REVIERWER FOR CGSR 7.

Environment - CSR is beyond legal requirements including the issue on

CHAPTER 5 the environment. It is the role of the company to further deliver environmental
CORPORATE SOCIAL RESPONSIBILITY AND ETHICS benefits besides mandatory requirements. Part of these mandatory
"Corporate social responsibility is measured in terms of businesses requirements towards the environment is looking for sustainable replacement
improving conditions for their employees, shareholders, communities, and for the depleting natural resources, lessening the adverse impacts on
environment. But moral responsibility goes further, reflecting the need for environment, reducing environment-risky pollutants/emissions as well as
corporations to address fundamental ethical issues such as inclusion, producing environment-friendly goods.
dignity, and equality." -Klaus Schwab 8. Community - The community where the company does its business is
another important stakeholder. of a company with the community depends
CORPORATE SOCIAL RESPONSIBILITY (CSR) is the most recent practice on its direct The connection communication with it. In addition, the evaluation
of companies in taking active participation in social concerns and community of the risks confronted by those people living in the community within the
matters. The customers or the buying public besides other stakeholders vicinity of the business is a consideration in CSR. CSR needs to help the
are the target of responsibility. Providing respect and satisfaction to community through providing positive changes to the lives of these people at
customers and other stakeholders is not new to businesses. However, it is the same cultivating the brand image of the company. Participation with the
believed that being responsible provides a greater pay off on community could be done both direct & indirect. Directly, any company can
profitability in the long run. fund the projects of the community while indirectly by supporting those
Basically, CSR is a business philosophy that requires companies to community projects executed by local agencies.
behave as good corporate citizens. For instance, in the conduct of their The idea of CSR is to encourage and support accountability to all
operations, they must avoid causing environmental pollution or exhausting stakeholders not just the shareholders and investors. These days and
limited natural resources. Although sometimes in making business decisions, possibly may continue in the future, the issues on environmental protection
companies feel pressurized to behave unethically when seeking to as well as the wellbeing of employees, the community and the society are
produce profits. the main concern. The business model of CSR considers that companies
are not isolated economic entities and must operate in connection with the
THE CONCEPT OF CORPORATE SOCIAL RESPONSIBILITY society beside competitiveness, survival and profitability which are the
These days, businesses are regarded as the most influential
organizations on Earth. They are not just expected though to merely traditional views.
produce profits just like their traditional role. The increasing role of the civil
society has placed much pressure on companies to turn into economically,
socially and environmentally friendly. Employees, customers, shareholders,
media and civil society put burden on companies to be transparent and DRIVERS OF CSR
accountable. Today, businesses no longer operate in isolation, because they
are in a distinctive position to affect society at large and make progressive The idea of CSR is to encourage and support accountability to all
influence. stakeholders not just the shareholders and investors. These days and
possibly may continue in the future, the issues on environmental protection
The ideas of Milton Friedman and Edward Freeman gave rise to the as well as the wellbeing of employees, the community and the society are
concept of Corporate Social Responsibility (CSR). As written in the New the main concern. The business model of CSR considers that companies
York Times Magazine in 1970, Friedman said that “the social are not isolated economic entities and must operate in connection with the
responsibility of business is to increase its profits” and “the business society beside competitiveness, survival and profitability which are the
of business is business”.
traditional views.
This concept of Friedman represents the viewpoint that the maximizing
profits for the shareholders considered as the only stakeholders for the Some of the drivers pushing business towards CSR include:
company is the lone social responsibility of the company. However, for
Freeman the stakeholders are those individuals or groups who can
affect or are affected by any activities of the company. Therefore, 1. The shrinking role of government - The government had usually
stakeholders consist of shareholders as well as but not limited to, customers, depended on legislation on the provision of social and environmental
employees, suppliers, community, environment and society in general. services in businesses. However, the distrust in the implementation of
These ideas led to the concept of CSR that extends beyond philanthropy and various regulations and the insufficiency of government resources directed
includes legal obligations social, environmental and ethical concerns into the businesses to explore on "soft intervention" instead that it is voluntary and
business process. From the widely quoted definition by the World Business not directly structured and regulated.
Council for Sustainable Development, corporate social responsibility is 2. Demands for greater disclosure - There is an increasing demand for
“the continuing commitment by business to behave ethically and disclosure coming from all stakeholders who consist of customers, suppliers,
contribute to economic development while improving the quality of life employees, local communities, investors, media and pressure groups.
of the workforce and their families as well as of the local community
and society at large”. 3. Increased customer interest - How a company conducts itself ethically
Hence, CSR is addressing the interests of all stakeholders simultaneous with may influence the buying decisions of customers. Most consumers either
profit-making. prize or penalize companies depending on how they perceived the
The emerging concept of CSR is the triple bottom line approach. This performance of the company.
approach often called the 3PS (PEOPLE, PLANET AND PROFIT) 4. Growing investor pressure - These days investors often decide on the
emphasizes a company’s guarantee to operate its business in an
evaluation of companies' performance based on criteria that embrace ethical
economically, socially and environmentally sustainable manner.
concerns. Investors also look into account ethical considerations when
buying and selling stocks.
The key components of CSR would therefore include the following: 5. Competitive labor markets - Gone are the days that employees are only
1. Corporate governance - Accountability, transparency and conformance looking at paychecks and benefits. Today, employees are also after how
with the laws are the major issues under corporate governance. With good
match their own principles with that of the employers’ philosophies and
corporate governance policy, a company is able to accomplish its objectives,
protect the rights of its shareholders, abide by the legal requirements and operating practices. Hence, employers are compelled to improve their
offer transparency for all stakeholders. working conditions when hiring and retaining valuable employees.
2. Business ethics - Business ethics is the inclusion of the core values such 6. Supplier relations - Nowadays, most stakeholders are more and more
as honesty, trust, respect, and fairness into the policies, practices, and interested in the affairs of businesses. With this situation companies are
decision making of a company. It also consists of obedience to legal making certain that even their partners are also conduct themselves ethically
standards and submission to in-house rules and regulations. and socially responsible. The trend now is to present codes of conduct for
3. Workplace and labor relations – Human resources are the assets of a their suppliers, which would guarantee a good image once these policies or
company and thus play the most important and critical roles. Workplace and practices would be followed.
labor relations are good CSR practices. These CSR practices include but not
limited to health and safety, employee relations and work-life balance. HISTORICAL PHASES OF CSR
Having these practices around the workplace assures easier recruitment and The practice of corporate social responsibility (CSR) has had an
higher retention thus resulting to cost reduction caused by non-stop extensive and widespread history. A sizable body of literature about CSR
recruitment and retraining. could be found mostly from the twentieth century particularly in developed
4. Positive action – Some of the good practices which reflect CSR practices countries, the majority of which from the United States (US). Europe later
of the company are inclusion of people with disability and people from the was also captivated with CSR as manifested by a lot of formal writings,
local community in the diversity of workforce. It also includes gender policy, research, conferences, and consultancies usually from the works of scholars
guidelines on prevention of sexual harassment, prevention of HIV/AIDS and and practitioners. Countries in Asia also joined the bandwagon and started
employee volunteering. to become interested to CSR policies and practices.
5. Supply Chain – The business process of any company is not limited to It is noteworthy then to understand the history of CSR, to wit:
the internal operations but includes the whole supply chain involved in Phase 1: (1800s to early 1900s)
producing goods and providing services. Any disregards or carelessness on PROFIT MAXIMIZING MANAGEMENT
social, environmental, human rights and other responsibility aspects may 1. Management must maximize profit.
seriously and greatly affect business eventually. Therefore, a company must 2. Individual drive for profit maximization would ultimately create wealth for
use its strategic position to impact the supply chain totally to positively the nation.
influence the stakeholders. 3. Business systems as a profit maximizer are used as a tool for the
6. Customers – The cost and quality of products and services are possibly elimination of economic scarcity.
the greatest but definitely not the only aspects of concern to the customers. 4. Business ignored unsafe working conditions, paid starvation wages and
Through improved awareness and ways of communication, the satisfaction used child labor in order to maximize profit.
and loyalty of customers would be contingent on the way the company has 5. Problems of cultural minorities, unsafe products, unfair advertising and
produced the goods and services with consideration on the social, urban poor problems were given little if no attention at all.
environmental supply-chain and other such concerns.
6. Abuses of capitalism are extremely rampant and the government tolerates increase share price in the long run, and have more protected long-run
these deplorable business practices. profits.

Phase 2: (Early 1900s) Society encourages businesses to become involved in its social, political and
TRUSTEESHIP MANAGEMENT legal environment. Now-a-days modern business organizations engage
1. Management was considered both as an instrument of stockholders and themselves into such activities to influence political process for their benefits.
as a trustee for all groups who contribute to the business enterprise. Social responsibility also includes the balance of responsibility and
2. Aside from the profit maximization, the management’s concern is also to power. A good example of a corporation that failed to implement corporate
maintain a fair balance in the interests of employees, customers, creditors, social responsibility is the case of Enron Corporation. Enron was one of the
stockholders and the community. world's leading electricity, natural gas, communications and pulp and paper
companies before it bankrupted in late 2001.
Phase 3: (1930s)
QUALITY OF LIFE MANAGEMENT Businesses which are socially responsible have some recognizable
1. Security of basic goods and services was no longer a principal problem. common points which are:
2. Social and economic problems brought about by economic growth 1. Public image - In order to increase their sales, access to financing better
expanded the concept of social responsibility of management. employees and the rest of the stakeholders, businesses are taking their
3. Society demanded management's active participation in helping solve efforts to enhance their public reputation. The public is always concern and
social and environmental problems in view of the vast resources (funds, give importance to social goals; hence businesses can form a positive public
manpower, materials, management, skills and technology) of businesses. image by pursuing these goals.
4. Business is expected to contribute to the improvement of the quality of life 2. Better environment – As part of the society, businesses can help in
which involves cultural, social, educational political factors and economic providing solution to problematic social problems. This way the business
security. sector can offer comfort of a better quality of life which may also attract and
5. Society is unstable it the quality of life of the people is poor Businesses retain skilled employees.
contribute to a good quality of life and society. 3. Public expectation - The public supposes that businesses are not only
6. A prosperous society is the best environment for a business to thrive in. after attaining economic goals but also social ones.
Businesses will benefit from its self-Investment in society. 4. Long-run profit – Those businesses that are socially responsible have
the highest likelihood to earn more secure long-term profits This is the
UNORGANIZED CSR (1960s to 1970s) consequence of harmonious community relationships and enhanced
In this dates, the effects of US colonization were still being felt by the business reputation through CSR.
Philippines. Businesses were purely involved in charity and donations. The 5. Balance responsibility and power – Businesses are said to be the most
declaration of the Martial Law in 1972 under the Marcos administration influential organizations in the society. However having this kind of power, it
placed the country into severe economic crisis. Political disorder, societal is expected that they must also be responsible. In other words, it requires
chaos and the continued existence of the business itself were threatened that they should balance their power and responsibility at the same time.
during this period. Consequently in order to combat there threats numerous 6. Stockholders interest - In the long-run when a business is socially
businesses and other organizations coordinated and shared their labors and responsible it would result in its stock price increase. The stock market shall
struggles through CSR programs. observe the actions of this socially responsible company. Hence, the reward
In 1971, the Philippine Business for Social Progress (PBSP) was of the company is a higher stock price earnings ratio.
organized by 50 Philippine corporations as the largest corporate- led social 7. Possession of resources - Almost all companies that are socially
development foundation in the Philippines. It was the first in Asia to lead the responsible have ample if not more financial resources, technical experts
promotion and practice of corporate social responsibility (CSR). Member and managerial talents. These resources make them able to support and
companies of PBSP allocate a certain percentage of their profits to sustain their public and charitable projects.
development projects on education, health, livelihood and the environment.
Filipino businessmen set aside 1% of their companies' net income CLASSICAL VIEW -- It was Milton Friedman, a Nobel Prize winning
before taxes for poverty reduction programs. These companies include San economist who endorsed this classical view. Friedman wrote this insight in a
Miguel Corporation Shell Companies in the Philippines, United New York Times article entitled "The social responsibility of business is
Laboratories, SGV and Company, Soriano Group and others. to increase its profits". The classical view says that the primary role of
business is to provide goods and services to maximize profits for the benefits
ORGANIZED PHILANTHROPY and satisfaction of the shareholders' interest in an open and free competition
(1980s to1990s) with obedience to laws.
The Philippine government implemented new and many policies about
deregulation, decentralization and liberalization during this period of Here are the common characteristics of the classical view of CSR:
organized philanthropy. In effect, with those policies foreign investment 1. Profit maximization - Businesses are focus only on activities that would
increased and the existing private sector was influenced. It was in this period produce profits for shareholders. As a consequence, shareholders are
that numerous foundations were put up such as ShoeMart Foundation expected to earn a good return on capital invested.
(1983), Coca-Cola Foundation Philippines (1986), Roxas Foundation 2. Government concern - Businesses which have the classical view believe
(1987), Sarmiento Foundation (1988) and the rest. that social welfare should be left for the government to take care of. It is the
Corporate social responsibility programs were also adopted by other role of the government to provide assistance to its constituents in the form of
companies through Community Relations. Later in the 1990s, Area health, education and financial aids.
Resource Management (ARM) was developed by PBSP in order to more 3. Aggressive competitive strategies – In order to ensure survival of the
organize CSR strategy. The intention of ARM is to connect with other business, the primary objective of business organizations is to maximize
partners in the private sector for capacity building. Truly, any investment in profits using aggressive competitive strategies Hence, businesses should
CSR is now becoming strategic that toughens the relations amongst the avoid commitment to CSR initiatives because there is only a small nature of
participants. direct economic benefit derived from it.
4. Utilization of resources – If resources would be committed to CSR
ORGANIZED MOVEMENT activities, it denotes additional costs and competitive disadvantage on the
(2000 and continues until present) part of businesses. Therefore, the financial performance of the company will
From the year 2000 and until present, the organized movement is still in also be negatively affected.
existence. Globalization was the great influence in the spread of CSR 5. Unachieved business objective – Commitment to philanthropic
worldwide. The interdependence of business competition and community responsibility would mean averting shareholders’ wealth into non-economic
health became popular as "shared value" in the field of CSR. This kind of activities. The main objective of maximizing profits then would not be
drive was endorsed by the League of Corporate Foundation (LCF) in the attained.
Philippines. The league was founded in 1991 with the purpose of promoting PYRAMID OF CORPORATE SOCIAL RESPONSIBILITIES
The basis of the modern definition of corporate social responsibility (CSR)
and enhancing CSR among its network of over 80 of the largest operating
came from Archie Carroll's Pyramid of Corporate Social Responsibility.
and grant-making corporate foundations and corporations in the Philippines. In this pyramid it considered four types of responsibilities which are actually
For more than two decades now, LCF still lead the business sector in an assortment of specific responsibilities that follow a successive fashion but
expanding interest in corporate philanthropy, CSR, and commitment to are interdependent to one another. However, due to necessity another
nation building. Members of LCF collaborate in educational projects and responsibility was added to the list.
initiatives ever since its foundation until these days through their committees
on Arts and Culture, Education, Enterprise Development, Environment, These five social responsibilities of a business are discussed below:
and Health. 1. ECONOMIC RESPONSIBILITY - The first and most apparent is the
economic responsibility to be profitable. The focus here is on the different
DIFFERENT VIEWS OF CSR practices that would lead to the long-term growth of the business. In the first
Over the last twenty years, corporate social responsibility of place businesses are created to be the livelihood of their owners.
organizations has been one of the most and widely debated issues. This is 2. LEGAL RESPONSIBILITY - The second level of the pyramid is the
because there are actually two extreme views about business’s social business' legal responsibility to obey the all laws set forth by society all the
responsibilities. The two approaches that form and guide managers on how time. Comparable to individual members of the citizenry, a business also has
to line up their priorities and actions are the Socioeconomic view and the an obligation to follow all written and codified laws that concern its existence.
classical view. They are discussed here below: The government acts as regulators of businesses so that the integrity of
business practices is maintained and the interest of the public is protected.
SOCIOECONOMIC VIEW -- says that a business is a portion of the larger 3. ETHICAL RESPONSIBILITY - The third, which is directly connected to the
society and thus has social responsibility that goes beyond making and legal responsibility is the ethical responsibility. That is to do what is right
maximizing profits. In addition, in this view maximizing profit is the second even when business is not obligated to do so by law. Fair labor practices to
priority and the first priority is defending and refining society's welfare. employees in the form of equal pay for equal work and living wage
Being socially responsible is not only the correct thing to do, it also helps compensation initiatives is an example of this responsibility. This labor policy
corporations that are socially responsible to form a positive public image, ought to be applied all employees, even those who are at the highest levels
of the company. Despite diversity in the workplace, this is beneficial so that Since the employees are very significant, a company must fulfill its
everyone would be encouraged to work as a team. In the Philippines, the obligations to them to increase more its productivity. Here are the
Philippine Association of National Advertisers (PANA) is responsible to responsibilities of a company to its employees, as follows:
regulate and set the guidelines for Philippine advertisers in TV, radio, print 1. Meaningful work and job satisfaction – In a country like the Philippines
and out-of- home. with a very high rate of unemployment, the job opportunities are restricted.
4. ENVIRONMENTAL RESPONSIBILITY Thus, employees must be ethically treated by giving them challenging but
These days environmental responsibility is a must for businesses, though meaningful tasks, good working conditions and job security. Certainly, top
this is not actually included among responsibilities by Archie Carroll in the management should make employees’ jobs enjoyable. Management of the
pyramid of CSR. Generally among the initiatives in sustaining the company must be responsible in making them grow and develop over time.
environmental endorsed by businesses are limiting pollution and reducing Job assignments needs to be delegated equally and be based on expertise,
greenhouse gases. knowledge and educational qualification of employees so that no one is
Senate Bill (SB) 1866 otherwise known as Philippine Ban on Plastic abused.
Straws and Stirrers is an initiative of the government on plastic reduction 2. Fair returns - Well-designed compensation package must include
nationwide to stop the notorious discarding of plastics. sufficient wages and salaries in addition to other incentives. Payment to
An example of the bad effects of not caring for the environment is the case employees must be given on-time so that they can meet their individual
of Boracay Island which had been a high-profile issue. The island had its financial obligations. Should employees faced financial crisis for some
temporary closure from April to October 2018 in order to prevent further reasons, they should not be denied help during said situations. Management
coastal and marine degradation. must treat all its employees as part of one big family that requires to be given
5. PHILANTHROPIC RESPONSIBILITY care and support. The company and employees ought to stand by each
Philanthropic responsibility known also as discretionary responsibility is other during both happy and sad times.
best described by the resources donated by companies toward social, 3. Best physical and mental atmosphere - Essentially, employees need
educational, recreational and/or cultural intentions. good facilities to work productively and comfortably to deliver their
SOCIAL RESPONSIBILITY TO STAKEHOLDERS - Today, both large and performance best. These require management to provide these employees
small companies are also faced with numerous issues that test them to with fresh, decent, healthy and safe working conditions, proper sanitary
answer to the concerns of their stakeholders to operate and perform in a facilities and fresh drinking water among others. In addition, employees must
socially responsible fashion. Here are some of the major stakeholders that be given proper workstations or cubicles for some amount of privacy. Every
companies need to focus on: employee should be given the same comfort so that they will not feel
stressed and frustrated with their job. Ensuring frequent inspection of the
TOWARDS CONSUMERS -- The consumers are without doubt, the facilities and educating employees about safety standards is necessary and
important stakeholders of any business whether big or small. Putting-up a a must for a harmless workplace.
profit-motivated company would not work without consumers or the buying 4. Participation in the management - Top management should encourage
public. Hence, a company's obligation to the consumers is much work teams, suggestion system, profit-sharing and other ways of
comprehensive compared to other stakeholders. Besides delivering the right participation. These activities both build a better workplace relationship and
product or service with desirable quality, consumers expect that they be reinforce the bond to work cooperatively in projects and activities that are
provided at the right time, right place, and reasonable price. Consumers outside the office Together, management and employees are other as they
always consider good value for the money they spend. It is the responsibility show their talents which are not exposed during the appreciative of each
of every company to take care of their customer' hard earn money. Truly, a time of work.
business cannot function without consumer. The survival and growth of 5. Training, promotion and welfare schemes - Proper training is a
business relies on consumer satisfaction, service and support. All business requirement for employees to be efficient and proficient as these are the
organizations should always win the confidence of the customers. This is demands of contemporary business workplace. Part of a good CSR practice
feasible by having a positive attitude towards customers and achieving is to offer opportunities for skills development to employees. It is a big help
the following social responsibilities towards them: for employees to learn new skills which they can share and contribute to the
1. QUALITY - It is a must for a company in the manufacturing industry to company. As they participate in CSR activities, these new skills would make
create quality goods and provide quality service for service-oriented kind of them confident to assume important roles within the scope and function of
businesses. Although, it is impossible to have a 100% percent quality, such activities.
companies should always make improvement to make it near perfection in 6. Recognition of unions - A union is an organized group of workers who
terms of quality. Improvement must always be part of any business operation unite to make decisions about conditions affecting their work. A socially
and process. responsible company recognizes the right of employees to form their union.
2. FAIR PRICES - It is not reasonable to charge high prices on customers. Having a union inside a company promotes and maintains good labor
Customers these days looking for quality goods and services offered at relations.
reasonable prices. It is always fair prices that make a new customer turn into 7. Proper personnel policies - A good practice of CSR is have concrete
loyal customers. and proper personnel policies in transfers, promotions, recruitment, training
3. TRUTHFUL ADVERTISING - Advertisements should offer accurate, and other related areas. Policies in promotion transfer or any other action for
relevant and updated facts, advantages and even side-effects of the product. the employees should at all times be unbiased.
Providing information is one of the basic purposes of advertising. Hence, any 8. Health and safety measures - All companies must always have enough
company which would like to advertise its product/s or service/s should not actions for employee protection in terms of health. Among others, proper
misinform and mislead its customers by giving out correct and real canteen, medical clinic and other related facilities must be in place.
information. Management as part of their CSR practice should always maintain a safe
4. AFTER SALES SERVICE – During the period of promised warranty, working environment to prevent possible accidents that may happen. Part of
customers always anticipate that the company would provide them after sale the management's responsibility is to secure insurance for its employees as
service. It is the after sale service when given efficiently and effectively that provision for medical care and wage replacement in case of injuries.
creates good relationship between the customers and the company. 9. Grievance procedure – As a socially responsible business, a company
5. RESEARCH AND DEVELOPMENT – It is actually a requirement of should have a proper grievance process to answer for employee complaints.
consumers for businesses to perform research and development (R&D). It is also the concern of management to build a working climate free from
Through R&D, quality of offering both goods and services may be improved harassment and discrimination with respect to all age, race, gender,
and certainly cost of production could be reduced. ethnicity, disability or even religion. Any workplace issues confronted
6. CONSUMER’S SAFETY – It is always expected by consumers that any correctly and promptly can avoid expensive civil lawsuit.
product they bought shall not harm their health and most importantly their Letting employees participate in CSR activities lifts their work ethics and
lives. Consumers trust more those companies that offer and sell safe performance. CSR creates a deep influence towards the attitude and level of
products. awareness of employees. In this sense, CSR gives them a sense of
7. REGULAR SUPPLY – Goods and services must be provided to direction, and cultivates positive perception concerning their employer and
customers on a regular basis. It is a business sin to create false scarcity of also themselves.
goods. Good and services should be accessible to consumers whenever
they need and want them. TOWARDS THE GOVERNMENT -- Either directly or indirectly,
8. ATTEND COMPLAINTS – Businesses should always attend to any businesses may be affected by the communities where they operate.
queries and complaints of customers the soonest possible. Customers Companies interrelate with a number of sectors in the bigger community and
certainly would retaliate when their queries and complaints are not given the government is a part of it. The government is basically responsible for
response instantly by telling negative feedbacks. controlling the laws and protecting the security of the country. Hence, the
9. AVOID MONOPOLISTIC COMPETITION - It is always healthy for any government actually plays a vital part also in the standpoint of CSR as an
industry to have a competitive business environment. For the sake of external stakeholder.
customers, businesses of any industry should not allow that monopoly exists. Here are some of the responsibilities of businesses towards their
10. TRAINING - Sometimes, businesses need to train their customers on the respective governments:
use of the products bought. This training is given either for free for a fee. It is 1. Pay taxes - Obviously, businesses owe to the government their taxes
freely given if the customers would not be able to use the product without the and fees as they carry out their operations. The government imposed
training or usually it is already part of the package. This is true in the case of various taxes and fees on businesses such as excise duty, sales tax and
computers and software products. corporate tax. These taxes and fees should be paid accurately based on
the provisions. In return, these collected taxes and fees are returned to
TOWARDS EMPLOYEES -- CSR programs should reflect that a business is the people through infrastructure and other welfare facilities.
more socially focused instead of just merely profit-oriented. CSR intentions 2. Follow environmental regulations - Those businesses in the
must be contained in the values of the organization. Millennial generation industrial and manufacturing sectors have been enforced strict rules
would like to work for a company that takes care of its employees besides a concerning the quantity and the variety of pollutants that they are
good compensation package. This group of workforce would like be on- permissible to produce. Socially responsible companies try to minimize
board a company that shows its core values by participation in CSR their pollution for the common good even more than the law requires.
activities. Millennial wants to work in a company that it is truly a corporate 3. Abide by labor laws - In the Philippines employers need to follow laws
citizen. on labor practices. These laws are about proper treatment of employees.
How much an employee can be paid, how many hours he is allowed to
 work and the hiring and firing criteria are some of these laws. The Labor 5. Health and education – Businesses as part of their CSR can help
Code of the Philippines is the general labor law that regulates the improve the quality of life of the communities which they wanted to provide
relationship between the employee and the employer, and all assistance to. In the Philippines some companies conduct dental and
employment-related matters in the country. The law applies to all medical missions in remote provinces to treat aliments and supplement the
Philippines enterprises and joint ventures, as well as to all employment health of people living in these communities. Often, medicines are distributed
relationships between Filipino nationals and foreign enterprises in the for free to sick people, pregnant mothers and aged people. In the rural areas
country. mostly the problems came from deficiency of health education,
4. Avoid restrictive trade practices – Competition is basically an unwholesome environment, unhygienic habits of living, poverty, deprived
element of any business. Businesses are not permitted to engage in diet, and the social culture. The Quezon Power for instance provided both
restrictive trade practices even under competition. Monopoly is an medical and dental services, made lectures on the prevention and treatment
example of a restrictive practice in any industry that limits competition and of major and chronic illnesses and the impacts of reproductive health.
prohibits new entrants in becoming a player of an industry. This type of The team of Quezon Power also fed malnourished children in two
trade practice can lower the quality of products available to consumers yet elementary schools in Mauban with accompanying lectures on health and
drives prices up. Article XII Section 19 of the Philippine Constitution nutrition for the parents. Besides concern on health, other companies also
provides that “the State shall regulate or prohibit monopolies when give some training to communities to help the people develop their skills. In
the public interest so requires. No combinations in restraint of trade CEMEX, a global leader in the building materials industry, the emphasis of
or unfair competition shall be allowed.” their CSR is letting the community to know the value of empowerment. This
5. Financial disclosure - The financial statements of companies need to company initiated a program called Experto Ako with the intention of
be disclosed to the government for taxation purpose. providing knowledge of masons on the current cement technology.
While, the company is also responsible to disclosed its ownership of 6. Industrial aid to education in urban areas - Successful businesses has
shares of stock to the public in terms of availability. Being financial CSR programs that support schools, colleges and technical professional
transparent makes certain that the company obey government laws such educational institutions.
as withholding and business taxes. Whereas the public is assisted on its In this contemporary times, part of modern CSR is to back-up educational
investment decision. programs specifically technical education through giving financial help and
6. Avoid corruption - In almost all countries bribing public officials by lend the services of their specialists. In the year 2001, Manila Electric
businesses is prohibited. Essentially, bribery is offering to do something Company or simply Meralco donated free computers to public schools. Free
for someone for the expressed purpose of receiving something in return. training for public school teachers on basic computer literacy such as
Bribery makes the interest of the country's citizens at stake. Those public Windows, Excel, and the use of the Internet was also given. The volunteers
officials that accept bribes lose their ability to be objective on the came from the regular staff pool of Meralco. Besides the training, the
performance of their respective jobs. teachers were also given transportation, allowance, food and handouts.
In the Philippines, Bribery of public officials is penalized under Articles 210
to 212 of the Revised Penal Code. Republic Act No. 3019 (The Anti-Graft TOWARDS THE ENVIRONMENT
and Corrupt Practices Act) is the main anti- corruption law. It enumerates Another primary focus of CSR is the environment. The aim of
certain acts of public officers that constitute graft or corrupt practices, or Environmental CSR is to lessen the harm effects on the environment from
which may lead thereto. any business' processes. Today some companies also initiated Green CSR
which can decrease business risk, improve reputation and offer opportunities
TOWARDS THE LOCAL COMMUNITY for cost savings. Businesses that believe in this green advocacy knew that
A local community is a group smaller in size and number compared to a even the simplest energy efficiency measures can generate savings and
society in general. It may consist of places where a company operates and make difference to businesses. Energy efficiency measures can be done by
functions as well as where it negotiates about common issues of concern. switching off lights and equipment when not in use, reducing the use of water
These places are proximate relative to the geographic location of the or even just reducing the amount of paper being wasted. Caring about the
business. Companies also voluntarily participate and involve themselves in environment can increase revenue too. Many customers prefer to buy from
responsible companies. Levi's Strauss & Co., an apparel company for
social activities where they try to build relationship with the larger community.
instance knowing that every drop of water counts had saved more than one
This is known as corporate social responsibility which provides an avenue billion liters of water globally since 2011. This company launched their Water
to fulfill their social obligation towards the community. It is through CSR that Less campaign with the intention to encourage and challenge everyone
companies are able to extend themselves beyond just maximizing profits. including its customer for a more sustainable use of water worldwide. In this
Usually, the participation of companies in CSR programs within the local campaign, Levi's was able to use 96% less water than traditional denim
community provides them with the source of fulfillment and satisfaction. finishes. San Miguel Corporation (SMC) had advocated the preservation of
the environment and the responsible use of resources.
There are several reasons why a company would involve itself in the Here are some ways that businesses can help protect and save the
local community. Firstly, most companies particularly the big corporations environment, which are:
knew that they impact a lot impact to the society so they are aware of their 1. Reduce paper waste - In recent years, businesses have moved toward
obligations. Secondly, some companies are interested to fill the scarcity or going paperless. Staff should be encouraged to do office stuffs
the needs of the local community using their products they manufacture or electronically. Companies need to cut back on paper use through setting
services provide. Lastly, certain companies are encouraged to create new up electronic collaboration tools.
products and market via community involvement. 2. Use LED light bulbs - These days offices had switch to LED light bulbs
that cut-down their utility bills because 95% of the energy in LEDs is
Here are some suggested approaches to establish a good relationship converted into light and only 5% is wasted as heat. At the same time LED
with communities that can also help businesses in return: protect the environment since less energy use reduces the demand from
1. In the field of industry - Some companies provide livelihood programs to power plants and decreases greenhouse gas emissions.
help people in the rural areas or the least privileged citizens in the urban 3. Allow telecommuting - Millennial prefers flexible work arrangements
communities. These programs could offer employment opportunities for and sometimes even working from homes. Telecommuting is
people living in these types of areas. advantageous for the environment.
2. In the field of agriculture - Any large companies can contribute in This human resource (HR) practice reduces the energy consumption in office
agricultural development as its CSR programs. In their perspective these spaces every day, saving money and cutting the business's carbon footprint.
CSR programs can provide full employment to the large unemployed people Even with just a few employees, telecommuting can ease commuter traffic.
in the labor market. In the case of Jollibee Food Corp. (JFC), the company 4. Improve air quality with indoor plants – Indoor plants do not provide
entered into an agreement with KALASAG as its main supplier. KALASAG, aesthetics but also improve the general air quality. Besides being more
a group of San Jose farmers provides bulk purchase of onion seeds, eye-pleasing, indoor plants can help clean the air and remove
fertilizers and other farm requirements to Jollibee. This supply agreement contaminants.
made available on-time and better crop yields on a fair and just price to 5. Power off computers and conserve energy by unplugging
Jollibee and higher than the farmers' traditional markets to KALASAG. computers - Businesses need to make it compulsory for all employees to
3. Housing facilities - There is a big need for this social responsibility of power down their. It is a great opportunity to save money computers,
businesses. It is a reality that majority of the Filipinos live in ill-planned and printers and copiers before they leave their respective offices.
filthy houses especially those in the squatters area. This CSR approach 6. Set-up recycling bins in common areas – Businesses should place
extends financial aid by means of material and manpower support by recycling bins in common work and meeting areas of their offices. In this
businesses to slum urban areas and disaster-prone places. Some way, companies would be able to send the message especially to
companies such as Banco de Oro (BDO) through its foundation have employees and visitors that they take environmental responsibility
disaster response rehabilitation and rebuilding programs. Using seriously.
volunteerism, its employees besides providing food packs, hygiene kits and 7. Reduce travel – Travel has a negative impact on the environment.
school supplies also builds classrooms for public schools and housing units Although it is an important part of doing business can be substituted by
for affected families after disasters. tech tools like video conferencing. Instead of travelling to a conference to
4. Transportation - It is usually the national government which has the get in touch with customers, schedule a webinar and let them join online.
responsibility to create programs for cheap public transport, for proper and These tech tools will not only save money of a company but also reduce
full utilization of road capacity, for setting up improved licensing procedures, carbon emissions.
and laying out changes in urban and rural structures among others. 8. Give filtered water - Basically, water is the beverage of choice by
However, businesses could also help the government in programs such as everyone in the offices. Instead of plastic water bottles, employees should
those mentioned. One example is the Layag-Layag Project of Canon be encouraged to bring their own reusable cups. Businesses may add
known as Canon Advocacy for Reinforcing Education (CARE). Canon filtration to their water system to make water available clean water to
has initiated an effort on strengthening and supporting education firstly in in employees throughout the day.
partnership with Canon's regional office in Davao. Coming from several fund
raising efforts headed by Canon, the company was able to give four medium- CHAPTER 6
sized boats to Davao. These boats from then on until the present were used ETHICAL ISSUES AND PROBLEMS IN THE BUSINESS WORLD
as the main mode of transportation for children to go to their school. “ETHICS OR SIMPLE HONESTY IS THE BUILDING BLOCKS UPON
WHICH OUR WHOLE SOCIETY IS BASED, AND BUSINESS IS A PART OF
OUR SOCIETY, AND IT'S INTEGRAL TO THE PRACTICE OF BEING ABLE undue advantage in favor of or discriminating against any other interested
TO CONDUCT BUSINESS, THAT YOU HAVE A SET OF HONEST party.
STANDARDS” -- Kerry Stokes 7. Entering, on behalf of the government, into any contract of transaction
manifestly and grossly disadvantageous to the same, whether or not the
EMPLOYEE FAVORITISM – favorite means preferring a person not because public officer profited or will profit thereby.
he is doing the best job but rather because of some irrelevant feature- 9.Becoming interested, for personal gain, or having a material interest in
membership in a preferred group, personal likes and dislikes, and other any transaction or act requiring the approval of a board, panel or group of
unessential factors. Playing favorites may result to businesses losing their which he is a member, even if he votes against the same or does not
valued employees. participate in the action of the board, committee, panel or group.
10. Knowingly approving or granting any license, permit, privilege or
Here are some types of favoritism in the workplace: benefit in favor of any person not qualified.
11. Divulging to unauthorized persons valuable information of a
1. Nepotism - It is the practice of hiring family members irrespective of their confidential character acquired by his office or by him on account of his
qualifications. Although in some instances, a relative of a company executive official position, or releasing such information in advance of its authorized
may be qualified to perform the job for which he is hired. When businesses release date.
hire unqualified family members, nepotism becomes counter-productive. This
lack of qualifications and ability would lead to ineffectiveness and REPUBLIC ACT 6713 (THE CODE OF CONDUCT AND ETHICAL
inefficiency. STANDARDS FOR PUBLIC OFFICIALS AND EMPLOYEES) - Prohibits
2. Cronyism - It is the act of hiring friends without regard to qualifications. public officials and employees from soliciting or accepting, directly or
Employees, who got their entitlement for a job using cronyism, feel that they indirectly, any gift, gratuity, favor, entertainment, loan or anything of monetary
deserve raises and promotions more than those who are qualified. Cronyism value from any person:
usually generates conflict in the workplace and can result in losing 1. In the course of their official duties; or
competent and eligible personnel. 2. In connection with any operation being regulated by, or any transaction
3. Patronage - This is the practice of hiring the friends and family members which may be affected by, the functions of their office
of those executives who became on board because of either nepotism or
cronyism. This type of favoritism is contagious as the executive brings more REPUBLIC ACT 7080 (PLUNDER) - Penalizes a public officer who acquires
of her favorite employees into positions of authority. ill-gotten wealth in the total of at least PHP 50 million through overt or
criminal acts
GIFT GIVING AND BRIBERY -- A gift is something of value that is given as
gesture goodwill. On the other hand, a bribe is also a valuable thing but PRESIDENTIAL DECREE NO. 46 (GIVING OF GIFTS ON ANY
given in the hope of influence or benefit. There is a thin line that separates a OCCASION) -Punishes the act of giving, or offering to give, to a public
gift from a bribe. Timing is critical in this difference. The giving and accepting official or employee, a gift, present or other valuable thing on any occasion,
of gifts are vital in facilitating business relationships. However, gifts may including Christmas, when such gift, present or other valuable thing is given
leave an organization susceptible to allegations of unethical or even illegal by reason of the public official/employee's position, regardless of whether or
conduct. Hence, there must be a company's protocol on giving or accepting not the same is for past favor or the giver hopes or expects to receive a favor
gifts so that every employee is guided. Guidance on giving and accepting of or better treatment in the future from the public official or employee
gifts is usually written in a company's code of ethics in order to encourage concerned, in the discharge of his official functions. Included within the
high standards of honesty and integrity in decision-making and behavior. prohibition is the throwing of parties or entertainment in honor of the public
official or employee, or of his immediate relatives.
There is a three-dimensional framework by which to evaluate whether a
gift crosses the line into bribery.
DISCRIMINATION AND HARASSMENT
1. Content - The item given expresses the nature of gifting. The price of the Discrimination -- The differential treatment of an individual or group of
gift determines the nature of the gift. people based on their race, color, national origin, religion, sex (including
2. Context - Sometimes the size, type, and value of the gift are irrelevant. It pregnancy and gender identity), age, marital and parental status, disability,
is crucial to know first the motives behind the gift giving. If the recipient sexual orientation, or genetic information.
crosses the line of ethical behavior, then it should be stopped. Harassment -- Unwelcome conduct that is based on race, color, religion,
3. Culture - Corporate gifting etiquette differs from country to country. sex, national origin, age, disability or genetic information. Harassment
becomes unlawful where enduring the offensive conduct becomes a
BRIBERY IN THE PHILIPPINES condition of continued employment or the conduct is sufficiently severe or
ARTICLES 210 TO 212 OF THE REVISED PENAL CODE PENALIZING pervasive to create a work environment that a reasonable person would
BRIBERY OF PUBLIC OFFICIALS. Under the Revised Penal Code, there consider intimidating, hostile, or abusive.
are three kinds of bribery that needs to be penalized to wit: “Sexual” harassment -- is a particular type of harassment that includes
1. Direct bribery - It is committed by a public officer who accepts an offer or unwelcome conduct such as sexual advances, requests for sexual favors or
promise or receives a gift or present, by himself or through another, with a dates, remarks about an individual’s appearance, discussions, remarks or
view to committing a crime, or in consideration of the execution of an act that jokes of a sexual nature, and/or other verbal or physical harassment of a
does not constitute a crime but is unjust, or to refrain from doing something sexual nature. The harasser can be the victim's supervisor, a supervisor in
that it is his official duty to do. another area, a co-worker, or someone who is not an employee of the
2. Indirect bribery - This is committed by a public officer who accepts a gift employer, such as a client or customer.
offered to him by reason of his office. HEALTH AND SAFETY -- refers to the measures and practices that are put
3. Qualified bribery - Such is committed by a public officer entrusted with in place to protect the health and well-being of individuals in the workplace,
law enforcement, who refrains from arresting or prosecuting an offender who as well as the general public. This can include things such as proper health
has committed a crime punishable by reclusion Perpetua (imprisonment of and safety training and use of equipment, adherence to safety regulations,
20 years to 40 years) and/ or death, in consideration of any offer, promise, and emergency procedures.
gift or present.
Corruption of public officials is the crime committed by the private person Health and safety encompass a wide range of practices and policies that are
who shall have made the offers or promises or given the gifts or presents to designed to prevent accidents and injuries, and protect the physical and
the public officers, as described in the abovementioned crimes of bribery. mental health of workers, customers, and the general public. These can
There are other laws that penalize corrupt acts/practices and prohibit the include things such as: Fail Protection, Hazard Communication, Scaffolding,
giving of gifts to public officers under certain circumstances. Respiratory Protection, Lockout/Tagout, Powdered Industrial Trucks,
Ladders, Electrical Wirings Methods, Machine Guarding, Electrical General
REPUBLIC ACT NO. 3019 (THE ANTI-GRAFT AND CORRUPT Requirements.
PRACTICES ACT.) -Is the main anti-corruption law. It enumerates certain INCORRECT ACCOUNTING -- refers to any errors or inaccuracies in
acts of public officers that constitute graft or corrupt practices, or which may financial reporting or record-keeping that do not comply with generally
lead thereto, as follows: accepted accounting principles or other accounting standards. These errors
1. Persuading, inducing or influencing another public officer to perform an can result in misstatements in financial statements, leading to incorrect
act constituting a violation of rules, or a connection with official duties. financial decisions, inaccurate valuations of assets and liabilities, and
offense in. potential legal and regulatory consequences. Examples of incorrect
2. Requesting or receiving any gift, present, share, percentage or accounting may include recording transactions in the wrong account, using
benefit, for himself or for any other person, in connection with any incorrect accounting methods, not properly adjusting for depreciation or
contract or transaction between the government and any other party, wherein amortization, failing to recognize revenue or expenses, and failing to properly
the public officer in his official capacity has to intervene under the law. disclose contingent liabilities.
3. Requesting or receiving any gift, present or other pecuniary or Additionally, incorrect accounting can occur due to intentional fraud, such as
material benefit, from any person for whom the public officer has secured misrepresenting financial results to deceive investors or creditors. It is
or obtained, or will secure or obtain, any government permit or license. essential for businesses to maintain accurate and reliable accounting
4. Accepting or having any member of his family accept employment in a records to ensure that financial statements reflect a true and fair view of their
private enterprise that has pending official business with him, during the financial position and performance.
pendency thereof or within one year after its termination. The importance of maintaining accurate accounting records is emphasized in
5. Causing any undue injury to any party, including the government, or this text. Unethical accounting practices, such as inaccurate financial
giving any private party any unwarranted benefits, advantage or preference reporting, are considered a grave offense, especially for publicly listed
in the discharge of his functions through manifest partiality, evident bad faith companies. Even small, privately owned companies should maintain
or gross inexcusable negligence. accurate records for taxation, profit sharing, and investment purposes.
6. Neglecting or refusing to act within a reasonable time on any matter
pending before him for the purpose of obtaining some pecuniary or material SOCIAL MEDIA -- has now become an influence on how an employee
benefit or advantage, or for the purpose of favoring his own interest or giving conducts himself offline and online. There has always been a never-ending
debate about this issue. Posting the employee’s complaint on Facebook is
often mistaken as disloyalty to the employer. It is not an uncommon 5. Failing to investigate a subordinate or coworker’s wrongdoing because
consequence for an employee to be punished or worst be fired out of work they are a friend.
because of the post. 6. Sharing confidential information about your employer with a competitor.
WHISTLEBLOWING -- A whistleblower is a person who exposes any kind JUST COMPENSATION
of information or activity that is considered illegal, unethical, or not correct Compensation decisions about similar type of occupation are mostly based
within a private or public organization. The suspected of wrongdoing can be on the ability to execute the task assigned, demonstrated and consistent
in the form of violation of company policy, and rules, law, regulation, or threat effort, general quality of work completed, and special skills, ability, or training
to public interest or national security, along with scam, and dishonesty. that let the person to do tasks that co-employees do not or cannot.
In the workplace, whistleblowing may result to dismissal from work or by Compensation decisions concerning distribution of funds between different
discrimination in pay, promotion, and workplace opportunities which may types of workers are usually based on principles of productivity, scarcity,
affect an employee's job and professional growth. Employee ought to be comparative effort, and market forces.
encouraged and should not be punished by their employer in case of raising
awareness of workplace violations. Employees who turned whistleblowers THREE POWER PRINCIPLES IN THE ETHICS OF JUST
should be respected and be protected when they state their opinions to COMPENSATION:
either regulatory authorities or on social media.
• Firstly, every working individual holds an inherent dignity and earns
NONDISCLOSURE AND CORPORATE ESPIONAGE respect. All workers are considered valued members of the company
Nondisclosure or confidentiality agreement is designed to keep someone weather high or low their skills or compensation. The ability of workers to
from talking about or stealing proprietary information, trade secrets, bargain collectively if they choose to do so must be protected and respected.
inventions, or other information that has competitive advantage to the owner. • Secondly, each working person has the right to be able to support
A nondisclosure agreement (NDA) is a written legal contract and is usually themselves and their families by the fruits of their labor. People who work
between an employer and employee. The contract lays out binding terms full-time must earn adequately to fund themselves and their families or at
and conditions that prohibit the employee from disclosing confidential and least should earn a living wage. Paying worker, a living wage is part of being
proprietary company information a good and responsible employer.
TYPES OF NONDISCLOSURE AGREEMENT • Thirdly, the economic considerations and the health of the employer are
The Mutual Agreement -- Consider situations where two businesses are also significant. Certainly, opportunity for jobs paying living wages is
discussing the possibility of partnering together. As part of strategic inadequate without an economically healthy employer. The obligation to pay
discussions, each company may disclose information about its operations to a living wage must be adjusted accordingly, when an employer is in risky
better inform the other side of their capabilities. In such arrangements, both financial situation. It is the obligation of every employer to pay the living
parties often agree to not disclose information as each side often receives wages to workers prior to any spending on less important things.
sensitive information. In order to be fair, the procedure of deciding just compensation must be
The Non-Mutual Agreement -- This type of agreement usually applies to transparent, inclusive, responsible, and participatory. In reality, this
new employees if they have access to sensitive information about the procedure is too difficult do, because of so many conflicting needs. At least,
company. In such cases, the employee is the only party signing the for fair results, deciding on the issue of just compensations must be done in
agreement that is prevented from sharing confidential information. Also rational, explainable, and non-discriminatory way. However, rapidly changing
called a unilateral NDA, only one party is bound to confidentiality as they situations can challenge the suitability of previous decisions, though fair
are the only party receiving sensitive information. results are already achieved.
The real aim of determining just compensation is to reduce the effects of
CORPORATE ESPIONAGE -- The key aspects of corporate espionage wage discrimination based on gender, age, race and disability. In this modern
involve the trade secrets at the heart of the espionage, as well as the time, these bases for wage discrimination are considered illegal and
ultimate purpose of the theft being to obtain a competitive advantage of unethical but still the effects of discrimination continue.
some sort. Differences in education, experience, and time in the workforce form a part of
A trade secret is an "information, including a formula, pattern, compilation, the valid criteria for determining compensation. However, concerns for pay
program, device, method, technique, or process that (i) derives independent equity necessitate the company to constantly question and accommodate
economic value, actual or potential, from not being generally known to, and the institutional respect for the value of work executed by lower-paid workers.
not being readily ascertainable by proper means by, other persons who can Economic inequality within a company often reveals an uneven participation
obtain economic value from its disclosure or use; and (ii) is the subject of in the decision- making process. Further, income inequality in companies
efforts that are reasonable under the circumstances to maintain its secrecy." usually becomes a sensitive basis of concerns during times of economic
For as long as there has been commerce, there has been espionage. The trouble and transition.
methods for spying on competitors have changed over time, but the desire to
uncover a rival's secrets has not. Here are some notable cases of corporate Highest vs Lowest Paid Workers
espionage, to wit:
1. Hot Commodity – Père d'Entrecolles was a French Jesuit missionary in - Ethics dictates that all persons are entitled to be treated with
the early 1700s. By some descriptions, he was also an industrial spy. While human dignity and respect.
in China, which was the leading maker of high-quality porcelain, he learned
the secret techniques for manufacturing the ceramic by gaining access to the - After sufficing all the basic needs of all workers, justice,
kilns, studying Chinese books, and getting "many particulars from my recognizes that more educated and skilled workers have principal privilege to
neophytes, several of whom work in porcelain." D'Entrecolles then spelled higher compensation out of the excess that remains. People who invest
out that information in letters sent to France. "Nothing but my curiosity could more in their education and continually hone their skills, those who work
ever have prompted me to such researches," he wrote, "but it appears to me more even to their own disadvantage, those whose service are hard to
that a minute description of all that concerns this kind of work might, obtain and those who work risk even their lives just to serve others are
somehow, be useful in Europe." ethically worthy of higher compensation.
2. Steeped in Tea's Secrets - In the 1800s, Britain had a thirst for tea, a
brew monopolized by China. So, the London-based East India Co. hired WRONGFUL DISMISSAL -- In law, wrongful dismissal, also called
Scottish botanist and adventurer Robert Fortune to smuggle the tea's plants, wrongful termination or wrongful discharge, is a situation in which an
seeds, and secrets out of China and into British-ruled India. Disguised as a employee’s contract or employment has been terminated by the employer,
Chinese merchant, he succeeded, and within his lifetime the production of where the termination breaches one or more terms of the contract of
tea in India surpassed China's. It was the "greatest single act of corporate employment, or a statute provision or rule in employment law. Laws
espionage in history," according to Sarah Rose, author of For All the Tea in governing wrongful dismissal vary according to the terms of the employment
China. contract, as well as under the laws and public policies of the jurisdiction.
3. Driving Competition - In 1993, General Motors accused Volkswagen of
industrial espionage after Jose Ignacio Lopez, the chief of production for Being terminated for any of the items listed below may constitute
GM's Opel division, left to join the rival German automaker, along with seven wrongful termination:
other executives. GM claimed its corporate secrets were used at VW. In the 1. Discrimination – The employer cannot terminate employment because
end, the companies agreed to one of the largest settlements of its kind: GM the employee is a certain race, nationality, religion, sex, age, or (in some
would drop its lawsuits in exchange for VW's pledge to buy $1 billion of GM jurisdiction) sexual orientation.
parts over seven years. In addition, VW was to pay GM $100 million. 2. Retaliation – An employer cannot fire an employee because the
employee filed a claim of discrimination or is participating in an investigation
CONFLICT OF INTEREST -- happen when a person's professional or for discrimination. In the Philippines, this ‘retaliation” is forbidden under civil
Personal obligations come up against a competing professional personal rights law.
obligation. 3. Reporting a violation of law to government authorities – Also known
as a whistleblower law, an employee who falls under whistleblower
Types of activities that can create a possible conflict of interest protection may not be lawfully be fired for reporting an employee’s legal
include: violation or for similar activity that is protected by the law.
1. Nepotism-This is the practice of giving favors to relatives and close 4. Employee’s refusal to commit an illegal act – An employer is not
friends, often by hiring them. permitted to fire an employee because the employee refuse to commit an act
2. Self-Dealing-This is a situation in which someone in a position of that is illegal.
responsibility in an organization has outside conflicting interests and acts in 5. Employer is not following the company’s own termination
their own interest rather than the interest of the organization. procedures – In some cases, an employee handbook or company policy
Example of situation where conflict of interest occurs outlines a procedure that must be followed before an employee is
1. Hiring an unqualified relative to provide services your company needs. terminated. If the employer fires an employee without knowing this
2. Starting a company that provides services similar to your full-time procedure, depending upon the laws of the jurisdiction in which the
employer. termination occurs, the employee may have a claim for wrongful termination.
3. Posting to social media about your company’s weaknesses.
4. Accepting payment from another company for information about your An employee who is dismissed without just cause is entitled to any or
employer. all of the following:
1. Reinstatement without loss of seniority rights – Reinstatement means who need to recruit new member to purchase their products. It is a legitimate
restoration of the employee to the position from which he has been unjustly multi-level marketing strategy if the situation is the former. It could possibly
detached. It also means that the employee, upon reinstatement, should be be an illegal pyramid scheme if the case is the latter.
treated in matter involving seniority and continuity of employment as tough A PYRAMID is strictly a money game that seldom deals in a real business. In
he had not been dismissed from work. a lot of cases there is no product or service involved of any kind. There is
2. In place of reinstatement, an employee may be provided separation pay of only money that exchanges hands. Besides While some pyramids may have
one month pay every year of service. a product it is them solely to cover up for the money game. No work is said to
3. Full back-wages - It refers to all compensations, including allowances be required to get the profits and benefits. It sounds like easy money. Hence,
and other benefits with monetary equivalent that should have been received pyramiding is illegal.
by the employee but was not collected by him because of unjust dismissal. It
comprises all the amounts he could have earned beginning from the date of INSIDER TRADING -- Refers to the practice of purchasing or selling a
dismissal up to the time of reinstatement. publicly-traded company's securities while in possession of material
4. Damages if the dismissal was done in bad faith. information that is not yet public information.
MATERIAL INFORMATION -- refers to any and all information that may
CONSTRUCTIVE DISMISSAL -- is an involuntary resignation resorted to result in a substantial Impact on the decision of an investor regarding
when continuous employment becomes impossible, difficult, or unlikely, due whether to buy or sell the security.
to any of the following reasons: NON-PUBLIC INFORMATION means that under different jurisdiction. The
1. Demotion in rank or a diminution in pay; or information is not legally out in the public domain.
2. When an obvious discrimination, insensibility, or disregard by an employer
becomes unbearable to an employee The definition of an "insider" can differ significantly.
MONEY LAUNDERING -- describes the practice by which criminals disguise 1. People within the company with direct access to the information,
the original ownership and control of the earnings of criminal activity through 2. People related to company officials.
making such earnings seem to have derived from a valid source. Drug
traffickers are in grave need of good laundering schemes because they deal
almost wholly in cash, which causes all sorts of logistics problems. Not only REAL-LIFE EXAMPLES OF INSIDER TRADING
cash magnets the attention of law-enforcement officials, but it is also really 1. MARTHA STEWART- Sold her holdings in the company's stock when the
heavy and bulky to carry. shares were trading in the 50 range, and the stock subsequently fell to $ 10
in the following months.
In general, money is laundered whenever a person or business happen Can 2. RELIANCE INDUSTRIES- The Securities and exchange Boards of India
money laundering has been described as a procedure which takes in a banned RIL from the derivative sector for a year and levied a fine on the
numerous number of different ways. Traditionally place in three different market.
stages: 3. YOSHIAKI MURAKAMI- made $25.5 million by using non-public material
1. Placement-This is the stage at which criminally generated funds are information about LIVEDOOR. His fund acted upon this information and
presented in the financial system. At this stage, the launderer introduces the bought two million shares.
dirty money into a valid financial company This is frequently in the form of 4. RAJ RAJARATNAM- made about $60 million as a billionaire hedge fund
cash bank deposits. manager by swapping tips with other traders, hedge fund managers and key
2. Layering - This is the essential stage of the procedure in which the employees of IBM+.
property is "washed" and its ownership and source is camouflaged. This
includes sending money through several financial transactions to alter its MERGES AND ACQUISITION -- When one company takes over another
form and make it tough to follow. Layering may entail several bank-to-bank and clearly establishes itself as the new owner, the purchase is called an
transfers; wire transfers between diverse accounts in diverse names in acquisition. In the pure sense of the term, a merger happens when two
diverse countries; making deposits and withdrawals to constantly differ the firms, often about the same size, agree to go forward as a single new
quantity of money in the accounts; changing the money's currency; and company rather than remain separately owned and operated.
purchasing high-value items (boats, houses, cars, diamonds) to change the
form of the money. ETHICAL DILEMMAS IN ACQUISITIONS
3. Integration - This is the final stage at which the "laundered" property is re- The management teams of both companies face ethical dilemmas prior to
introduced into the legitimate economy. At the integration stage, the money beginning the merger, as negotiations continue and after the transaction is
re-enters the mainstream economy in legitimate-looking form coming from a closed, here are some of those ethical dilemmas:
legal transaction. This may include a final bank transfer into the account of a 1.) DISCLOSURE BY TARGET COMPANY- A company being acquired is
local business in which the launderer is "investing" in exchange for a cut of often called the target company. When negotiations start, management team
the profits, or the sale of a condo bought owned by the launderer. is confronted with the issue of how much to reveal about the company's
Money laundering is a vital step in the victory of drug trafficking and terrorist existing operations and forthcoming prospects.
activities, and there are countless organizations attempting to resolve the 2.) UNFRIENDLY TAKEOVERS - A company might elect to buy a company
problem. that is not actually for sale. The management team of the target company
might regard the purchase offer with the unfriendliness because they will lose
MONEY LAUNDERING TECHNIQUES control of the company.
There are many forms of money laundering though some are more common 3.) CONFIDENTIALITY- Companies in discussions about a merger are also
and profitable than others. Some of the more popular money laundering confronted by the issue of how much to tell employees about the planned
techniques includes: transactions.
1. Bulk cash smuggling - This comprises literally smuggling cash into 4.) TERMINATING EMPLOYEES -One of the advantages of a merger is the
another country for deposit into offshore banks or other type of financial chance to trim down costs by combining certain business functions of both
institutions that honor client secrecy. companies and being able to lessen the total number of staff positions of the
2. Structuring - This also referred to as "smurfing" which is a method in combined companies.
which cash is broken down into smaller amount, which are then used to 5.) RELOCATING EMPLOYEES - Those employees blessed enough to be
acquire money orders or other instruments to evade detection or suspicion. retained after the merger may still be confronted with the task of having to
3. Cash-intensive business - This happens when a business that move to another place if the company plans to combine substantial number
legitimately deals with big amounts of cash uses its accounts to deposit of hardships.
money acquired from both everyday business proceeds and money acquired
through illegal means. Businesses able to get all of these proceeds as
legitimate income which include those that provide services rather than
goods, such as strip clubs, car washes, parking buildings or lots, and other
businesses with low variable costs.
4. Shell companies and trusts are used to disguise the true owner or agent
of a big amount of money.
5. Bank capture - This refers to the use of a bank owned by money
launderers or criminals, who then move moneys through the bank without
fear of investigation.
6. Real estate laundering - This happens when someone procures real
estate with money obtained illegally, and then sells the property. This makes
it appear as if the profits are legitimate.
7. Casino laundering- This involves an individual going into a casino with
illegally obtained money. The individual buys chips with the cash, plays for a
while, then cashes out the chips, and claims the money as gambling
winnings.
MULTI-LEVEL MAKETING AND PYRAMIDING
Multi-level marketing is a strategy of some direct sales companies which
make use of current distributors to recruit new distributors through paying the
current distributors a certain percentage of their recruit sales. The recruits
are called the distributors "downline".
In a multi-level setup, companies and collectively from a network of
independent sales people who sell their product directly to people in their
community. These said sales people get their income from their own
personal sales and the sales of the people they recruit to work for the
company.
The legitimacy issue determined but in a multi-level marketing company
through whether it sells its product mainly to costumers or to its members