Greater demand for the company’s products or
services;
Benefits and costs of Social
Actions
Preference by investors to buy the firm’s
stocks; and
Elimination of possible legislative
controls on business activities.
Benefits and costs of Social
Actions
Costs
The money spent in direct support of
social projects;
Reduction of competitive power; and
The private provision of social services
and programs may later on, be also
regulated by the government.
Social Responsibility Strategies

The approaches are expressed in

four basic social responsibility strategies
as follows:
Reaction strategy
Defense strategy
Accommodation strategy, and
Proactive strategy
Reaction Strategy

The company allows a condition or

potential problems to go unresolved until
the public finds out about it. When a
problem is brought before the company,
the firms reacts by denying responsibility,
then attempts to resolve the problem, deal
with its consequences, then continue
doing business to minimize the negative
impact.
Defense Strategy

The company tries to minimize or avoid

additional obligations. Among the tactics
used are legal maneuvering and seeking
the support of groups that prefer the
company’s way of doing business.
Accommodation Strategy

This is done when special interest groups

are taking the side of the opposition, or
when the business perceives that if it does
not react, a law will be passed by
Congress to ensure compliance. This
means that the company is forced to
accept its economic, legal, and ethical
responsibilities.
 Proactive Strategy
the firm goes beyond what is legally and
ethically required. There are a number of
companies using the proactive strategy. This is
undertaken through sponsorship of cultural
shows offered free to the public, scholarship to
financially-handicapped but deserving
students, providing financial support to the
upkeep of endangered animal species, and
many other similar concerns.
Social Audits

 A social audit refers to the systematic

examination of all the activities achieving
social goals such as employment of the
handicapped and those belonging to the
cultural minorities, adaption of anti-
pollution campaign, improvement of
working conditions, community
development, donations to worthy causes,
and various consumer issues.
Social Audits

A social audit may be done through the

preparation of the following:
1. A summary of program areas, such as
consumer affairs, as well as the reasons
for undertaking certain social activities
and not others.
2. A report of specific programs and the
priorities for each set of activities.
 Social Audits
3. A listing of objectives for each priority activity
and a description of how the organization is
striving to reach the objective.
4. A summary report of the costs of each program
area and activity to the company
5. A summary using quantitative measures,
whenever possible, of the extent of achievement
of each social objective.
Thank you for listening!