BUS560M – La Sallian Business Leadership Through Ethics and Corporate Social Responsibility

 

BUS560M – La Sallian Business Leadership Through Ethics and Corporate Social Responsibility

 

 

Perhaps if there’s an MBA subject that is considered a neutralizer to all other subjects, it will be this subject BUS560M – La Sallian Business Leadership Through Ethics and Corporate Social Responsibility. Unlike in other subjects where the emphasis is only how to make profits or minimize costs for the companies, here, the emphasis is placed on how to think about other people and the environment more than obtaining personal gain/profit. The subject offers a different kind of perspective since it teaches us to put our feet on the shoes of other stakeholders, such customers, employees, community and the environment by analyzing the consequences of our decisions and actions. As shown in the diagram below, a company’s decision and action will always have an impact on the whole society.

 

The subject is also packed with complete set of topics, ranging from Businessman’s Vocation (Divine), Work-Life Balance (Personal), Family, Philippine Constitution (Country) all the way up to Corporate Social Responsibility (CSR) (Community) that is really a holistic approach.

 

 

Aside from lecture discussions, the cases presented in the class are very relevant and realistic. They are very practical, and yet what’s good about this subject is that we learn each and every Ethical and CSR framework, and we had the chance to apply all those frameworks to formulate our own alternative courses of actions and solve the problems in the cases.

 

 

Learning is fun. Learning without actual experience seems to be an incomplete learning. The best thing in this subject is that we have learned not only the Ethical and CSR theories, but we also had the chance to personally experience giving actual service to others through our community service initiatives.

 

Finally, the most important lesson that we learned, perhaps, would be that economic profit is the least important among Carroll’s hierarchy of CSR. Contributing resources to the community that improve quality of life is the most supreme of all. It even surpasses obedience to the law and merely doing what is right and just without doing harm to others. This framework is very much applicable even in our personal lives. Quite noble, indeed.

References:

 

1.       Text

 

        All BUS560M SESSION slides - De La Salle University-Manila

2.       Images

BUS560M SESSION 1.ppt - De La Salle University-Manila

BUS560M SESSION 5.ppt - De La Salle University-Manila

BUS560M SESSION 10.ppt - De La Salle University-Manila

Kate, Albert Ten. Royal Dutch Shell and Its Sustainability Troubles. Milieudefensie-Friends of the Earth Netherlands. May 2011



 



Sustainable Development

Sustainable Development 

According to World Commission on Environment and Development (Brundtland Report 1987), development is sustainable where it meets the needs of the present without compromising the ability of future generations to meet their own needs.

Companies must be responsible enough to achieve economic growth in a manner that pursues the protection of both social and environmental systems. This concept of sustainability is called the Triple Bottom Line.

For me, the 3 pillars (Economic Prosperity, Environmental Quality and Social Equity) of the Triple Bottom Line are all equally important. Based on our lecture topic “Sustainable Development” Session 11 of our subject, Lasallian Business Leadership Through Ethics and Corporate Social Responsibilities, environmental sustainability without human development is also unsustainable. There are obstacles in the sustainable development, however they can be overcome through the following:

1.       Paradigm shifting

2.       Thinking holistically

3.       Respecting the natural world

4.       Valuing People

5.       New perspective on the Economy

In the Book of Genesis of the Bible, it was stated that God created man to have dominion over all the creatures of the earth. God gave man life, food and everything that he needs to survive. But in return, God gave man the duty to cultivate and care the earth. Therefore, we owe our master, God, the obligation of taking good care of the nature and all natural resources. But instead, people destroy the environment by polluting the air, water and soil. In short, people exploit and take for granted what has been freely given by God. Some cases were caused by human culture, while most are caused by the desire for higher personal gain/profits. An infamous case of a well-known large petroleum company in Nigeria and the case of the largest copper mining company in the Philippines in the 90s are just 2 examples of numerous companies around the world which constantly destroy the natural environment for the sake of personal profits. As a result, tons of greenhouse gases are released into the air that cause global warming and severe climate change. The garbage that humans throw also comes back as garbage containing more harmful effects to humans.

 

So goes the so-called “Environmental Ethics”. Environment Ethics deals with the approach to the environment that ought to be taken as well as the approach that is taken. On the point of view of Utilitarianism, total social cost of production equals the private costs plus external costs not being borne by the producers. On the point of view of Rights, people have the right to a healthy environment. Future generations, unborn humans and nature have the right for access to clean and healthy natural environment. Justice requires that we hand over to the next generation the world’s condition that is not worse than the one we received from our ancestors. Care demands humans to see matters from the perspective of those with whom we are thus directly related and care for their specific needs.

 On the point of view of the companies, it seems that going “Green” means getting less competitive. But in fact, on the contrary, companies who go “Green” enjoys the following advantages:

1.       Generate cost savings

2.       Promote innovation

3.       Command premium pricing

4.       Enhance the brand image

5.       Differentiate from competitors

Perhaps, starting now, at my own capacity, I will be more selective in choosing the products that I use, making sure that they are environmental friendly, and dispose them properly. If possible to recycle, then I shall recycle. That way, even in simple ways, I can minimize harm to the environment, therefore, practicing sustainable development.

 

References:

 

1.       Text

BUS560M SESSION 11.ppt - De La Salle University-Manila

BUS560M SESSION 12.ppt - De La Salle University-Manila

 

2.       Images

BUS560M SESSION 11.ppt - De La Salle University-Manila

http://florida.sierraclub.org/miami/images/greenhouse_effect2.jpg



Human Rights

Human Rights

Every human being must have equal rights and opportunities because we are all created under God’s own image, and everyone of us, regardless of age, gender and race, has equal share in God’s blessing of life. By definition, human rights are rights inherent to all human beings, whatever our nationality, place of residence, sex, national or ethnic origin, colour, religion, language, or any other status. (United Nations Office of the High Commissioner for Human Rights)

(http://www.ohchr.org/en/issues/pages/whatarehumanrights.aspx)

 

In the business workplace, there are a lot of issues on human rights. But the common ones are the following which result to job discrimination:

1.       Gender Inequality and Inequity

·         The mentality that men are superior than women.

·         Women have less power and access to assets.

·         Women are not being involved in the decision-making process nor heard in consultations.

·         Women have limited choices.

·         Women are blocked from handling senior executive management positions (also called Glass Ceiling), instead they are blocked in the rank and file positions that hinder their promotions (also called Sticky Floors).

·         Violence and sexual harassment against women caused by the mentality of women are weak and fragile

 

2.       Unequal Opportunity in the Workplace

·         Employers hire only applicants who graduated from certain schools.

·         Managers promote subordinates who have been personally close to them.

·         Promotions are based on seniority regardless of competency or qualifications.

·         Job discrimination against senior citizens.

·         Job discrimination against people with disabilities.

Fortunately, a local company, Lamoiyan Corporation, founded by Mr. Cecilio K. Pedro, which manufactures toothpaste with brand name of Hapee, was able to deviate from the usual practice of modern companies of job discrimination by employing hearing impaired regardless of age and gender. By hiring hearing impaired, Lamoiyan is successful in proving the society that everyone, even if he/she has physical limitations, still has a worth and dignity at work and capability to produce output, therefore, he/she also has the right to receive equal job opportunity and just compensation, same as hearing workers. Hopefully, Lamoiyan will be able to sustain its advocacy and even spread it despite of threats of business process outsourcing to remain global competitive.

 

References:

 1.       Text

BUS560M SESSION 11.ppt - De La Salle University-Manila

2.       Images

http://www.ohchr.org/en/issues/pages/whatarehumanrights.aspx

 

Corporate Social Responsibilities

Corporate Social Responsibility

 

                  A fundamental question to this topic is why should corporations be socially responsible?           

Corporate Social Responsibility (CSR) is the impact of a company’s action on society. Companies do not operate just for personal gain. Every decision and action of companies has impact to stakeholders and wider society, that is why managers are required to consider their acts in terms of a whole social system and anywhere in that system.

The concept of CSR has evolved from simple responsibility of increasing a company’s profits to complex responsibility of considering the impact of company’s action on the whole society.

Here are some of the views on CSR:

1.       As stated by Davis and Blomstrom, CSR requires decision makers to make actions that protect and improve the welfare of society as a whole along with their own interests.

2.       For McGuire, CSR mandates that the corporation has not only economic and legal responsibilities to society that extend beyond these obligations.

3.       According to Epstein, CSR relates primarily to achieving outcomes from organizational decisions concerning specific issues or problems, which by some normative standard have beneficial rather than adverse effects upon pertinent corporate stakeholders. The normative correctness of the products of corporate action have been the main focus of CSR.

At the same time, private corporations should not be merely established for the purpose of private gain, but effective partners of the National Government in spreading the benefits of capitalism for the social and economic development of the nation. (Explanatory note to the Corporation Code of 1980)

According to Archie B. Carroll, a professor and a researcher on the subject of CSR for decades, CSR can be categorized into a pyramid as follows:

 

If put into an equation, CSR is the sum of 4 responsibilities in Carroll’s CSR pyramid.

So what’s the need for being socially responsible?

As identified by our 10^th lecture notes entitled “Introduction to CSR” of our subject, La Sallian Business Leadership in Ethics and CSR, there is a need to be socially responsible given the following reasons:

1.       Self defense – if business is not proactive, the public or government will press for more regulations.

2.       Obligation – Business exists due to being sanctioned by society – owing debt to the society.

3.       Self-interest – Being socially responsible is good for the business in the long run.

Conflict between CSR activities and Business Profit?

I don’t think so. In contrast, CSR activities lead to greater business profit since:

1.       CSR activities are important to and even expected by the public;

2.       CSR activities help organizations hire and retain the people they want; and

3.       CSR activities contribute to business performance.

           

References:

 1.       Text

       https://www.conference-board.org/bio/index.cfm?bioid=1323

Explanatory Note to the Corporation Code of 1980

BUS560M SESSION 10.ppt - De La Salle University-Manila

 

2.       Images

 BUS560M SESSION 10.ppt - De La Salle University-Manila

 

Philippine Constitution (Certain Provisions on Property and Labor)

The Philippine Constitution on the Social Purpose of Private Property and
the Explanatory Note to the Corporation Code of 1980 on the Purpose of the Private Corporations

According to Section 6 of the Philippine Constitution, “the use of property bears a social function, and all economic agents shall contribute to the common good”. The State has the duty to promote distributive justice and intervene when the common so demands. The State shall also promote a just and dynamic social order and free the people from poverty and provide adequate social services and promote a rising standard of living and improved quality of life for all (Article II, Section 9). To do this, the Congress shall give the highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities by equitably diffusing wealth and political power for the common good; the State shall regulate the acquisition, ownership, use and disposition of property and its increments. (Article XIII).

In terms of Labor (Article XIII, Section 3), the Constitution mandates that the State shall guarantee the rights of all workers, and the workers must be entitled to the security of tenure, humane conditions of work and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits. The State shall also promote the principle of shared responsibilities between workers and employers. Rights of labor in terms of share in the fruits of production and right of enterprises to reasonable returns to investments, and to expansion and growth must be recognized.

Private corporations should not be merely established for the purpose of private gain, but effective partners of the National Government in spreading the benefits of capitalism for the social and economic development of the nation. (Explanatory note to the Corporation Code of 1980)

Comments: The mandate of the Philippine Constitution on the use of properties is very clear that they shall contribute for the common good since they bear social function. The same Constitution names the State as responsible for promoting distributive justice and intervene when the common good so demands. However, with the current practical scenarios, one can say that the State is not that effective in performing its duty since the current trend is that the properties are being sold to the richest people or “privatized” who in turn monopolize the benefits from those properties at the expense of ordinary citizens who cannot afford to repurchase said properties. Common example are the condominium developers. They purchase as many land as they can without limit or regulation and turn them into profits by reselling them in the form of condominium units to only those who can afford. Because of privatization of common land, rights of people to own a share now turns into privilege for those who can only afford. With this, instead of improving the quality of lives of ALL, discrimination results which is contrary to the provisions of the Constitution.

                        It is also not good to notice that the State is not preventing the widespread practice of labor contractualization which can be thought of as a way to circumvent the mandate of the Constitution/statute to provide living wage and humane conditions of work to all workers. With labor contractualization, workers are simply paid the minimum statutory wage without full benefits. Security of tenure is also absent in labor contractualization.  Often than not, workers bear more responsibilities than employers. There is also a huge gap to the returns being received by the employers vs. the fruits of production being received by the workers.

                        If there are entities who can be considered as truly rich, I would say they are the private corporations. Truly indeed, the government and private corporations are partners in producing gains and spreading the benefits of capitalism for the economic development of the country. However, to say that they are partners in spreading the benefits of capitalism for the social development of the country, it seems that this is not so happening.

                        Perhaps, instead of focusing on never ending political scandals, the State can choose to review and improve on how it enforces the mandate of the Constitution to promote the use of properties for the common good, the rights of all workers and the limitations of private corporations to private gains.

      
       References:

1.       Text

 

http://laws.chanrobles.com/otherlaws/1_otherlaws.php?id=1

Explanatory Note to the Corporation Code of 1980

BUS560M SESSION 10.ppt - De La Salle University-Manila

 

The Ethical Principles in Business

The Ethical Principles in Business

Mr. Manuel G. Velasquez in his book entitled, Business Ethics Concepts and Cases, discusses 5 Ethical Frameworks based on the principles of ethical reasoning, as follows:

1.       Utilitarian – Basis of cost benefit analysis is whether present and future economic benefits outweigh present and future costs

2.       Rights – An individual’s entitlement to something

3.       Justice and Fairness – Comparative treatment given to members of a group

4.       Ethics of Care – Obligation to exercise special care toward those person with whom we have close relationships

(http://blogs.ubc.ca/hinz/files/2013/10/ethics-large.thumbnail.jpg) 

 

The Government’s Role in the Business System

What role should the government assume in the business system? Should the government control the conduct of business or let the market freely flow?There are different ideologies ranging between Individualism to Communitarianism. Each has its own arguments and criticisms. In a command system, a single authority makes the decisions about what is to be produced and how it will be distributed, while in a free market system, individual firms make their own decisions about what they will produce and how they produce it.

Free market system recognizes that there is no constraints on the property that one could own and do to those properties. John Locke argued that natural rights is given to man because he is “human”, meaning, there is no limit to a man’s liberty and natural right to private property. However, criticisms to his argument include conflict between negative and positive rights, the dominance of natural rights of individuals over another individual’s natural rights, immorality (legalizing prostitution, drugs and slavery) and conflict with the demands of caring. Another advocate of free market system is Adam Smith, who believed that private individuals are free to seek their own interests in free markets, that unregulated markets and private property will produce greater benefits than any amount of regulation could, and that a system of competitive markets will allocate resources efficiently among the various industries of society that meet consumer demand, thereby promoting social utility. In short, the government should do nothing. However, critics defends that there are unrealistic assumptions in Smith’s argument as contrasted by the presence of monopolies and oligopolies. People also tend to behave irrationally. Other arguments presented include those of Von Mises and Hayek (“it is in principle impossible for the government to allocate resources with the same efficiency because they do not have perfect information”), Keynes (“total demand for goods and services is the sum of the demand of three sectors – households, business and government”), and proponents of Social Darwinism (“Competition is beneficial as it ensures that the best business firms survive, improving the economic system and produces human progress, therefore the government must stay out of the market”).

Command system advocates believe that a single authority makes the decisions about what is to be produced, who will produce it, and who will get it. According to Karl Marx, the real purpose of the government is to protect freedom and equality and plan the production. Inequalities happen during exploitation of workers by the capitalists. However, critics argue that justice does not mean either equality or distribution according to the need. Justice means distribution according to contribution which requires free markets.

On the other hand, mixed economies allow partially free markets to be subjected to some government intervention to ensure competition, moderate the effects of the business cycle, prevent the most egregious kind of exploitation of workers and guard the environment against destructive effects of pollution and mining, soften possible injustices of distribution through redistributive mechanisms, and limit property rights. It comes closest to combining utilitarianism benefits of free markets with respect for human beings.

Comments: In my opinion, the best option to adopt by a society isthe mixed economy which combines both ideologies from individualism and communism. Some conducts of business need to be regulated by the government, while some need to be left freely flowing at the hands of the market players. There is no one best ideology to adopt since the business market is dynamic. Each business pursuit may be treated as a separate case from another. 

Ethics in the Marketplace

Basically this is just saying that under the conditions of either competition or anti-competition such as monopoly and oligopoly, there can still be issues on Ethics.

1.       Perfectly competitive free markets – results to inequalities; does not maximize society’s total utility, especially those who cannot participate; may conflict with the demands of caring

2.       Monopoly – buyers buy under duress; sellers dictate terms to buyers

3.       Oligopoly – price-fixing; manipulation of supply; collusion among players to cause prices to rise; exclusive dealing arrangements

 

Ethics of Consumer Production and Marketing

The ethical issue arises from the opposing interests between the producer and consumer. The most important question is “Where does the consumer’s duty to protect their own interests end and the manufacturer’s duty to protect consumers’ interests begin?” Producers have several duties, including the duty on ensuring that their products are safe, that they do not misrepresent, that they comply with the sales contract, that they disclose right amount of information.

Truly, the goal of all marketing is the sale. Marketing people needs to be very creative to achieve sales. One of the techniques is the use of influence. But issues will arise when unethical means of influencing would be employed, including threats, coercions, deception, manipulation and lying.

Comments: Irresponsible marketing can be partially blamed on why people are becoming more and more materialistic each day. It distorts people’s mind to believe that a particular product is “necessary” even though in reality, it’s not. As a result, people engage aggressively in debt just to make in reality “unnecessary” purchases.

Ethics of Job Discrimination

3 main common sources of ethical issues at work are discrimination, sexual harassment, and unjust compensation.

Comments: Although our constitution and laws uphold very strict standards against job discrimination and sexual harassment, nevertheless, companies and managers still find their ways to circumvent them and practice such. The constitution mandates a “living” wage for workers. However, the minimum statutory wage seems not reflective of the living wage. Top companies choose applicants graduate from specific schools. This means that job discrimination still exists in our current society.

References:

1.       Text 

Business Ethics Concepts and Cases, Seventh Edition - Velasquez, Manuel G.

BUS560M SESSION 5.ppt - De La Salle University-Manila

 

2.       Images

 

http://blogs.ubc.ca/hinz/files/2013/10/ethics-large.thumbnail.jpg

 

Business Ethics vs. Pursuit for Profit

 

Business Ethics vs. Pursuit for Profit

Business Ethics, as defined by Mr. Manuel G. Velasquez in his book entitled, Business Ethics Concepts and Cases, is a specialized study of moral right and wrong that concentrates on moral standards as they apply to business policies, institutions and behavior. It is a study of moral standards and how these apply to the systems and organizations through which modern societies produce and distribute goods and services, and to the people who work within these organizations. Systemic issues in business ethics are ethical questions raised about the economic, political, legal, and other social systems within which businesses operate.

(http://blogs.ubc.ca/hinz/files/2013/10/ethics-large.thumbnail.jpg)

 

Conflict or Harmony Between Business Ethics and Business Pursuit for Profit?

I agree that the main consideration for pursuing business is profit. But that does mean that anyone who is into business has the right to employ whatever means he/she wants in order to obtain profits? Certainly, the answer is not. There is no absolute freedom for anyone to employ whatever means to gain profit, especially if those means are already classified wrong, abusive or harmful to the society and/or environment. The pursuit of profit must not conflict with the concept of what is right or ethical in the conduct of business. As discussed in our class and hereby reiterated, a person who is engaged in business must conform to certain business ethical standards for the following reasons:

1.       An argument for business ethics tells us that since ethics governs all voluntary human activities, it shall also govern business because business is also a voluntary human activity.

 

Comments: There is much greater need for ethics which shall govern the business since business involves transactions with another individual/entity who is of equal importance with the individual/entity who is initiating the transactions. In short, business is naturally a human interaction with another human being.

 

2.       Businesses require at least minimal adherence to ethics on the part of those involved in the business (e.g., the honoring of contracts by customers, managers and employees); businesses require a stable society in which to carry on its dealings: morality is a stabilizing force in the society.

Comments: Business transactions are conducted via the meeting of the minds between/among persons. Transactions could not be consummated if contracts are not honored by the persons who previously agreed to the transactions. If this happens, the society will become unimaginably unstable. Ethics is therefore a key to avoid such chaotic scenario.

3.       Unethical businesses become targets of moral outrage which works to their detriment, while ethical behavior cultivates good will and loyalty among customers and employees.

Comments: Conducting business unethically produces unfavorable consequences to business owners in terms of legal cases, scandals, loss of public trust (negative image to the society) and eventual loss of customers that may lead to bankruptcy and closure of such business. Businessmen who conduct business unethically are condemned by the society. On the other hand, doing business in the right way attracts more and more customers and employees who want to be associated with such business. This results to higher goodwill, better public image, more competent personnel, and loyal customers who repeatedly patronize products that will eventually lead to better equity and stable business profits.

4.       No studies have found a negative correlation between socially responsible behavior and profits.

Comments: Businessmen who are socially responsible do not necessarily have lower profits. One reason is because being socially responsible does not necessarily mean that a businessman must incur higher costs. There are many ways in which social responsibility can be practiced.

Therefore, I shall conclude that the business pursuit for profit must be in harmony with business ethics since good ethics is good business that eventually translates into good profit. This may not be noticeable in the short run, but probably in the long run, the effect becomes more apparent.

 

References:

1.       Text

Business Ethics Concepts and Cases, Fifth Edition - Velasquez, Manuel G.

             BUS560M SESSION 5.ppt - De La Salle University-Manila

2.       Images

http://blogs.ubc.ca/hinz/files/2013/10/ethics-large.thumbnail.jpg