Business Ethics and Social Responsibility

1
The Role of Business in Social and Economic Development: Core Principles
Underlying Fairness, Accountability, Transparency in Business Operation and
Stewardship

Module 002 - The Role of Business in Social and

Economic Development:
Core Principles Underlying Fairness,
Accountability, Transparency in Business
Operations and Stewardship

In the modern business world we frequently hear core values, mission and
vision statements, guiding principles among other terms. But what does it
mean to have a company core principles? Why is it important in a business?
Whether you work for a small business or a big major corporation, following
ethical principles matters.
Although businesses have to meet profitable opportunity and expectations,
they also have ethical responsibilities to look up to. Every person within the
business, from the bottom employee to the top of the organizational chart,
must be cautious to meet these responsibilities.
At the end of this module, you will be able to:
1. Identify the core principles essential in a business;
2. Determine the importance of each principles in dealing with issues in an
organization;
3. Relate the core principles in solving simple issues in a business.

Core Principles Underlying Fairness, Accountability, Transparency in Business

Operations and Stewardship

A business guided by ethical principles; behaving in an ethical manner can create a positive
atmosphere and may build a promising business results. A business environment that
promotes and upholds valued principles is usually more productive.

Any business that values the core principles; fairness, accountability, responsibility and
transparency in business operation and stewardship, usually performs exceedingly and
has the capacity to attract more investors, whose support can help to finance further
growth.

Course Module
Fairness

[fair-nis]
noun
the state, condition, or quality of being fair, or free
from bias or injustice; even handedness:

http://www.dictionary.com/browse/fairness

Fairness refers to equal treatment, for businesses and companies for instance,
there should be fairness in shareholders, more so in the treatment of all
stakeholders including employees, communities and public officials. The fairer the
entity appears to stakeholders, the more likely it is that it can survive the pressure
of interested parties.
How would it feel to experience the sting of injustice? To be blamed for something
you did not do or felt the horror of discrimination because someone simply did not
like you? Would anyone be justifiably deserve an unfairness regardless of the
circumstance?
In most businesses where there is a workplace, despite rules and policies and
guiding principles, an employed personnel regardless of its position, may tend to
experience injustices. Normally when money, competition, position, and pride are
at stake, both petty and serious unfairness's are inevitable. for instance, taking
claim for another’s work, shifting blames, unequal distribution of work load,
promotions of the less competent employee for biased reasons, and even double
standards. Any businesses has strict rules, but most often, when there is unfairness,
grievance follows.
As it happens, what is or is not fair is much more complicated and unclear than it
seems from the vantage point of the person who feels being short-changed. Even
though the underlying concepts of fairness and justice are simple, almost intuitive
and discerning, applying it in real life and in workplaces has been proven to be
somewhat difficult.
But sometimes, distinguishing real injustice from self-serving justifications is
complicated. Observing workplace issues for instance, an employee who has been
denied of something, like a job, a promotion, a contract, a serious file of protest
follows.
Fairness is concerned with actions, processes, and consequences, that are ethically
correct, principled, and unbiased. In essence, the virtue of fairness establishes
moral standards for decisions that affect may others. Fair decisions are made in an
appropriate manner based on suitable criteria.
We tend to think and speak in terms of fairness when we are dealing with the
behavior of individuals and everyday interpersonal relationships. We talk about
justice and equity in the context of broader social issues and institutional
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The Role of Business in Social and Economic Development: Core Principles
Underlying Fairness, Accountability, Transparency in Business Operation and
Stewardship

obligations to individuals. All these apply to any situation where we want to judge
whether an action contributes to a good, rational, caring society.
The moral obligations arising from the core ethical value of fairness are almost
always associated with the exercise of power to render judgments that grant
benefits or impose burdens. Almost everyone has the power to give or withhold
benefits such as showing approval, giving praise, honor, and support, or to impose
burdens such as disapproval on reports and proposals, giving negative criticism,
blame, and worse is condemnation that makes significant affect in our lives.
The moral duty to be fair places constraints on our judgments and actions. There
are two aspects of fairness: a) fair results which is substantive fairness and b) fair
procedures which is procedural fairness.

a) Substantive Fairness
Different contexts and political ideologies yield different and often incompatible
criteria for substantive fairness. A fair result is one in which people receive what
they are due and what they deserve. Unfortunately, there are no agreed to criteria
to determine what a person really ought to have.
Some argue that true fairness is equality (each person receives an equal share of
benefits and burdens). Others believe the better criterion is merit (those who are
most competent and who produce the most deserve the most). Still others believe
that benefits should be allocated based on need and burdens on the ability to carry
them. Other theories of “distributive justice” include resource allocation based on
effort, social contribution, seniority, and legal rights.
The wide variety of approaches to fairness means that for every decision there will
be people who claim it is unfair. And they’re right —according to their personal
criteria. Thus, in making difficult decisions that affect several stakeholders who
have conflicting interests, it is impossible to come to a single, indisputably fair
result. Nor is it possible to satisfy everyone. Generally, those who consider
themselves winners in the decision will consider the result just, and those who see
themselves as losers consider it unjust. This observation suggests three important
rules about the fairness of decisions;
First, since disagreement, differences and criticism are unavoidable we must satisfy
ourselves with doing our very best to reach a fair judgment based on our
conscience and ethically justifiable standards of fairness.
Secondly, we should be clear in our own minds about the criteria of fairness we are
using and let others know, ahead of time if possible, what those standards are. For
example, in hiring applicants, we evaluate based on qualifications and make
comparisons. It is helpful to everyone if we know and disclose what we think is
relevant and irrelevant to the decision and, if we can, how we rank other factors.
The third rule in making decisions is that the procedures we use in decision making
must be and should appear to be fair. In many cases, a judgment is defended
Course Module
primarily in terms of the process used to reach it. In effect, one can argue that a fair
process always yields an ethically justifiable result.

Procedural Fairness
Fairness requires that the procedure of making decisions may reveals a conscious
concern with reaching a fair, just, and equitable result. Decisions should be made,
and should appear to be made, cautiously, truthfully, and objectively, with the
knowledge that even a process of the greatest integrity does not always produce
certainty.

Two major types of decisions in terms of fairness:

a) Comparative selections
- for instance, whom to hire or fire; who should be cut from the team and;
b) Factual determinations
- This type of decision is often accusatory in nature; for instance, did a person lie,
cheat, or steal.

How to deal with workplace issues:

1. Fair Notice
Determine whether the person accused had fair notice that the conduct was wrong.
Simply cases such as lying, cheating, and stealing, may not be much of a problem
but more technical violations, such as when you are a public servant and receiving
improper gifts or using company assets, requires more investigation. If you
determine that the person knew or should have known about the proper standards
of conduct, further action on your part is fair. If, however, you decide that the
person did not know and reasonably could not be expected to know of a rule,
fairness may dictate nothing stronger than a warning.
2. Impartiality
One should be sure of fair and impartial judge. This means you are willing to
suspend judgment until all the information has been laid in, setting aside
conclusions you may have made and clear your mind of prejudice or prejudging
about the person or issues involved.
3. Gather Facts
Make reasonable efforts to gather facts. Thoroughness without being irrational is
important in making sound judgements. What do you actually know? Are there
uncertainties in the facts that needs to be clarified? If you are making comparisons
do you have sufficient information on each candidate concerning the factors you
think are most important? If you are adjudicating facts, is there any way of
confirming your suspicions or the accuser's claim of innocence without unduly
embarrassing that person.
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The Role of Business in Social and Economic Development: Core Principles
Underlying Fairness, Accountability, Transparency in Business Operation and
Stewardship

4. Fair Hearing
Anyone being accused of sometime should be allowed to tell his/her side of the
story. The “right of confrontation” is a fundamental prerequisite of fairness in
personal and business relationships. Anyone should be given the opportunity to
explain, clarify, and ask questions, and you must listen with a truly open mind.
5. Evaluation
Carefully weigh and evaluate all the information by separating facts from opinions
and opinions from speculation. Don’t be afraid to draw reasonable inferences but
know when you have done so and the premises on which you base your conclusion.

Principles of Fairness
 Treat everyone fairly based on their merits and abilities and handle all
essentially similar situations similarly and with regularity.
 Make all decisions on appropriate criteria, without favoritism or
discrimination.
 Never blame or punish anyone for what they did not do, and appropriately
sanction those who violate moral obligations or laws.
 Promptly and voluntarily correct personal and institutional mistakes and
indecency.
 Not take unfair advantage of anyone's mistakes more so, ignorance.
 Fully consider the rights, interests, and perspectives of all stakeholders,
approach judgments with open-minded impartiality, conscientiously gather
and verify facts, provide critical stakeholders with an opportunity to explain or
clarify, and carefully evaluate the information.

Course Module
Accountability

ac·count·a·bil·i·ty əˌkoun(t)əˈbilədē/

noun
1. - the fact or condition of being accountable;
2. responsibility.

Being accountable simply means being responsible for decisions made, actions
taken, and assignments completed.
In any business organization, accountability is a management's way to control the
process in which responses are given for a person's actions. These responses may
be resulted to a positive or negative effect. Depending on the response, the person
might need to correct his or her error. Accountability refers to
individual responsibility for the work he/she has performed and answering to
peers and superiors for their performances. Accountability is often used
synonymously with responsibility, blameworthiness, and liability.
In leadership roles, accountability is the acknowledgment and assumption of
responsibility for actions, products, decisions, and policies including the
administration, governance, and implementation within the scope of the role or
employee position. Accountability also include the duty to report, explain, and
answer for resulting consequences.

Leadership Accountability

In any organization, leaders normally take the blame in any case of failure. To
change this behavior and create an environment where all levels can flourish and
work as a team, view failure as a learning opportunity and make it a core principle
of your culture—not a chance to place the blame.

What does accountability look like?

According to Michael Hyatt, a New York Times best-selling author: "accountability
means that you accept responsibility for the outcomes expected of you—both good
and bad. You don’t blame others. And you don’t blame the external environment.
There are always things you could have done—or still can do—to change the
outcome. Until you take responsibility, you are a victim. And being a victim is the
exact opposite of being a leader. Victims are passive. They are acted upon. Leaders
are active. They take initiative to influence the outcome."

Viewing failure as a learning opportunity, not an option to blame it on others, will

encourage them as part of an organization to take on new responsibilities without
fear or apprehensions. One way to achieve this is to take up the continuous
development process as an accepted model among your leadership team. The
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The Role of Business in Social and Economic Development: Core Principles
Underlying Fairness, Accountability, Transparency in Business Operation and
Stewardship

process is an ongoing and joint team effort that organizations use to ultimately
improve products, services and internal processes for breakthrough performance.
Your team will know what action to take when a process succeeds or fails, all
without placing the blame on anyone else.

Lead by example to motivate employees to achieve goals

It is important for leaders to foster an environment that may lead to empowers
employees through their failures and success; you can help your team members
see outcomes as useful insights, not as mistakes. Use positive experiences as a way
to formulate new processes, and use failure as insight into what went wrong and
how you can avoid it in the future.
In accountable organizations, everyone can work as a team to identify and analyze
such insights to positively influence the culture, process and improve a working
environment for the company.

Accountability in Companies

Accountability also has a connection to expectations. Employees who do not meet

the expectations of their supervisor are held accountable for their actions and
must answer for their inability to do so.
Accountability is crucial to ensuring high performance within an organization.
However, managers must clearly communicate their expectations to the person
who is responsible for the specified action or task. Clear communication of
expectations and well defined goals is a very effective tool to enhancing
performance at every level of organization.
Without defined goals, employees lack a frame of reference for how they
are performing in the workplace. They are unable to rely on guidelines or a
structure that helps them achieve their performance goals. In many organizations,
the management team and board of directors create goals for themselves and the
general manager, while the general manager creates goals for department
managers. This process is replicated throughout the organization, down to the
department managers who create goals for entry-level employees.

Both subordinates and supervisors should have a clear idea of how their projects
should be handled and delivered. A clear expectation level and the understanding
that all employees are accountable for their performance boosts employee morale
and productivity in the workplace. However, because different individuals in large
organizations contribute in various ways to a company's decisions and policies, it
is often difficult to identify who should be accountable for the results.

Course Module
Transparency

transparency

The quality of being done in an open way without secrets:

http://dictionary.cambridge.org/dictionary/english/transparency

PEOPLE TRUST BUSSINESS WHO ARE TRANSPARENT

Transparency yields trust. Who can trust a company or anyone for that matter who
does not disclose information and who does not share anything to employees and
clients or customers?

There are very few ways to build trust. It is something that cannot be built over
night, but can be accomplished when there is transparency. The opposite of
transparency is secrecy and confidentiality, which normally wears away trust
especially to your employees.

A business organizations exist for the sole purpose of encouraging transparency

because a culture that is more transparent can build trust. Trust is the defense
against corruption.

As people become more transparent with one another, their relationships grows
and deepen. And who is responsible for leading that move towards transparency?
It’s the leadership of the business. Transparency has to start at the top
management.

WHAT DOES TRANSPARENCY MEAN

In order for a business to be transparent, its people need to be transparent. A

culture of transparency takes shape when leaders intentionally manifest their own
personal transparency, and encourage it in the attitudes and behaviors of their
team members. Transparency always starts with people. When an organization’s
people are transparent, then the organization is ready to follow.

For instance, in a selling business, It is important to be transparent about the

price. There’s seldom a need to hide the pricing of a product. Explain upfront what
it costs, what they’ll get, and how they’ll get it. There's no need to hide these
information at it promotes doubt to customers.
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The Role of Business in Social and Economic Development: Core Principles
Underlying Fairness, Accountability, Transparency in Business Operation and
Stewardship

For instance, transparency about unsatisfied customers. If people are not happy
with the services or even the business products, it will not do any good to hide it.
These should be dealt with it openly and honestly.

It is very important to be transparent about change. Be upfront about how you’re

changing your business model, the prices of products or services and even about
leadership The fact that you’re declaring the changes openly is just as significant as
the change itself.

Transparency is one of those subtle things that can make a dramatic impact on a
business. This will help everyone do business better; the owner, customers and
clients, and employees as team members.

A principle of good governance in any business is that stakeholders should be

informed about the company’s activities, what it plans to do in the future and any
risks involved in its business strategies.

Transparency means openness, a willingness to provide clear information to

shareholders and stakeholders as well. For example, transparency refers to the
openness and willingness to disclose financial performance figures which are
truthful and accurate. Unless a business is hiding something illegal and law
breaking.

Disclosure of material matters concerning the organization's performance and

activities should be timely and accurate to ensure that all investors have access to
clear, factual information which accurately reflects the financial, social and
environmental position of the organization. Organizations should clarify and make
publicly known the roles and responsibilities of the board and management to
provide shareholders with a level of accountability.

Transparency ensures that stakeholders can have confidence in the decision-

making and management processes of a company.

Course Module
Stewardship

Definition of STEWARDSHIP
1. 1: the office, duties, and obligations of a steward
2. 2: the conducting, supervising, or managing of something; especially: the
careful and responsible management of something entrusted to one's
care stewardship of natural resource
3.
4. https://www.merriam-webster.com/dictionary/stewardship

What Is Stewardship in Business?

Stewardship refers to the responsibility that companies have to understand and

manage their impacts on the environment in any number of ways. Practicing
stewardship can help a business find sustainable practices, improve its status and
reputation among clients and consumers and even save funds.
Stewardship in Practice
Not all businesses engage in active stewardship. Some perform activities that have
a minimal impact on the environment, while others focus on different areas of
corporate responsibility. When a business does engage in stewardship it must
generally state its commitment to bear responsibility for the effects its operations
have on the environment. Many businesses work with environmental agencies to
improve their practices.

Elements
Stewardship can include one or more of a long list of specific practices and
elements. For businesses engaged in manufacturing this includes sourcing raw
materials that are renewable and using chemicals and processes that are safe for
the environment. For all types of businesses, using email and mobile devices to
reduce paper consumption as it is called, paperless, is a form of stewardship.

Costs
Engaging in active environmental stewardship comes at a higher price. For
instance, employing renewable energy alternatives, such as hybrid vehicles or a
solar-powered factory, are on the cutting edge of stewardship but also require
large initial investments which is the reasons for some company to act differently
as a steward. Tax credits can help offset these costs, as can the savings that come
from a reduced reliance on environmentally harmful energy sources with rising
prices, such as petroleum. Managing stewardship as part of a budget is a big
challenge for every businesses that seeks help improve its environmental status.

Outcome
Stewardship in business has a several possible benefits. Collectively it reduces
energy usage, protects natural resources and improves public health. For individual
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The Role of Business in Social and Economic Development: Core Principles
Underlying Fairness, Accountability, Transparency in Business Operation and
Stewardship

businesses that commit themselves to stewardship, the decision may have a

positive impact for the business. Some companies earn certifications from
environmental agencies that serve a marketing function, making their actions
known to consumers and customers. This gives them a good imagery and is
favorable in their marketing campaigns. Let us take for instance, computer
manufacturer Apple, holds a Gold rating from the Electronic Product
Environmental Assessment Tool in 2011. For environmentally conscious clients,
such certifications play a role in their buying decisions.

Figure 1.

Source: https://danielsethics.mgt.unm.edu/pdf/principles.pdf

Course Module
Glossary
Principles a fundamental truth or proposition that serves as the foundation for a system
of belief or behavior or for a chain of reasoning.
Stakeholder: a person with an interest or in the business

References and Supplementary Materials

Books and Journals
Linda K. Trevino, Katherine A. Nelson; 2014; Managing Business Ethics: Straight Talk
about How to Do It Right, 6th Edition; ISBN

Jose Mario Maximillano; Business Ethics and Corporate Social Responsibility; Anvil
Publishng Inc., 2014
<Complete name of author/s>; <Title of article>; <Title of publication>; <Volume
number>; <Issue number>; <Year of publication>

Online Supplementary Reading Materials

The core principles of good corporate governance; http://www.pearsetrust.ie/blog/bid/
108866/ The-Core-Principles-Of-Good-Corporate-Governance, Feb 19, 2014
May 19, 2017

Ethical principles for business; https://www.southuniversity.edu/who weare/

newsroom / blog/ethical-principles-for-business-38725; April 8, 2011;
May 19, 2017

Online Instructional Videos

CG Principles: Fairness and Integrity; https://www.youtube.com/watch?v= YxfVDn
YrBg&spfreload=10; 2013;
May 19, 2017

CG Principles: Transparency; https://www.youtube.com/watch?v=eJ3YIg8mHkY; 2013

; May 19, 2017