HRM AND

BUSINESS ETHICS
Prepared by: JESSEL C. YARA
 Objectives:
At the end of this presentation the listeners are expected to:
• Define the Business Ethics
• Differentiate Shareholder and Stakeholder perspective
• Understand the Ethical Behavior
• Enumerate the major factors impacting organizational ethics
• Understand the clarifying Values
• Understand the PMAP.
 Identify if the statement is true or false.
1. Human Resource Management is the strategic approach to nurturing and
supporting employees and ensuring a positive workplace environment.
2. Ethics examines the rational justification for our moral judgements; it
studies what is morally right or wrong, just or unjust
3.Fostering an environment of ethical behavior and decision-making takes
time and effort—it always starts at the top to implement food business
ethics.
4. Shareholder and stakeholder have the same perspective.
5. It is not important to clarify and identify your values in business.
HUMAN RESOURCE MANAGEMENT

• Is the strategic approach to nurturing and

supporting employees and ensuring a
positive workplace environment.
BUSINESS ETHICS
 What is ethics?

- Examines the rational justification for our moral

judgements; it studies what is morally right or
wrong, just or unjust.
 Definition of business ethics
• Business ethics studies appropriate business policies and
practices regarding potentially controversial subjects, including
corporate governance, insider trading, bribery, discrimination,
corporate social responsibility, fiduciary responsibilities, and
much more. The law often guides business ethics, but at other
times business ethics provide a basic guideline that businesses
can follow to gain public approval.
 Principles of Business Ethics

• It's essential to understand the underlying principles that drive desired

ethical behavior and how a lack of these moral principles contributes to
the downfall of many otherwise intelligent, talented people and the
businesses they represent.
• There are generally 12 business ethics principles:
• Leadership: The conscious effort to adopt, integrate, and emulate the other 11 principles to guide
decisions and behavior in all aspects of professional and personal life.
• Accountability: Holding yourself and others responsible for their actions. Commitment to
following ethical practices and ensuring others follow ethics guidelines.
• Integrity: Incorporates other principles—honesty, trustworthiness, and reliability. Someone with
integrity consistently does the right thing and strives to hold themselves to a higher standard.
• Respect for others: To foster ethical behavior and environments in the workplace, respecting
others is a critical component. Everyone deserves dignity, privacy, equality, opportunity,
compassion, and empathy.
• Honesty: Truth in all matters is key to fostering an ethical climate. Partial truths, omissions, and
under or overstating don't help a business improve its performance. Bad news should be
communicated and received in the same manner as good news so that solutions can be developed.
• Respect for laws: Ethical leadership should include enforcing all local, state, and federal laws. If
there is a legal grey area, leaders should err on the side of legality rather than exploiting a gap.
• Respect for laws: Ethical leadership should include enforcing all local,
state, and federal laws. If there is a legal grey area, leaders should err on
the side of legality rather than exploiting a gap.
• Responsibility: Promote ownership within an organization, allow
employees to be responsible for their work, and be accountable for yours.
• Transparency: Stakeholders are people with an interest in a business,
such as shareholders, employees, the community a firm operates in, and
the family members of the employees. Without divulging trade secrets,
companies should ensure information about their financials, price
changes, hiring and firing practices, wages and salaries, and promotions
are available to those interested in the business's success.
 Types of Business Ethics

• There are several theories regarding business ethics, and many different
types can be found, but what makes a business stand out are its
corporate social responsibility practices, transparency and trustworthiness,
fairness, and technological practices.
 Corporate Social Responsibility

• Corporate social responsibility (CSR) is the concept of meeting the needs

of stakeholders while accounting for the impact meeting those needs has
on employees, the environment, society, and the community in which the
business operates. Of course, finances and profits are important, but they
should be secondary to the welfare of society, customers, and employees
—because studies have concluded that corporate governance and ethical
practices increase financial performance.
 Transparency and Trustworthiness

• It's essential for companies to ensure they are reporting their financial performance in a
way that is transparent. This not only applies to required financial reports but all reports
in general. For example, many corporations publish annual reports to their shareholders.
• Most of these reports outline not only the submitted reports to regulators, but how and
why decisions were made, if goals were met, and factors that influenced performance.
CEOs write summaries of the company's annual performance and give their outlooks.
• Press releases are another way companies can be transparent. Events important to
investors and customers should be published, regardless of whether it is good or bad
news.
 Technological Practices and Ethics

• The growing use of technology of all forms in business operations

inherently comes with a need for a business to ensure the technology and
information it gathers is being used ethically. Additionally, it should
ensure that the technology is secured to the utmost of its ability, especially
as many businesses store customer information and collect data that those
with nefarious intentions can use.
 Fairness

• A workplace should be inclusive, diverse, and fair for all employees

regardless of race, religion, beliefs, age, or identity. A fair work
environment is where everyone can grow, be promoted, and become
successful in their own way
How to Implement Good Business Ethics
• Fostering an environment of ethical behavior and decision-making takes
time and effort—it always starts at the top. Most companies need to create
a code of conduct/ethics, guiding principles, reporting procedures, and
training programs to enforce ethical behavior.
• Once conduct is defined and programs implemented, continuous
communication with employees becomes vital. Leaders should constantly
encourage employees to report concern behavior—additionally, there
should be assurances that if whistle-blowers will not face adversarial
actions.
• Compassion: Employees, the community surrounding a business, business partners,
and customers should all be treated with concern for their well-being.
• Fairness: Everyone should have the same opportunities and be treated the same. If a
practice or behavior would make you feel uncomfortable or place personal or
corporate benefit in front of equality, common courtesy, and respect, it is likely not
fair.
• Loyalty: Leadership should demonstrate confidentially and commitment to their
employees and the company. Inspiring loyalty in employees and management
ensures that they are committed to best practices.
• Environmental concern: In a world where resources are limited, ecosystems have
been damaged by past practices, and the climate is changing, it is of utmost
importance to be aware of and concerned about the environmental impacts a
business has. All employees should be encouraged to discover and report solutions
for practices that can add to damages already done.
 Why Is Business Ethics Important?

• There are several reasons business ethics are essential for success in modern business. Most
importantly, defined ethics programs establish a code of conduct that drives employee behavior—
from executives to middle management to the newest and youngest employees. When all employees
make ethical decisions, the company establishes a reputation for ethical behavior. Its reputation
grows, and it begins to experience the benefits a moral establishment reaps:
• Brand recognition and growth
• Increased ability to negotiate
• Increased trust in products and services
• Customer retention and growth
• Attracts talent
• Attracts investors
 References

• https://www.investopedia.com/terms/b/business-ethics.asp
Shareholder theory vs. stakeholder theory
• There’s an age-old debate among business analysts -- some believe that
corporations must focus on making more profits, while others think
they’re bound by duty not only to their shareholders but also to their
customers, suppliers, employees, and the community.
 Shareholder theory

• Introduced by the economist Milton Friedman in the 1960s, the

shareholder theory of capitalism claims that corporations’ primary focus is
to create wealth for its shareholders. This, however, doesn’t mean that
companies can do as they please because their practices are still subject to
applicable laws.
• The shareholder or stockholder theory is also known as the “Friedman
doctrine.”
 Stakeholder theory

• The stakeholder theory was first introduced by Dr. R. Edward Freeman, a

University of Virginia professor in business administration, via his 1984
book, Strategic Management: A Stakeholder Approach.
• It’s a business ethics and organizational management theory that maintains
that businesses, to be successful, must create value for all of its
stakeholders, not just shareholders.
• The reasons are clear:
• When customers have less or zero need for a company’s products or services,
earnings take a hit.
• When employees are no longer motivated to come to work, companies get less
than 100% of their energy, focus, and creativity.
• If a business violates the law of the land or puts people’s lives in danger in
pursuit of bigger profits, the company finds itself fighting off lawsuits and its
permits revoked by the regulating agencies.
• If a business fails to help financiers, partners, and shareholders make a profit, it
loses investors and opportunities for growth.
• As far as the stakeholder theory is concerned, for organizations to truly create
shareholder value, companies must embrace social responsibility and very
carefully consider the needs of all of its stakeholders.
 WHAT IS A STAKEHOLDER?
• A stakeholder is any individual or entity with an interest in how well a company -- or
project -- is doing, as its performance has a direct or indirect effect on them. A
company’s stakeholders include:
-Employees who lose their jobs if the company goes bankrupt
-Customers who can no longer avail of products or services if the company stops operating
-Suppliers who lose a consistent revenue stream
-Lenders who lose money if the company defaults on its financial obligations
-Shareholders who lose the money they invested if the company shuts down
• Stakeholders also include the community and
society in general. So if you’re in the
manufacturing business, for example, you have to
consider the needs of neighboring communities --
specifically, how your operations affect their
livelihood and quality of life.
• Stakeholders can be internal or external:
• Internal stakeholder: Any individual or entity with a direct relationship
with the company. Examples are owners, employees, investors, managers,
the board of directors, etc.
• External stakeholder: A person or organization not directly related to the
company but is nevertheless affected by its decisions and actions.
Examples are customers, end users, creditors, suppliers, the local
community, society at large, and government regulators.
• In project management, people or entities that can be considered
stakeholders include:
• Executive committee
• Project sponsor
• Project leaders (e.g., project manager or scrum master)
 WHAT IS SHAREHOLDER?

• A shareholder is an individual or organization that

owns shares in a publicly-traded or privately held
company and, therefore, has an interest in its
profitability. Depending on the types of shares they
own, they can receive dividends, vote on corporate
policy or amendments, or elect a board of directors.
• Shareholders are also known as stockholders, and they’re typically
categorized as:
• Preferred shareholder: Owners of preferred stock usually get no voting
rights, so they have no say in the company’s future. But they receive a
guaranteed annual dividend payment (except under certain
circumstances).
• Common shareholder: Common stock dividends are variable, not
guaranteed, and determined by the board of directors. If a company’s
assets have to be liquidated, common stockholders are the last to get paid,
after creditors and preferred stockholders have gotten their share. But
unlike preferred shareholders, they have voting rights, which grants them
some level of control over management decisions and corporate policy.
More people invest in common stocks than preferred stocks.
• Team members
• Functional managers
• Project consultants
• Contractors
• Customers
• End users
 What is ethical behavior?
Ethical behavior is the application of moral principles in a given situation. It means to behave according to the
moral standards set by the society which we live in.

Ethical behaviors can be identified in both individual relationships and work relationships. The concept can also be
applied to corporations as entities. It evaluates the moral implications of actions being taken on each of the
previously mentioned contexts. An ethical behavior is essential for a society to function properly. Individuals that
behave unethically will normally loss other people’s confidence and their unethical behavior should be also
punished by the law.

https://www.myaccountingcourse.com/accounting-dictionary/ethical-behavior
• Ethical behaviors can be identified in both individual relationships and work
relationships. The concept can also be applied to corporations as entities. It evaluates the
moral implications of actions being taken on each of the previously mentioned contexts.
An ethical behavior is essential for a society to function properly.
• Major Factors Impacting Organizational Ethics are ; the individual’s personal code of
behavior, ethical standards imposed on a manager by his superiors, policies of the
company, ethical climate of a country
• Clarifying Values- Identifying values as a business sets you apart and defines exactly
who you are and what you care about. They separate you from the competition, bring a
unique voice to your business and drive your behavior.
• PMAP helps institutions mold an enlightened, competent, socially responsible, and
influential sector of people managers who can effectively participate in nation-building.
PMAP also helps its members become more effective on the job by teaching the human
aspect of management via numerous career development forums and training programs.
On the other hand, ethical behaviors can also be evidenced in work relationships.
Co-workers should maintain an ethical standard between each other to ensure a
healthy work environment.

This behavior is evidenced by certain values and principles maintained within the
relationships, such as integrity, transparency, honesty or fairness.
These are ethical standards that should be respected between the parties to maintain
an ethical environment.
 Finally, business and corporations should also
maintain an ethical behavior towards their clients and
stakeholders.
Transparency with shareholders, punctuality when it
comes to payments and a fair treatment towards their
employees are desired ethical behaviors for companies.
 Major factors impacting organizational
ethics
• 1. The individual’s personal code of behavior: The personal Code of
Behavior is the result of the complex environment that influences one’s
life.
• 2. The ethical standards imposed on a manager by his superiors also
influence him in his decisions as to the morality of behavior. If the
superior condones unethical activities such as padding expenses accounts,
the subordinate is encouraged to look upon this activity as an acceptable
practice.
• 3. The policies of the company also influence the determination of ethical
conduct. Standards of behavior in an industry are often influenced greatly
by the dominant firms in that industry. The authors of the company policy
obviously have an effect that is decisive.
• Garrett puts this idea when he says:
• The best protection is the example presented by the conduct of top
management and the atmosphere it creates, when leaders are scrupulous,
the employees know what is considered right. When example is supported
by explicit policy, the followers have a clear idea of how to translate the
example of leaders into action. When policy is enforced and enforcement
reinforced, the employees know that honesty is the best policy in this
company.
• 4. The ethical climate of a country. If, it is poor, then only giant
corporations and large undertakings can stand competition and be viable;
a small concern is apt to go bankrupt, since business is concerned with
employment of a large number of persons, it has the obligation to see that
it adheres to an ethical atmosphere. However, considerable differences
occur among managers as to what is ethical or unethical; and business
truly lacks a Code of Ethics.
 CLARIFYING VALUES
• Identifying values as a business sets you apart and defines exactly who you are and what you care about.
They separate you from the competition, bring a unique voice to your business and drive your behaviour.
From where you make your products to who you hire (or fire!) and how you market yourself, values
should lie at the foundation of these decisions.
• They provide a solid base from which to guide behaviour across all aspects of what you do and can be
used by your team in their day to day decision-making. Values help the company work towards shared
goals so that decisions are made and challenges are overcome by a cohesive team working with the same
principles in mind.
• As a business, values are useful tools in attracting like-minded people who are aligned with what your
company cares about and is driven by. This is true whether you are a charity trying to find fundraisers or
a restaurant trying to find the right suppliers. Not only will your values attract the right employees,
customers, investors or clients but they can also help to deter anyone who might not be the right fit.
• They provide a solid base from which to guide behaviour across all
aspects of what you do and can be used by your team in their day to day
decision-making. Values help the company work towards shared goals so
that decisions are made and challenges are overcome by a cohesive team
working with the same principles in mind.
• As a business, values are useful tools in attracting like-minded people who
are aligned with what your company cares about and is driven by. This is
true whether you are a charity trying to find fundraisers or a restaurant
trying to find the right suppliers. Not only will your values attract the right
employees, customers, investors or clients but they can also help to deter
anyone who might not be the right fit.
• Values help to define and build a strong culture within your business,
which in turn can be used to build valuable connections with people. This
can be crucial when growing a business, nurturing brand loyalty and
ensuring the longevity of your business. In the words of Airbnb’s CEO
and Founder, Brian Chelsky, when speaking at Stanford,

• 'companies around for a really long time had a clear mission... a clear
sense of values, and they had a shared way of doing something that was
unique to them and was really special.'
 What to do with your values

• One reason we roll our eyes when people

start talking about values is that everyone
talks a big values game but very few people
actually practice one.’ (Brené Brown, Dare
to Lead
People Management Association of the Philippines

• The Premier Organization of HR Professionals and People Managers

• The People Management Association of the Philippines (PMAP) is a professional, non-stock, not-for-profit
organization of over 1,800 member companies and individual management executives engaged or interested in
Human Resource Management (HRM) and Industrial Relations (IR) work. Founded more than 59 years ago,
PMAP continues the tradition of its forefathers in advancing the profession of Human Resource Management.
• As a professional association, PMAP helps institutions mold an enlightened, competent, socially responsible,
and influential sector of people managers who can effectively participate in nation-building. PMAP also helps
its members become more effective on the job by teaching the human aspect of management via numerous
career development forums and training programs.
• Currently with twenty four (24) chapters throughout the Philippines, PMAP’s nationwide reach makes it a
potent force for nation-building. What further enhances PMAP’s solid reputation as a national association is the
dynamism of its local Chapters, proven by the success of their respective programs and projects.
 SUMMARY OF THE TOPIC
• Business Ethics refers to implementing appropriate business policies and practices with regard to
arguably controversial subjects.
• Some issues that come up in a discussion of ethics include corporate governance, insider trading,
bribery, discrimination, social responsibility, and fiduciary responsibilities.
• The law usually sets the tone for business ethics, providing a basic guideline that businesses can
choose to follow to gain public approval
• A stakeholder is any individual or entity with an interest in how well a company -- or project -- is
doing, as its performance has a direct or indirect effect on them, while a shareholder is an
individual or organization that owns shares in a publicly-traded or privately held company and,
therefore, has an interest in its profitability.
 Identify if the statement is true or false.
1. Human Resource Management is the strategic approach to nurturing and
supporting employees and ensuring a positive workplace environment.
TRUE
2. Ethics examines the rational justification for our moral judgements; it
studies what is morally right or wrong, just or unjust
TRUE
3.Fostering an environment of ethical behavior and decision-making takes
time and effort—it always starts at the top to implement food business
ethics.
TRUE
4. Shareholder and stakeholder have the same perspective.
FALSE
5. It is not important to clarify and identify your values in business.
FALSE
 REFERENCES
https://www.investopedia.com/terms/b/business-ethics.asp
https://www.myaccountingcourse.com/accounting-dictionary/ethical-behavi
or
https://accountlearning.com/factors-influencing-business-ethics-what-affects
-business-ethics/
https://www.goodtherapy.org/learn-about-therapy/issues/values-clarification
• https://www.linkedin.com/pulse/importance-identifying-clarifying-values-
your-how-use-sophie
• https://www.pmap.org.ph/about-pmap/