LESSON 1

U S IN ES S A N D
S U ES I N B
ETHICAL IS V I R O N M EN T
O R AT E E N
CORP
OBJECTIVES:
At the end of this lesson, the students should be able to:
• Suggest ways to enhance employer-employee relationship
and encourage just and fair business policies and practices
such as recruitment, promotion, retention, marketing and
advertising, intellectual property rights.
 Workplace Sexual
Harassment
 Sexual harassment includes unwanted sexual advances,
requests for sexual favors, direct or indirect threats or
bribes for sexual activity, sexual innuendos and
comments, sexually suggestive jokes, unwelcome
touching or brushing against a person, pervasive displays
of materials with sexually illicit or graphic content, and
attempted or completed sexual assault. It varies
depending on the situation and people involved.
 Usually, there are two
forms of sexual
harassment:
1 Quid pro quo (an employment decision) – like a promotion, an
assignment, or even keeping one‘s job and is based on submission
to the sexual harassment

2 Hostile work environment – the sexual harassment makes the

workplace environment frightening, intimidating, or offensive.
All verbal or physical conduct of a sexual nature constitutes
hostile environment.
 JUST WAGE
 Wages are the price that workers receive for their labor
in the form of salaries, bonuses, royalties, commissions,
and fringe benefits, like paid vacations, health insurance,
and pensions. Wages differ among nations, regions,
occupations, and individuals.
The Church identifies three principles
that are necessary for implementation
of the just wage:
1 Needs relate to the wage rate necessary to keep going the individual worker
and his family. Workers who reside in more classy cities require a higher
wage.

2 Equity defines what is appropriate to a person because of the worth of the

particular skills, effort and talent that person is capable to bring to the job. So,
somebody with the skills needed to create new products must be paid more than
the person who just tosses burgers.

3 Economic order refers to the reality that the individual‘s work and the firm itself
must produce adequate values to give the wages. Simply, fair wages must be
sustainable. This means that for similar work, it is just that a successful enterprise
like Apple may pay a higher wage than a struggling startup business or not-for-
profit organization.
 Just Wage
Determination
The policy in setting minimum wage rates take into account
the needs of workers, employers‘ capacity to pay, and the
requirements for socioeconomic development. The following
factors should be taken into consideration in determining
wage and salary structure of workers:

1.
External market factors – this refers to the supply and demand for labor and
so called economic conditions and underemployment.

2.
Laws and regulation – Workers must be paid
with reference to the laws and regulations of the
government. It obliges that employers pay no
less than the minimum wage.
3.
Cost of living – The cost of living relates to essential maintenance needs
and it must be fatally considered in the preparation of wages.

4.
Existing industry rate – Some alleged that paying
workers the average of what other companies are
5. paying for an identical job results in a fair wage.
Organizational factors – evaluation on what nature of
industry the organization operates, the size of the company
and the organization‘s profitability to justify its ability to
grant fair wages to its workers should be considered.

6. Individual performances – the trend implies that

individual performances or productivity ratings
influence the determination of wage/salary
increases.
 The Issue of
Minimum Wage
versus the Living
A minimum wage is a national floor level set by the government. Various countries have lay down lawful

Wage
national minimum wage for workers. It is usually decided in the course of negotiations between
government, industry and sometimes trade unions. On the other hand, this method does not constantly
work as proposed. There is at times no genuine representation of workers, or the method is used only
once in a while, or overlooked in the actuality of the workplace. A living wage is what workers need to
give their families decent standards of living. The national minimum wage in many countries is often not
adequate to allow a worker to supply his family with decent living standard. A living wage is sufficient to
meet primary needs and to provide nutrition any discretionary income. The primary needs comprise a
standard level of nutrition, housing, transportation, energy, healthcare, childcare, education and savings
within regulated working hours without overtime hours.
 Gifts and Bribery
 A gift is something of worth given with no anticipation of return. Gifts can be
monetary, actual items or they can be tickets to a sporting event, entertainment,
travel, rounds of golf or restaurant meals. The premise of giving gifts is an ancient
way to express gratitude, appreciation and love.

A bribe is the same thing given in the expectation to influence the recipient‘s conduct. It
may be money, goods, rights in action, property, preferment, privilege, emolument,
objects of value, advantage, or merely a promise to induce or influence the action, vote,
or influence of a person in an official or public capacity.
 The Morality of
Accepting Gifts
According to William Shaw and Vincent Barry from their book
―Moral Issues in Business‖, there are certain factors that must e
thought of in making decisions about whether a gift may be accepted.
These factors can provide support and clarity but will not tell anyone
what to do. There is actually no magic guide but they can help one to
see things more clearly. More or less, here is the list.

1. Conflict of interest 5. A circumstance when the gift is given

2. Gift‘s value 6. Power to bestow favors in return for gift

3. Gift‘s purpose 7. Industry accepte practice

4.Gift or entertainment 8. Organization‘s policy

9. laws
 Conflict of
Interest
• Conflict of interest is the organizational context happens when someone acts in a way that is
advantageous to himself at the expense of his employer. When hired by the employing
company, an employee has implicitly agreed that the interest of the company is above his
personal interest. Conflict of interest could be non-financial or financial in nature
 Here are some examples of conflicts of interest :

1.
A key donor whose business is challenging for an institutional contract implies
that he will not complete his multi-year pledge if he is not given the contract.

2.
A local tobacco firm promises funds to secure naming
rights of a new stadium on a smoke-free campus.

3.
An alumnus calls to inquire how he can post a job
for a new engineering graduate, and the alumni
officer recommends that his son might be just right
for the position.
 Abuse of Abuse of Power

Power
The application of one‘s official position for personal benefit is often an abuse of power. This can
take many types, like taking advantage of someone, obtaining access to information that must not
be available to the public, or just controlling somebody with the capacity to penalize them if they
do not conform. Abuse of power or authority may be the price source and true essence of moral
evil. Evil is the abuse of power. Moral evil commences to be present when someone rejects to
acknowledge responsibility for the welfare of others, especially those obviously under his direct
concern. It can be said that someone has power, if that someone can with certainty manipulate
the reality of others
 Ways to Prevent Abuse Abuse of Power

of Power
Leaders who abuse their position are often not in power for long. Some
leaders start off well, but waste the chance. They let power go to their
heads, or they take advantage of their position and choose to advance
their own interests. They change direction and in the end, fail to
conduct themselves with dignity ad respect.

1. Make the tough calls

2. Steer clear of the power trip
3. Back up words with action
4. Take the job seriously
5. Willingly share he power
 Unions can refuse to work unless an employer meets their
demants. Strikes are a powerful tool, but can be harmful to a
company and should not be used unless certain criteria are met.

1. There must be a just cause, a legitimate reason to strike, such as inadequate pay or unsafe
working conditions.
2. There should be proper authorization. Workers should: a. Agree to strike on their own without
being coerced and b. Strikers must attempt to attain union backing
3. Strikes should be a last resort. Workers should try to negotiate and communicate their
grievances before having a strike because ―we should always use the least injurious means
available to accomplish the good we desire.‖
4. Strikes should be nonviolent non-coercive, and nondestructive.
 Whistleblowi Abuse of Power

ng
Whistleblowing is the act of going public with what one has reason to believe to be significantly immoral
or illegal acts of an organization one is a member of. Someone is not a whistle blower for telling the public
about awkward or bad-mannered behavior. Being a whistle blower doesn‘t involve sabotage or violence.
Whistle blowers must often have courage to be prepared to endanger their own safety. However, it‘s not
at all times the precise thing to do. Whistle blowing can be careless and imperil the welfare of an innocent
company when it‘s done from a ―feeling‖ of wrongdoing rather than from a dependable method.
 Whistle blowing
Abuse of isn‘t
Power justified
unless the following criteria are:
me:
1. The intention must be appropriate.
2. The employee should usually seek less harmful ways to resolve the
issues first.
3. The whistle blower needs forceful proof of wrongdoing.
4. The organization‘s wrongdoing must be precise and significantly
wrong.
5. The whistle blowing has a chance to being successful.
 Recruitment of Abuse of Power

Recruitment is the process of looking for and hiring qualified

Candidates
candidate either within or outside of an organization for a job opening,
in a timely, effective and efficient manner. Recruiting has a quite bad
reputation. Ethics play a very important role during the recruiting
process

Some common ethical dilemmas in recruitment can include:

1. Placing misleading advertisements for jobs.

2. Misrepresenting the requirements of a particular position.

3. Responding to a hiring manager who has asked to find a way around
not hiring a qualified candidate for discriminatory purposes.
4. Not reviewing candidates based on their merits.
It is vital for human resource professionals to be honest, consistent and objective through the
recruiting process to avoid ethical dilemmas. Job ads for positions that in fact disagree from what
is being publicized should not be placed. Normally, employers should concentrate on a
candidate‘s ability to perform the job and not on irrelevant factors.
 Employee Abuse of Power

Promotion
• A promotion is a move up the organizational ladder. There are two major promotion tracks: one based on
accomplishment, the other on competition. Accomplishment promotions are those scheduled fro workers
attaining specific, predetermined goals. For example, in an office of stockbrokers those who achieve a certain
number of clients or reach a level of total investment money under their direction may automatically be
elevated. An account executive could become a vice president of accounts after he‘s gathered more than
ninety-nine clients or has garnered accounts valued at more than a million pesos. Along with the new title,
there will be pay raise and additional benefits. Competitive promotions on the other hand are those situations
where workers within a group are not only teammates working to attain the organization‘s goals but also
competitors contending for that one slot that comes open on the hierarchy‘s next level up. In this situation, the
ethics of trying to get the promotion comes to play. There are three considerations for promotion which are
work performance, seniority and projected work performance.
 Employee Abuse of Power

Termination
• Terminating employees is one of the most feared tasks for human resources managers. Unless
there is a definite cause to terminate the employee from the company, the decision to stop the
employment relationship is a hard one. In ordinary situation, when a human resources manager
removes an employee, the lives of not just the employee but the employee‘s family as well are
affected. Employee terminations also gave an effect in existing employees. It is for these reasons
that a human resources manager charged with terminating an employee will struggle with the
ethical dilemmas about termination
 There are several common reasons to
Abuse of Power
terminate an employee, which are:
1. Unable to perform some of all of the necessary aspects of the job, 2. Unfavorable business
conditions of economic reasons,
3. Unacceptable behavior such as disclosure of confidential information, stealing company
property, engaging in sexual harassment or verbally or physically threatening another
employee, and
4. Chronic absenteeism which could be a sign that the employee is dealing with substance
abuse, mental illness or job dissatisfaction.
Ethics factor comes in whether an employee should rightfully be terminated for grounds connected
to employee performance. When an employee‘s performance is mediocre, the instruction given to
human resources may be to terminate the employee. In contrast, a human resources manager may
consider mediocre performance could be enhanced through a structured improvement program.
The choice to spend in an employee‘s performance or just terminate an employee is a foremost
ethical dilemma for numerous human resources professionals.
 Marketing and Abuse of Power

Advertising Morality
• A marketer‘s goal must be to please and bring delight to its possible and current customers in an
ethical way. In terms of direct marketing, there are some instances where certain ethical issue arise
which are:
1. Irritation and frustration
2. Being unfair to customers
3. Deception, fraud and misleading information
4. Privacy issues
Advertising on the other hand, is non-personal practice of calling public attention to one‘s product, service, need,
and the like especially by paid announcements in newspapers and magazines over radio or television, on
billboards, and other similar ideas. The three general advertising objectives are to inform, to persuade and to
remind customers. Advertising has become an essential element of the corporate world and hence the companies
allot a considerable amount of revenues as their advertising budget. Companies advertise for the following
reasons:
1. Increasing the sales of the product/service,
2. Creating and maintaining a brand identity or brand image,
3. Communicating a change in the existing product line,
4. Introduction of a new product or service, and
5. Increasing the buzz-value of the brand or the company.
However, advertising becomes unethical in situations when it:
1. Has degraded or underestimated the substitute or rival‘s product,
2. Gives false or misleading information on the value of the product,
3. Fails to give useful information on the possible reaction or side effects of the product, and
4. Is immoral.
There are several ways of unethical advertisement:
1. Surrogate advertising
2. Puffery
3. Exaggeration
4. Unverified claims
 Fair Pricing
• A fair and reasonable price is the price point for a good or service that is fair to both parties
involved in the transaction. This amount is based upon the greed-upon conditions, promised
quality and timeliness of contract performance. There is a common consensus that marketing
strategies must not violate on values like honesty, transparency, and autonomy. As such, the
main root of pricing ethics concerns the establishment of a balance of power between the
producer and the consumer. In a completely free market, producers frequently have the upper
hand because they are in power of their products and processes. This potentially leads to
unethical practices which could be in the form of using cheap or harmful materials or lying
about benefits, which are believed harmful for society as a whole.
2.
Here are some unethical practices
when it comes to pricing:

1. Price fixing
2. Price skimming
3. Price discrimination
4. Bid rigging
5. Price war
 Trade Secrets
• Companies often have secret information called trade secrets that they do not want to be
disclosed outside the organization. Employees would be disloyal to make use of such
information to advance the interests of competing organizations. Companies have trade
secrets to guarantee that the information is not used by competitors, but it is likely for others
to find out the trade secret on their own and exploit it.

2.
There are at least three arguments given for why some people think trade secrets
should be protected by the law:
1. They are intellectual property.
2. The theft of trade secrets is wrong.
3. Employees can steal trade secrets from their companies, but that would violate the
confidentiality owed to the company.

There are several ways by which trade secrets could be revealed:

1. Hacking
2. Social Engineering
3. Dumpster Diving
4. Whacking
5. Phone Eavesdropping
 Product
Misrepresentation
• Misrepresentation means a transformation of information
to misinformation. It could be directed or indirect in
nature.
1. Direct – This is done through actively misrepresenting about a product or service which creates a bad name
due to deception and lying.

a. Deceptive packaging
b. Adulteration
c. Misbranding/Mislabeling
d. Short weighing
e. Shortchanging
f. Short measuring
g. Short numbering
h. Misleading advertising
2. Indirect – This is done through omitting unfavorable
information about the product or service.
a. Caveat emptor
b. b. Business ignorance
 Multilevel Marketing and
Pyramiding
• Multi-level marketing is a system of selling wherein one signs up other people or assist him
and they in turn recruit others to help them. It is a selling system using many levels of
distributors, the reason why it is so-called multi-level marketing. Each obtains a percentage
on the price of the product sold. Avon Cosmetics, Herbalife, Amway, Mary Kay and
Tupperware are example of direct selling companies engaged in multi-level distributorship.
Most successful companies concentrate on product sales as their main activity. Pyramiding
on the other hand, is about merely making money out of recruiting new participants in the
program. The concentration of these schemes is the guarantee of high returns in a short span
of time by doing nothing but handing over money and letting other to do the same things.
2.
• Pyramid schemes are bogus money-making scams in which new participants at the bottom of the
pyramid pay money to people at the top. They pay for the chance to move up and profit from
payments of others who might join later. The ―investment‖ to join may range from a small free to
thousands of pesos. Only after the few at the top have collected from everyone do members at the
bottom finally move up to have a chance at profiting themselves. Until then, new members are simply
poorer by the amount of their out-of pocket expense as the search for new participants continues and
new levels are added. The entire pyramid may collapse before new participants ―advance‖ the top.
In order for everyone in this illegal activity to profit, there would have to be unending supply of new
members. This is not possible, so each new level becomes more likely to lose money.
 Pyramiding must be avoided because:

1. They committed fraud – Participants in a pyramiding scheme are, consciously

or unconsciously, deceiving those they recruit.
2. Money will be lost – The scheme is based on simple mathematics: many losers
pay a few winners.
3. They are illegal – Besides losing investment, the operation could be closed down
by legal authorities and the participants subject to fines or arrest.
 Money
Laundering
• Money laundering is the process of creating the appearance that large amounts
of money obtained from serious crimes, such as drug trafficking or terrorist
activity, originated from a legitimate source.

There are three steps involved

in the process of laundering
money:
1. Placement
2. Layering
3. Integration
 In 2013 amendments to the Anti-Money Laundering Act (AMLA) of 2001 or
Republic Act 9160 has been made. The amendments expanded the definition
of money laundering to cover more businesses subject to monitoring. Under
the ―strengthened‖ anti-money laundering law of the Philippines, the more
exhaustive list of predicate crimes for money laundering includes:

1. Kidnapping for ransom 6. Jueteng and masaio

2. Drug trafficking and related offenses 7. Piracy

3. Graft and corrupt practices 8. Swindling

4. Plunder 9. Qualified theft

5. Robbery and extortion 10. Smuggling

 11. Violation under the Electronic Commerce Act of 2000

12. Hijacking; destructive arson; and murder, including those perpetrated by terrorists
against non-combatant persons and similar targets

13. Fraudulent practices and other violations under the Securities Regulation Code of 2000

14. Felonies or offenses of a similar nature that are punishable under the penal laws of other
countries
15. Terrorism financing and organizing or directing others to commit terrorism financing
(RA 10168)
16. Attempt/conspiracy to commit terrorism financing and organizing or directing others to
commit terrorism financing (RA 10168)

17. Attempt/conspiracy to commit dealing with property or funds of designated person

18. Accomplice to terrorism financing or conspiracy to commit terrorism financing

19. Accessory to terrorism financing

 Insider
Trading
• Insider trading is when one person who by virtue of his work has access to information
that is not presented to the public and will probably has an impact for making
investment decisions. For instance, employees might have earlier information that their
company is going bankrupt before the general public and sell all their stocks before it
becomes valueless. People who buy the stocks will be misled into thinking its worth
more than it really is. In reality, it is also insider trading for the employees to push
family and friends to sell their stock using such “material information”.
Material information refers to the information for which there is a substantial likelihood than an investor
would consider is important in making his investment decision, or information that is certain to have a
substantial effect on the price of the company‘s security whether positively or negatively. Material information
may include, but not limited to:
1. Financial result
2. Projections of future earnings or losses
3. News of pending or proposed merger
4. Change in the corporate structure (e.g. reorganization)
5. Acquisition / Divestiture / Joint Venture
6. Dividend declaration and changes in dividend policy
7. Stock splits
8. New significant equity investment or debt offering
9. Significant litigation exposure
10. Major change in key senior management position
Examples of insider trading cases that have been brought by the SEC are cases
against:
1. Corporate officers, directors, and employees who traded the corporation‘s
securities after learning of significant, confidential corporate development;
2. Friends, business, associates family members, and other “tippees” of such
officers, directors, and employees who traded the securities after receiving such
information;
3. Employees of law, banking, brokerage and printing firm who were given such
information to provide services to the corporation whose securities they traded;
4. Government employees who learned of such information because of their
employment by the government; and
5. Other persons who misappropriated, and took advantage of, confidential
information from their employers.
 Tax Evasion
 Tax evasion refers to the elimination or reduction of
one‘s correct and proper tax by fraudulent means which
is criminally punishable. Tax avoidance on the other
hand is an attempt to minimize the payment or
altogether eliminate tax liability by lawful means, which
is not criminally punishable while the latter.
These are three elements to a tax evasion case:
1. The existence of a tax deficiency,
2. Willfulness in an attempted evasion of tax, and
3. An affirmative act constituting an evasion or attempted evasion of the tax.

An affirmative act is anything done to mislead the government or conceal funds to

avoid payment of an admitted and accurate deficiency. Affirmative behavior can
take two forms:
1. The evasion of assessment and
2. The evasion of payment
Affirmative acts of evasion include evading taxes by placing assets in another‘s name,
dealing in cash, and having receipts or debts paid through an in the name of another
person. Merely failing to pay assessed tax, without more, does not constitute tax
evasion. The keeping of a double set of books or the making of false invoices or
documents can be proof of tax evasion.
There are several ways to avoid tax
evasion which are:
1. Reduce tax rates,
2. Create more simply laws and
system,
3. Draw a well-organized tax
administration structure,
4. Be tough with anti-corruption
policies,
5. Enhance information on tax paying
through seminars, conferences and
media,
There are several ways to avoid tax
evasion which are:
6. Draw a permanent tax structure,

7. Make certain political changes does not

affect tax structure,

8. Have strong and updated manner of audit,

collection, deposit, and filling provisions,
9. Design stronger penalties and make strict
implementation,
10. Design friendly schemes
of tax collection,

11. Give assistance terms to big tax

payers.
Thank
You