Definition of Ethics

The term Ethics is derived from the Greek word ethos which means “characteristic
way of thinking”. Ethics, as a science, does not only evaluate the morality of our human
conduct but also provides us with a common understanding of the universal, objective, and
irreversible moral principles that should govern our human behavior and guide our moral
decisions (Roa, 2011).

Ethics are moral principles that guide the conduct of the individual (Racelis, 2017).
These are rules of behavior based on ideas about what is morally good and bad (Merriam-
Webster Dictionary).
Why is ethics important in business?
Ethical conduct, whether at the corporate, professional, or personal level, is a direct
reflection of the principles and values which regulate the person and the institution he/she
represents. Organizations establish their own culture that is socially expressed as their
ideals. Such principles or ideals have an impact on the relationships within the company,
efficiency, prestige, performance and retention of
employees, legalities, and the wider community they work in.

As a result, most organizations generate a list of organizational values and codes of

conduct to be recognized and adhered by all workers. Motivating and enhancing
constructive actions, and at the same time building an atmosphere that prevents unethical
behavior are vital obligations on the part of both administrators and workers.
How to Apply Ethics
At the individual level, organizations ought to concentrate on improving and
encouraging every employee to respect and adhere to ethical principles. Certain aspects of
individual ethics have their roots in the individual. Achieving a strong sense of
professionalism and recognizing certain professional decisions' ethical implications are the
key components of education, individual reflection, and experience.
Examples of Ethical Issues in Business
1. Ethical Issues in Finance
Under the umbrella of finance and accounting, fairness in trading practices,
trading conditions, financial contracting, sales practices, consultancy services, tax
payments, internal audits, external audits, and executive compensation are
included, whereas specific corporate ethical/legal abuse includes insider trading,
bribery/kickbacks, misleading financial analysis, and fraud on securities.
2. Ethical Issues in Human Resource (HR) Management
Human Resource Management 's tasks include hiring and orientation,
performance evaluation, training and development, labor relations, and health and
safety concerns. Among the ethical issues are discrimination by age (the young ones
are preferred over the older ones), gender preference, sexual orientation, race,
ethnicity, disability, and physical appearance are all ethical issues that the HR
oversees.
3. Ethical Issues in Sales and Marketing
Marketing ethics deals with the beliefs, standards and/or morals that
advertisers and marketing organizations will operate upon. Ethical marketing issues
include promotion of obsolete or harmful products/services; openness about
environmental threats; food ingredients (Genetically Modified Organisms); possible
health hazards or financial risks; protection for the privacy and autonomy of
consumers; truthfulness in advertising; and honesty in price and delivery. Some

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 claim that advertisements can affect the views of individuals and their relationships
with others, suggesting an ethical obligation to avoid distorting those expectations
and relationships.

Ethics in marketing includes practices in pricing, which involves unlawful

acts such as price manipulation and price skimming. According to Hayes (2020),
price skimming is a product pricing strategy by which a firm charges the highest
initial price that customers will pay and then lowers it over time. On the other hand,
advertising has raised concerns over offensive advertisements, objectification, and
school marketing.
4. Ethical Issues in Production
Business ethics typically deals with company's duties to ensure its goods and
industrial procedures do not inflict unnecessary harm. Many products and services
can be generated and used at zero risk and it can be difficult to assess the ethical
path. However, there are consumers who patronize products that damage them, for
example, tobacco products. Output can have adverse effects on the environment like
air pollution, destruction of habitats, and urban sprawl.

A secret to success lies in recognizing the value of ethics in industry. The customers,
management, and staff value honest and ethical practices. Hence, business ethics is vital
because it helps maintain a great reputation, helps to avoid significant financial and legal
issues, and ultimately benefits all involved. Therefore, it is highly suggested that each
company formulates its own Code of Ethics to be used as a guide in its business operation.
What is Code of Ethics?

Code of Ethics is a set of rules about good and bad behavior. It is a guide of
principles designed to help professionals conduct business honestly and with integrity. A
code of ethics document may outline the mission and values of the business or organization,
how professionals are supposed to approach problems, the ethical principles based on the
organization's core values, and the standards to which the professional is held.

Saucer and Sims (2013) offer recommendations for developing Code of Ethics in
business organizations:

1. Adopt code of ethics (use the Code of Ethics of other companies as a

reference and modify according to the needs of the company).
2. Offer training on ethics (for management and employees).
3. Hire and foster individuals with ethical value.
4. Deal with immoral activities. Employees must know the implications and
effects of making unethical actions, and should be ready to accept
consequences.
5. Take constructive measures. For example, give rewards to employees who
admit their mistakes. If the company is conscientious and smart, it can encourage
warehouse workers to take responsibility for their mistakes and even praise them for
coming forward, apologizing and ensuring that a faulty product is not purchased by the
customer. At first it seems counter-intuitive to reward an employee for a mistake, but in
the end, it provides everyone with the best result.
6. Carry out a social audit. Conduct survey to employees once in a while.

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 7. Cover all whistleblowers. These people detect illegal activities within
organizations and disclose the actions to the authority or managers. A whistleblower who
works sincerely, correctly reporting an issue, should be praised for his/her courage and
integrity, as opposed to being disciplined and ostracized. If an individual blasts the
whistle, it is possible that the company itself has failed internally to motivate and improve
fair and ethical conversations.
8. Empower the defenders of integrity. Support those who work with honesty and
integrity.

9. Ensure executive commitment. The anonymity of those who report the

problems should be practiced.
10. Communicate the principles of conduct within the company and across the
industry.
11. Assign an officer who is clearly responsible for the enforcement of ethical
standards. He/she can be consulted for advice.
12. Establish a procedure for violations of ethical standards, and fully review any
offenses reported.
13. Ensure high perseverance by the company's board of trustees.
14. Lead by example, above everything else.

It should be remembered that when faced with an ethical situation, the outcome of the
decision-making process should be considered. One way to tackle ethical situations is by
using the four-way test to evaluate decisions.

This four-way test consists of asking four questions:

1. Is my decision truthful?

2. Is my decision fair to all who are affected by it?

3. Will this build the organization's goodwill?

4. Will the decision benefit all parties with vested interest in the outcome?

Code of Ethics contains the following:

1. Vision means something that you imagine; a picture that you see in your mind
(Merriam-Webster Dictionary). The vision statement helps to ensure the
alignment of the decisions to the company goals.
Example: To make innovations that everyone could access and adapt
depending on their needs
2. Values (value means something thought of as important or useful)
Values in business help to ensure that all of the employees work towards the
company goals.
Example: We commit ourselves to serve our customers with quality service
and utmost respect.
3. Mission- a specific task with which a person or a group is charged (Merriam-
Webster Dictionary). The mission statement clearly and effectively guides the
business or the organization in its decision-making.
Example: To inspire all the young athletes of the country… tell them to dream
and go for it!
4. Principles- moral rules or beliefs that help you know what is right and wrong
and that influence your actions (Merriam-Webster Dictionary).

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 Examples:
Customers have to be respected.
Make sure to deliver quality product.

Simplified Sample of Code of Ethics: XYZ Company

Our Core Values
Our Vision: To lead the car industry by giving our customers quality cars
worthy of their money and unmatched customer services Our Values:
We act with the highest standards of integrity.
We respect individuals and treat them fairly.
Our Mission:
To work efficiently and enthusiastically to make XYZ Company the country’s top car
dealer while serving our customers punctually and courteously
Our Principles:
1st: XYZ Company shall adopt a zero-tolerance policy towards bribery
and corruption in whatever form;
2nd: All company officers and employees shall conduct business in
accordance with Philippine laws and regulations; and
3rd : We shall act in good faith and observe sense of professionalism at all
times.

For actual/specific example of Code of Ethics, please visit:

http://www.ayala.com.ph/governance/page/business-conduct-and-ethics
Code of Ethics aims to lessen conflicting issues as it explains to what degree such
conflicts can be avoided and what parties can do if these conflicts happened. Professionals
therefore cannot say that they were ignorant of the immoral nature of their improper
behavior. Often relevant is the possibility of disciplinary action (e.g. disbarment of a lawyer)
which helps minimize unnecessary disagreements or offensive behavior where a
confrontation is imminent or is likely to happen.