BUSINESS ETHICS AND SOCIAL RESPONSIBILITY

MODULE

Module No. 2: Week 2: THIRD Quarter

CORE PRINCIPLES OF FAIRNESS, ACCOUNTABILITY, TRANSPARENCY, AND

STEWARDSHIP OBSERVED IN BUSINESS AND NON-PROFIT ORGANIZATIONS

Learning Competency
Illustrate how fairness, accountability, transparency, and stewardship are
observed in business and non-profit organizations.
Code: ABM_ESR12-IIIa-d-1.4
ABM_ESR12-IIIa-d-1.5

Objective
After reading this module, the learners will be able to:
1. Explain the core principles of fairness, accountability, transparency, and stewardship in
the socio-economic development of a country.
2. Identify fairness, accountability, and transparency, and stewardship in a business
organization.
3. To have an idea of the role of non-profit organizations.

Let’s Recall
Directions: Let’s recall our lesson in the forms of business organizations. Read each question
below and write TRUE if the statement is correct or FALSE if the statement is incorrect on the
space provided.

__________ 1. Sole proprietorship requires only minimal legal cost.

__________ 2. A partnership is described as a business structure solely owned and managed by
an individual.
__________ 3. A partnership has a limited life.
__________ 4. A sole proprietorship can not be held personally liable for the debts of the
business.
__________ 5. Corporation has two or more owners who entered, into a contract.
__________ 6. In partnership they may contribute money, property or services.
__________ 7. Flexibility is one of the characteristics of a Sole Proprietorship. __________
8. Partnership is a form of business organization formed by two or more
individuals.
 __________ 9. A corporation is a form of business organization owned by its
shareholders.
_________ 10. People who are engaged in business are called businessperson.
Let’s Understand
We all know that the only animal in the world where we lived in who has a
conscience is Man. Mankind has the ability to identify what is wrong and can decide what is
right to do for the community or to the public. Thou, a businessperson needs to be reminded
from time to time that he will not only be in the business for a day but as much as possible stay
in the business world for a longer time. Therefore, the best way to stay in the business world is to
play fair and square with your stakeholders, thus, you will have continued the client’s goodwill
and patronage vis a vis continued to have profit to carry on with the business game. As part of
your academic track, Accountancy, Business, and Management Strand (ABM), it is a must to
undertake a study of ethics in business. “Ethics” comes from the Greek word “Ethos”, meaning
character, or your proper way of acting like a human being. In the world of business
organization, there is what we call “Business Ethics”, these are all about the proper ways of
everyday business practices. With Business Ethics it was the hope to guide the would-be
businessperson and the businessperson and use their best knowledge in making the right business
decisions.
In this module, we will discuss and illustrate the core principles of Fairness,
Accountability, Transparency, and Stewardship observed in business and non-profit
organizations.

Fairness

Probably the very first time we heard about fairness is within our home. As children
we are often taught how to be equal with our siblings, especially if we are born as the eldest, we
are always expected by our parents to always be fair in dealing with our younger siblings. As we
got older our environment changes into a bigger one. Aside from our home, the school is the
second place that we call our home up to our adolescent, in school it is where our teachers play
as our mother or an umpire in dealing with our life as a student. Our teachers are there who
watches us closely to enforce the rules and arbitrate on matters arising from situation to show us
and remind us about fairness. After our college life, we will go into a bigger world where, as
some of you will launch your careers and will belong to different business organizations. In the
business world, there is what we call Fair business competition. Fairness in business is all about
the right actions or procedures to produce the right outcomes in making business transactions or
decisions. It is weighing all the interests involved in the decision-making related to hiring or
firing employees, benefits, and the bonus system, and the professional obligations to clients,
prospects, and the general public at all times. Being fair in the workplace is not just possessing
good morals, it is also a legal essential under our law in which prohibits all forms of these
examples below:
 1. Discrimination – all of us is a unique individual, employees should not be chosen through
their appearance but rather you are hired because you qualify for a certain job in an
organization.
2. Equal Footing – every individual has different skills and abilities companies should treat
it as equally as possible.

3. Equal Pay, Compensation, or Benefits – all business organizations should follow the
labor code of the Philippines to achieve the equality of payment for said benefits to their
employees.

4. Voice – employees should be given a chance to air their feelings and share their ideas to
address any situation that they feel are not fair.

Accountability

“WHO IS NOISY”? Does this line sound so familiar? Bet you’ve heard this line a
thousand times in your school life, but do we confess to our teacher if we are the ones who are
being noisy? Nah, we often mention random names of our classmates, pinpoint somebody else or
we just often stay silent with which these actions would lead the whole class punished since no
one would dare to admit the fault. In this scenario, the readiness to admit one’s action is very
vital. That is how important accountability is in any organization.

Accountability is considered as one main pillar of a good business command and the
most important aspect of prevention and detection of corruption. Business accountability can
also be related to responsibilities and liabilities. In a business context, this refers to the concept
that businesses are answerable for all of their actions and performances to all their stakeholders
whether it is a positive or negative action. Every employee in an organization is responsible no
matter what position in aiding to achieve the success of the business. Accountability does not
just arise, but it is implemented. Here are some examples of corporate accountability.

1. The board should present a balanced and fair valuation of the company’s accountable
events.
2. The board is the ones who are responsible for overseeing the nature and extent of risk
they are willing to take.
3. The board should keep a systematic approach to lessen the organization’s exposure risk.
4. The board should always have communication with stakeholders at regular intervals so
that the stakeholders would know how the business is attaining its company goals.

Transparency

Have you ever been victimized by an ad, or a seller, or simply by your best friend who
was not being honest enough with you? Maybe one of you or most of us has experienced this
kind of situation. In this day and age, the business world has become very competitive that
sometimes being transparent in the business is already neglected.

We all know that accounting is the language of the business meaning it is a process of
identifying, recording, and communicating economic information that is useful in making
economic decisions for stakeholders of the company and stakeholders outside the company. In
short, Transparency is all about facts that embody all about the business doings. Transparency
also symbolizes honesty. Having an open business setting as mentioned earlier will lead to
having a stable profit and continued client goodwill and patronage. This would also encourage
employees to give their best to deliver results that help to make the company’s growth
sustainable. The openness of the business of course should be backed up by the business rules
and regulations and within the Philippine government Law. The following are common examples
of transparency.

1. Freedom of Information – the law requires a business to post their financial statements in
the business section of newspapers or on their website for the stakeholders to know the
standing of the company and the would-be, investors.
2. Creating an open business environment – employees who know who they are working for
and what they are working for brings out the best in them and more likely to be more
enthusiastic in doing their work.
3. Builds internal and external trust – leaders who consistently walk their talk brings trust
with the employees and consumers
4. Effective communication- when communication is straight to the point, even if it is not
good news, employees are likely to feel more cherished and valued.

Stewardship

Merriam-Webster defines stewardship as conducting, supervising, or managing of

something especially the careful and responsible management of something entrusted to one’s
care.

Business leaders now not only have the objective to generate and continue to make much
money for the stockholders, but they are now also becoming more aware of the challenges that
our environment is facing and the residents who are living in it. Many businesses are now
engaged in activities that have a social and environmental impact. Some businesses may do their
stewardship activities with a minimal effect on the environment and others may take part in a
greater impact on the environment. Stewardship in business has some advantages and benefits.
Generally, it lessens energy usage, saves natural resources, and enhance public health. For small
businesses receiving certificates from environmental agencies, this may help them boosts their
sales especially since consumer now is very conscious in preserving our environment.

There are so many kinds of stewardship practices that the businesses do, for example,
businesses who are involved in manufacturing they have what they call
 1. Product Stewardship - this is an approach to assume responsibility for reducing negative
impacts on the economy, environment, public health, and worker safety of their different
products, materials, and at different stages in their production, use, and disposal.

2. For other types of businesses, their form of stewardship is utilizing email and mobile
devices to reduce paper consumption.

3. There are types of distribution businesses that make use of renewable energy sources to
reduce air pollution.

Non-Profit Organization

In the Philippines, only registered non-profit organizations are considered to have a legal
identity that would enable them among, other rights to open a bank account and to accept
donations or participate in any government activities.

In general, non-profit organizations are exempted to pay income tax as long as they
qualify for exemption under the Tax Code of the Philippines. An example would be a non-stock
non-profit educational institution. Under the Philippine Constitution with certain exemptions
provided by all, the grants, donations, or contributions used, directly, and exclusively for
educational purposes shall be exempt from taxes. Since it is not operated for profit the governing
body is called the Board of Trustees, the owners are members, but no dividends are issued. In
other words, the members, directors, and officers do not receive any income from the operation
of the school though they can receive reasonable allowance and salary if they are also employees
of the school.

Although they are tax-exempt, they are required to secure from the BIR a confirmation of
their tax-exempt status which is valid for three years. The organization however is required to
pay tax on their activities conducted for profit regardless of the disposition of such income.

Non-profit organizations play an important role in building healthy communities because

they usually provide services that would greatly contribute to economic stability. Because
nonprofit organizations are usually in touch or frequently communicate with members of the
community, they have more intimate local knowledge and they understand better what the
community needs, what problems it encounters, and more importantly, how to resolve it.
 REFERENCES:
• Business Ethics and Social Responsibility By Aliza Racelis
• Business Ethics and Social Responsibility By Dr. Reynaldo A. Padilla
• Philippine Business Ethics (Third Edition) By Alejandro R. Gorospe & Jose Ma. Quintos
• Business Ethics By William H. Shaw

“Start where you are. Use what you have. Do what you can.”
Arthur Ashe

Let’s Apply

DIRECTION: Identify what is being asked and write F for Fairness, A for
Accountability, T for Transparency, and S for Stewardship on the space
provided.

_____ 1. Treating employees equally and give reasonable punishments when rules are broken.

_____ 2. A customer does not incur hidden fees.

_____ 3. Employees being present for their entire shift.

_____ 4. Letting employees use their paid time to help community programs of companies.

_____ 5. Effective communication.

_____ 6. I am responsible for my actions.

_____ 7. Sacrifice is required at times.

_____ 8. Common Rules.

_____ 9. Employees are recognized for their ideas and contributions.

_____10. Employees consistently doing the right things about their job.

_____11. Utilizing email and mobile devices to reduce paper consumption.

_____ 12. The employee admits an error she made on a project.

_____ 13. Keep track of your commitments.

_____ 14. The manager gets to know the employees and become familiar with them.

_____ 15. Correctly reporting the financial position of a firm to investors including risk.

_____ 16. Employees feel valued.

_____ 17. Businesses use emails to reduce using papers.

_____ 18. The company has accurate job descriptions.

_____ 19. Being open with employees about the company’s performance and plans.

_____ 20. Companies engaged in activities that have a social and environmental impact.

Let us Analyze

SELF -ASSESSMENT:
Directions: Put a checkmark under “Yes” or “No” depending on whether the statement is
true of your behavior or not. The questions below help you
determine if you are a fair person.
YES NO
I treat other people the way I want to be treated. √
I treat people with impartiality as equals. √
I am open-minded and reasonable. √
I play by the rules. √
I do not take advantage of people √
I consider the feelings of all people who will be affected by my actions or √
decisions.
(If you answered “yes” to most of these questions, you are more than likely fair.) (This activity is taken from the book: Business Ethics and
Social Responsibility by Aliza Racelis, copyright 2017)

Directions: Put a checkmark under “Yes” or “No” depending on whether the statement is true
of your behavior or not. The questions below help you determine if you are an accountable
person.
YES NO
Do you set micro-goals? (A micro-goal is a single action that, when accomplished, √
serves as a building block to a much larger goal
Do you make to-do lists? √
 Do you reward yourself when you do a job well? √
Do you do one task at a time? √
Do you emphasize your strengths, work to improve your weaknesses? √
Do you seek feedback? √
Are you responsible for whether the results are good or bad? √
Do you tell the truth? (No one is perfect, but trying to cover up a mistake only makes it √
worse
(If you answered “yes” to most of these questions, you are more than likely accountable.) (This activity is taken from the book: Business
Ethics and Social Responsibility by Aliza Racelis, copyright 2017)

Directions: Put a checkmark under “Yes” or “No” depending on whether the statement is true
of your behavior or not. The questions below help you determine if you are promoting
transparency.
YES NO
You confront difficult situations. √
You can deal with the “ask me anything session”. √
You are open to challenges. √
You are open to feedback. √
You don’t keep important information to yourself √
(If you answered “yes” to most of these questions, you are more than likely promoting transparency.)
WORD SEARCH
Direction: Find and circle all the direction words that are hidden in the grid. The words may be hidden in
any direction.
FAIRNESS ACCOUNTABILITY COMMUNITY ORGANIZATIONS LEADERS
TRANSPARENCY STEWARDSHIP CORPORATION MANAGEMENT ETHICS
ENVIRONMENT PARTNERSHIPS BUSINESS PROFITS INCOME

STAKEHOLDERS EMPLOYEES COMPANY CONSUMERS PRODUCTS

E N V I R O N M E N T O A P R O D U C
L E A D S T C U D O R P C A E V U N P
C U T O P R O D C U T S C R V E T I R
S N O I T A Z I N A G R O T N R H P O
C O N S U N E R D C T S U N U S O R F
A C C T O S Y E I C S D N E D S E A I
N O B E W P N A A O T R T R N E M N T
S S U W N A A D P U A A A S U N P O S
S T S A E R P S E N K W B H F R L I S
S C I H T E M M N T E A I I A A O T R
E O N R O N O A N T H G L P I I Y A E
N M N D N C C N S A O E I S R F E R M
I P E H N Y R A I B L S T I N I E O U
S A S I E E A G M I D O Y N E X S P S
U N S S A M A N A G E M E N T E O R N
B I N P T O S U P E R V I S I N G O O
C O M M U N I T I E S R E D A E L C C
Let us Try
Direction: Write your answer legibly in the space provided below.

1. Cite the instances that you were able to engage in Fairness, Accountability, Transparency, and
Stewardship in your house, school, or in your community.

Fairness:

The instance that I was able to engage in fairness, happened within our house. In my case I
have twin nephew aged 6 years old, and they really love to draw and paint. And as a twin, we
can’t contradict the fact that they are often fighting for small issues like not sharing brushes
and other stuffs. That day I am doing my own business at my room and the twins doing their
thing outside, and suddenly I heard someone shouting and crying and as I expected it is my
nephews who is eagerly fighting for a piece of brush. And as I go where they’re, instead of
judging who started the fight and punishing the one who is not crying, I ask each side story for
me to conclude who is responsible for the punishment and to show fairness and stand as good
example for my nephews.

Accountability:

Transparency:
The instance that I was able to engage in stewardship, happened within our school. That time
we are making a research proposal, for academic purposes

Stewardship

The instance that I was able to engage in stewardship, happened within our school. That time
we are assigned to make a product that is uniquely made by our hands