Ethical Issues in the

Functional Area
Environmental Ethics
Corruption
Gender Ethics
Sexual Harassment and Discrimination

Presented by: Professor:

Mary Monique Llacuna Lagan Mr. Juan F. Pujol Jr.

September 12, 2019

 TABLE OF CONTENTS
TABLE OF CONTENTS .............................................................................................................................. 1

INTRODUCTION ........................................................................................................................................ 2

OVERVIEW ................................................................................................................................................. 3

ETHICAL ISSUES IN THE FUNCTIONAL AREA ................................................................................... 4

ETHICS IN HUMAN RESOURCE ......................................................................................................... 5

ETHICS IN MARKETING ...................................................................................................................... 0

ETHICS IN PRODUCTION..................................................................................................................... 2

ETHICS IN ACCOUNTING AND FINANCE ........................................................................................ 0

ETHICS IN RESEARCH AND DEVELOPMENT ................................................................................. 1

ENVIRONMENTAL ETHICS ..................................................................................................................... 2

REFERENCES ............................................................................................................................................. 8
 INTRODUCTION

Ethics is a branch of philosophy that involves systematizing, defending, and recommending

concepts of right and wrong codes of conduct. It is often equated with moral philosophy or principles that

govern decisions and actions. To act ethically is to behave in ways that are in line with certain values.

It is in the best interest of a company to operate ethically. The main reason for behaving ethically

– in business or in any area of life – is simply that it is the right thing to do. Ethical practices help a company

gain a larger network of customers. Trustworthy companies are better at attracting and keeping customers,

talented employees and capital. Consumers will be more confident when buying goods and services from

an ethical company. Furthermore, an ethical workplace motivates its employees. People are the most

important asset in the company, which referred to as intellectual assets. Thus, it is vital that the workplace

is safe and motivating for the company to function well.

In general, ethical behavior prevents legal problems. Thus, prevents scandals, financial losses and

the like. Those tainted by questionable ethics suffer from dwindling customer bases, employee turnover,

and investor mistrust.

An organization's ethical behavior is an extension of its organizational culture. The four elements

necessary to quantify an organization's ethics are a written code of ethics and standards; ethics training for

executives, managers, and employees; availability for advice on ethical situations (i.e. advice lines or

offices); and systems for confidential reporting.

Ethical practices need to be formulated, disseminated, and followed at the organizational and

functional levels (i.e. sales marketing, human resource management, production, finance, research and

development, etc.) to be effective. A single person in the organization cannot achieve this alone. Every

employee should feel responsible and accountable and try to stand by what is right in any given situation.

In other words, it should be a team effort across all levels of the organization.
 OVERVIEW
Ethical issues affect everyone. The difficulty for most of us is that while there may be an official

company code, ethical issues are dilemmas, the answers to which, in a business context, may depend on

conditions and circumstances as well as moral positions. Furthermore, what may be unethical to one person

may be considered normal practice to another. For example, if your firm has a sales contest, do you try to

get the customer to order more than they require or reschedule orders to improve your chances of winning?

Do you go further and suggest an imminent price increase to achieve your objective? The answer, for some,

will be that any such action is unethical but others may see this as part of the ‘game’ and within their normal

remit as salespeople and ‘winners’. Individual and business ethics are a complex area and, in this chapter,

the focus is on ethical issues affecting sales operations. This concerns the moral problems and rights and

wrongs of sales practices. In this chapter the aim is:

to define ethics and the scope of ethical issues

to consider how ethics might affect sales operations

to evaluate ethical relationships between salespeople and the company, co-workers, customers and

competitors

to suggest managerial guidelines for ethical behaviour in sales.

 ETHICAL ISSUES IN THE FUNCTIONAL AREA

Functional Area is defined as the grouping of activities or processes based on their need in

accomplishing one or more tasks. It’s also an alternative term for business unit or department.

Part of an organization’s growth is the deployment of separate departments which functions with

specific focus and definitive path. They are structured according to certain business requirements and these

departments will vary depending on the type of business being practiced.

Organizations face various ethical issues in its main functional areas: marketing, human resource,

information technology, production, finance, and research and development. All ethical issues encountered

in these functional areas must be coordinated to and controlled by those who are in the top management

such as the chief executive officer (CEO) of an organization.

Top Management
Chief Executive Officer (CEO)

Human Information Research and

Marketing Production Finance
Resource Technology Development

From factory working conditions at the turn of the 20th century, to today’s emphasis on diversity

training, the history of workplace ethics is the ongoing story of the relationship between employees and

employers. Here are some of the ethical issues that businesses face and real-world cases of how these ethical

issues have affected companies in the different functional areas.

ETHICS IN HUMAN RESOURCE

Human resource or intellectual assets are the most important asset of a company. The heart of an

organization lies on its people.

The Human Resource Department is responsible for recruiting the right people with the required

skills, qualifications and experience; is responsible for determining the salaries of different positions in the

company and is also involved in training company’s employees for their development.

Human Resource Management or HRM is concerned with the management of the ‘people’ of an

organization. It refers to the procedures, philosophy, policies, and practices related to the management of

people within an organization.

The organization of the human resource management consist fields in recruitment, training and

development, and administration. The following are examples of unethical practices in the different fields

of human resource management:

 Recruitment

 Recruitment by affiliation or in the influence of gifts and bribery

 Recruitment of underqualified and overqualified persons

 Employing underaged applicants

 Offering and giving less than minimum wages

 Training

 Arranging trainings to those who are favored by the management, without assessing the need to do

so

 Setting development programs during days when workload is very high

 Providing outdated training materials

 Administration

 Tampering leave records in favor of an employee

 Providing promotion to ineligible employees merely on the recommendations of an acquaintance

or a colleague

 Giving the contract for supplying employee uniforms and stuffs for personal gain

ETHICS IN MARKETING

Marketing Department promotes a business and drives sales of its products or services. It provides

the necessary research to identify the target customers and other audiences. Depending on the company's

hierarchical organization, a marketing director, manager or vice president of marketing might be at the

helm. Marketing includes advertising, selling, and delivering products to consumers or other businesses.

Marketing ethics refer to the principles, values, and ideals marketers and marketing institutions

follow. These are standards that define acceptable marketing conduct as determined by various

stakeholders. Companies need to develop corporate marketing policies that will serve as a broad guideline

that everyone in the organization must follow. Good ethics is the cornerstone of sustainable marketing.

Marketing issues related to ethics include marketing redundant or dangerous products and services;

a lack of transparency regarding environmental risks, product ingredients (genetically modified organisms),

possible health risks, or financial risks; disrespect for consumer privacy and autonomy; advertising

truthfulness; and, fairness in pricing and distribution. Some argue that marketing can influence individuals'

perceptions and interactions with other people, implying an ethical responsibility to avoid distorting those

perceptions and interactions.

 The marketing department consists of various subdivisions such as sales, advertising and

promotion, after-sales service and marketing research. The following are unethical issues in these

subdivisions:

 Sales – the activity or business of selling products and services. The following are some of the unethical

practices in the selling division:

 Not supplying the correct item – organizations may deliver a product not made by the company as

per the order

 Denying responsibility for a defective item or product

 Hiding costs (e.g. transportation cost) while making the contract with the client

 Changing specifications of the item without prior notice

 Delaying delivery without proper and valid reason

 Discriminating customers – treating two customers differently. Salespersons may discriminate the

customers on how they look.

 Price discrimination – charges customers different prices for the same product or service, based on

what the seller thinks they can get the customer to agree to (i.e. tourists charged higher than the

locals on goods and services)

 Advertising and Promotion – provide the means for communicating with the customer. Organizations

follow various techniques that are unethical while advertising for their products and services such as

ambiguity, concealed facts, exaggeration and psychological appeal.

The following are specific examples of the unethical advertising and promotion practices of

organizations in different advertising techniques:

 Deceptive or ambiguous advertising - false advertising; refers to a manufacturer's use of confusing,

misleading, or blatantly untrue statements when promoting a product. Deceptive advertising is

officially defined by the Federal Trade Commission (FTC) as "a representation, omission or
 practice that is likely to mislead the consumer" and "practices that have been found misleading or

deceptive.

 Greenwashing – the practice of making an unsubstantiated or misleading claim about the

environmental benefits of a product, service, technology or company practice. Greenwashing

can make a company appear to be more environmentally friendly than it really is.

 Concealed facts – organizations conceal information related to a product that may result in less

selling of that product thereby resulting in losses. This type of advertising allows exploitation of

people in a way that it may cause serious health issues to them, thus makes it unethical.

 Hidden Fees – a lot of advertising is not fully disclosing the true cost of an item.

 Bait and Switch – is a form of fraud used in retail sales but also employed in other contexts.

First, customers are "baited" by merchants' advertising products or services at a low price, but

when customers visit the store, they discover that the advertised goods are not available, or the

customers are pressured by sales people to consider similar, but higher priced items

("switching").

 Exaggeration – organizations mislead customers by providing amplified information which is not

supported by evidence. They use superlative words as to accentuate the information (e.g. best loved

by housewives, cleans up to ten times more, etc.)

 Psychological or Emotional Appeal – it is the appeal made considering the emotions of customers.

 Fear Appeal – persuades people to feel that they are assuming a risk if they do or do not

purchase a certain product. The idea is that if consumers don't use the product you are

advertising, you make them feel like there may be undesirable consequences as a result.

 After-sales Service – this includes what a salesperson does at the point of sale, including customer

service and selling techniques. It also includes following up after the customer has left, such as

providing follow-up contact and effectively dealing with complaints.

 The following are unethical practices done by organizations in providing after-sales service:

 Overcharging service fees to customers – use of below standard material for repairs and charging

the customers a relatively higher amount

 Use of outmoded service equipment that might cause more harm on the product

 Disregarding service calls when free service was promised before the sale of the product

 Deliberately make temporary adjustment in the product to have customers return for another service

 Not keeping service records for more effective diagnosis of the problem form future use

 Not providing the after-sales service; refusing to offer service due to personal reasons or denying

responsibility for a defective product

 Marketing research – is done to find out the needs of the market, its trends and competitive activities.

In the field of marketing research, the following are examples of unethical behavior:

 A biased research report is prepared to suit the marketing manager

 Old research is presented as the new one for the purpose of financial gain

 Distortion of findings to fit own views

 Report surveys not held

 The research report is sold to the competitor

ETHICS IN PRODUCTION

Production is the functional area of business that turns inputs (raw materials) into finished products

or outputs through a series of production processes.

Ethics in production is a subset of business ethic that is meant to ensure that the production function

or activities are not damaging to the consumer or the society. Like other ethics there is a certain code of

conduct or standards to be followed, however ensuring that the ethics are complied with is often difficult.
The following are examples of unethical practices production:

 Irresponsible product design

 Dangerous manufactured goods

 Illegal manufacturing of products

 Negligent quality control

 Incompetent production of consumer goods

ETHICS IN ACCOUNTING AND FINANCE

Accounting and Finance can be considered as a company’s lifeblood since it takes care of all money

matters. After all, a company will not be able to operate without cash even though it is possible to start a

business with no money.

The two primary responsibilities of Accounting and Finance have to do with the money that is

going in (Accounts Receivables) and money that’s going out (Accounts Payable). They are also the ones in

charge of Payroll, making sure that all employees are paid accurately and on time.

Reporting and financial statements that can be used for budgeting, forecasting and other decision-

making processes are also being handled by this department.

The following are specific examples of the unethical practices of organizations in the following

fields:

 Finance – performs the planning, organizing, auditing, accounting for and controlling its company's

finances.

 Overestimating and overbudgeting of project costs

 Overpricing current assets to increase working capital

 Purchasing capital equipment not needed and investing unapproved funds

 Liquidating assets for own benefit

 Use of working capital for personal gains

  Accounting – performs billings, collections, preparation of financial statements, preparation of internal

reports, and accounts for payables, payroll and taxes.

 Deliberately delays payments to vendors, dealers, commissions and promotion costs

 Deliberately delays in paying wages, interest to financiers, incentive, bonus to employees

 Deliberately delays in paying statutory taxes and fees

 Maintaining two different sets of books – one with correct data and another with lower declared

data which are presented to auditing bodies and government agencies, especially the Bureau of

Internal Revenue

 Showing wrong figures in financial statements

 Costing – a form of managerial accounting that aims to capture a company's total cost of production

by assessing the variable costs of each step of production as well as fixed costs, such as a lease expense.

 Reducing manufacturing costs by manipulating work hours

 Not accounting for manhours lost in work stoppages

 Audit – creates and implements procedures and controls to ensure that the finances of a company are

managed in accordance with established principles.

 Ignoring major deviations from the budget

 Rejecting the tender with lowest cost due to personal reasons

 Helping in hiding black money 1for lower taxes

 Ignoring inflated travel expenses of employees

 Accepting personal expense of top management as a company expense

 Approving payments to suppliers without checking bills and deliverables

1
Black money is income illegally obtained or not declared for tax purposes.
ETHICS IN RESEARCH AND DEVELOPMENT

Research and development (R&D) refer to the activities a company undertake to innovate and

introduce new products and services. It is often the first stage in the development process. The goal is

typically to take new products and services to market and add to the company's bottom line.

Companies across all sectors and industries undergo R&D activities. Corporations experience

growth through these improvements and the development of new goods and services. Pharmaceuticals,

semiconductor, and software/technology companies tend to spend the most on R&D.

The following are specific examples of the unethical practices in the research and development of

organizations:

 Ignoring environmental hazards of chemicals or materials used in a product

 Ignoring the health hazards the raw materials can cause to people

 Fabricating product ideas from other developers or researchers

 ETHICAL ISSUES

ENVIRONMENTAL ETHICS

Environmental ethics is the discipline in philosophy that studies the moral relationship of human

beings to, and also the value and moral status of, the
The underlying principle of environmental
environment and its non-human contents.
ethics is that nature has intrinsic value. This

means that nature and its parts are not merely For centuries, it was easy to believe that nature

means for accomplishing one’s purposes but existed for human beings to exploit. The more trees we

are ends in and for themselves. could cut down and convert into magnificent buildings, the

better our quality of life. The more coal we could mine for

- Laszlo Zsolnai, University of Budapest fuel, the more energy we had available to power factories

and produce more life-enhancing goods. And best of all,

no matter how much we used, there was always plenty more available.

But in recent decades, it’s become clear that this is no longer true. As our economies have grown,

our impact on the environment has grown to the point where we are depleting the available resources,

causing the extinction of thousands of animal species, and altering the climate of our planet.

Environmental ethics aims to question the basic assumption that nature is there for everyone’s

benefit.

Businesses have traditionally shown egregious indifference towards the environment.

Environmental protection was rarely seen as an issue. A company would harm the environment to whatever

extent was profitable, and they often harmed the environment despite the fact that it was unwarranted to do

so.

The following are specific examples of the unethical environmental activities by organizations:

 Air pollution (i.e. use of machineries which are emitting harmful gas to the environment)
  Water pollution (i.e. disposal of harmful wastes and chemicals to the oceans and rivers)

 Land pollution and soil erosion (e.g. use of toxic fertilizers in farming, disposal of toxic chemicals,

and mining activities)

 Excessive deforestation (e.g. cutting down of trees for business expansion, illegal logging, etc.)

Barriers to Considering Environmental Ethics

 Cost – businesses, especially SMEs, have a hard time raising funds for environment friendly

processes.

 Time – since not all businesses get to form a functional area solely dedicated for corporate social

responsibility, those employees with other functions find it hard to find time due to their busy

schedule.

 Legal or regulatory barriers – companies might encounter administrative difficulties in the

implementation of their chosen project.

 Competitive Pressure – companies are afraid to be disadvantaged in cases that they would insist on

the highest ethical standards but the competitors do not (i.e. competitors are importing low-cost

goods with no regard for environmental sustainability)

Benefit of Considering Environmental Ethics

 Positive brand image – recycled products are more expensive than other products due to the

additional required labor, but plenty of of customers are willing to pay more for the peace of mind

that comes from buying something in tune with their own values.

 Attract better employees – the environmental image a company has may appeal to the applicants’

own values and may see these companies to be great place to work in for ethical, as well as financial,

reasons.
CORRUPTION

Corruption is a dishonesty and illegal way of people, either in positions of authority, power or

otherwise who engage in fraudulent activities, to gain undue advantage over the others. It also includes

giving or accepting bribes or inappropriate gifts. Corruption in workplaces is a vice that has become a

cancer in the delivery of services within the organizations. It has heavily impacted on the performance and

affected the profits.

Corruption in Different Levels

 Manager to Manager Corruption – the players here are the big bosses in the organization.

Corruption in this level entails embezzlement of massive and huge amounts of company money

and resources at the top-level management. They collude among themselves, to literally steal huge

sums of money mostly by forging signatures and stamps of the organization. They end up

siphoning out company resources without caring the fate of the organization and the other

employees within the organization. They do not care whether the organization will collapse or not.

 Manager to Supplier Corruption – this entails managers who collude with suppliers to corrupt

the supply records and eventually give inaccurate information concerning the goods supplied. This

kind of corruption benefits both the supplier and the corrupt manager but the company suffers a lot.

 Manager (Middle Level) to Junior Staff Corruption – corrupt managers can extend their habits

to a junior staff through enticing the junior staff of a promotion, money or gift to do something

illegal for him (i.e. like to carry a stolen item from the office to a given destination). This type of

corruption is very rampant among the middle level managers and specific junior staff who

understand the corruption being perpetuated by their seniors. This kind of mutual collusion among

the level managers and junior staff is the worst. This is because access to goods and services of the

company is mainly handled by this group. This level is where maximum corruption of any kind

thrives.
  Junior Staff to Junior Staff Corruption – entails dealing with the small quantities of goods of

the company by corrupt juniors (e.g. stealing and selling small accessories like lighting equipment,

stationery, laptops etc., and corrupting their way out of any liabilities). This will eventually result

the audit findings to show massive loss of money and resources and irregular records.

 Junior Staff to Subordinate Staff Corruption– The cancer of corruption in an organization

trickles down to the subordinate staff like watchmen, drivers and cleaners. The corruption being

perpetuated especially by the junior staff thrives well when watchmen are also sucked in to it. This

is because they facilitate the movement of goods in and out of the workplace since they are the

custodians of the entry and exit points of the organization premises.

Practices to Prevent Corruption

 Digitized inventory system and maximum-security features

 Outsourcing of manpower (e.g. security, cleaning, etc.) to help check on bad practices as the

responsibility is shifted to a third party

 Monthly audit – instead of waiting for the end of the year to know the financial performance of the

company

GENDER ETHICS

Gender refers to the socially constructed characteristics of men and women, whereas sex refers to

the biological differences between males and females.

Gender discrimination is when an employer treats one employee or job applicant differently than

another based solely on gender, rather than job requirements or work performance. Gender discrimination,

including discrimination in hiring practices, is illegal in the United States and can result in a lawsuit against

an offending employer. While in the Philippines, Republic Act 9710 (Magna Carta of Women – MCW)

provides that all individuals are equal despite of gender and other aspects.
 Men and women have had trouble communicating Section 3 of Republic Act 9710
effectively since the beginning of time, and it's not just in
otherwise known as the Magna Carta of
the workplace. In fact, the differences between the genders
Women (MCW) provides that “All
have long been the topic of debate and the subject of many
individuals are equal as human beings
books. When it comes to the workplace, however, it's not
by virtue of the inherent dignity of each
important that you even try to understand the differences
human person. No one should therefore
between the genders. That's an exhaustive subject that
suffer discrimination on the basis of
someone would probably never fully comprehend

anyway. It is critical, though, that you learn the skills ethnicity, gender, age, language, sexual

needed to work together in harmony, and practice orientation, race, color, religion,

effective communication. political or other opinion, national,

Persons with diverse sexual orientation and

social or geographical origin,

gender identity (SOGI) experience abuse and violence disability, property, birth, or other

(ranging from subtle jokes to extreme forms of stigma and status as established by human rights

assault) from their families, neighbors, standards.

educational/training institutions and even from

government institutions.

The following are examples of gender ethical issues experienced in the workplace:


SEXUAL HARASSMENT AND DISCRIMINATION
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http://www.biznas.co.uk/business/functional-areas-of-business-explained/

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Kiplagat, D. (2014 August 27) Corruption in the Workplace. Retrieved from

https://www.careeraddict.com/corruption-in-the-workplace

The Philippine Commission on Women (2019) Enacting an Anti-Discrimination Based on Sexual

Orientation and Gender Identity Law. https://www.pcw.gov.ph/wpla/enacting-anti-discrimination-

based-sexual-orientation-and-gender-identity-law