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Social Responsibility and Business Ethics

Business Ethics

Business ethics is the application of social responsibility or a business that arise from within the company itself. Business is always in touch with ethical issues in daily activities, business association with The general public also has social ethics, namely business association ethics.

Business association ethics can include several things, including:

  1. Relationship between business and customers/customers; For example, the packaging Differences make it difficult for consumers to make price comparisons for their products, or consumers find it difficult to know the contents of the packaging. Other than that giving a guarantee is a very ethical act for a business.
  2. Relations with employees; business relationships with employees include several things, namely; recruitment, training, promotion or promotion, and termination of employment.
  3. Relationships between businesses; In this relationship, it is not uncommon for ethics to be demanded good association. For example, there is a struggle for skilled workers professional managers by entrepreneurs, and also competitive price dropping among businessmen.
  4. Relations with investors; For example, companies in the form of PT and especially those who will or more “go public” must maintain the provision of information good and honest from his business to investors or potential investors. Dishonest information will lead investors to take wrong investment decisions.
  5. Relations with financial institutions: relations with finance especially the tax office in general is a social relationship that financial in nature. This relationship relates to financial statements in the form of: Balance Sheet and Income Statement.

Company employees must pay attention to business ethics. It means, a set of principles that must be followed when running a business. Every The company has a social responsibility, namely a recognition of the company, that business decisions can affect society. Responsibility term Social is sometimes used to describe responsibility company to the community and the environment. However, can widely used to include corporate responsibility for customers, employees, and creditors. Even though business decisions are made is to increase value, decisions must be unethical and social responsibility.


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Business Environment

Forms of Social Responsibility of a Business

There are several forms of carrying out the social responsibility of a business that can or several entrepreneurs, especially in Indonesia, have been:

  1. Implementation of Pancasila Industrial Relations; Industrial relations This Pancasila in industrial Pancasila is implemented in a form that is often used known as the Collective Labor Agreement (KBK). This KBK is a guidelines on the relationship between employers and workers who regulate about the rights and obligations of employees and employers.
  2. Environmental Impact Analysis (AMDAL); the real form of AMDAL This is reflected in the implementation of industrial waste treatment so that waste does not disturb or damage the environment, because the production process of a business will not infrequently cause environmental pollution or pollution, both water, air and noise pollution.
  3. Application of Occupational Health and Safety Principles; To To carry out this K3 practice, it is necessary to provide protective equipment for workers in carrying out their work in the form of safety hats, masks as well as special work clothes that can ensure the safety of workers worker.
  4. The Adopt-Adopted Father System; The implementation of this system is intended to big entrepreneurs can help the development of small businesses by opportunities for small businesses to manage some of the work of the the big businessman.

Examples of unethical business decisions:

  1. An employee of a car dealership wants to sell a car at a price of sticker (according to the price list ) to all customers who are not aware that usually the selling price is at least Rp. 2,000,000 below the ticket price. Employees are paid on a commission basis and will receive more if customers pay higher prices.
    Conclusion: profits for sales employees, otherwise sufferers customer.
  2. An employee of a computer company who is paid on a commission basis tend to sell computers much more expensively to customers than they do need
    The result: profits for employees, on the contrary, losses for customers.
  3. A manager hires a friend, even if that friend not a good suitor.
    Consequences: gains for managers, conversely losses for applicants others who actually deserve the job.
  4. An employee whose job is to buy supplies for a factory manufacturers, will buy nearly all of their inventory materials from a supplier who delivers Super Bowl tickets each year. Suppliers provide prices 20% higher than other suppliers. As a result, due to the cost of inventory very high, the company’s profits will be lower.
  5. A company manager tends to avoid paying some employee to work a few hours so that he can reduce expenses and maybe get a higher bonus because it can suppress fixed expenses low.

The consequences of unethical business practices as mentioned above are very adversely affect the value of the company.


Responsibility To Customers

  • Production Responsibility Practices.
  • Responsible Sales Practices.
  • How the Company Guarantees Social Responsibility to Customers.

The company can guarantee responsibility to its customers by the following steps:

  • Create a Code of Ethics.
  • Monitor All Complaints.
  • Customer Feedback.

How the government guarantees responsibility to customers:

  • Government Regulation on Product Safety.
  • Government Regulation Regarding Advertising.
  • Government Regulation Regarding Industrial Competition.



Responsibilities To Employees

The company also has a responsibility to its employees to reassurance or a sense of security, fair treatment from other employees and the same opportunity.

  • Decent treatment by other employees
  • Protection against sexual harassment
  • Equal opportunity

Ensuring that employees receive proper treatment, much The company created a complaints procedure for employees who feel that the company solving employee complaints is Marriott, which implement three strategies. First, a mediation process is created, in which a neutral person outside the company is called an estimate mediator employee complaints and propose a solution. The mediator doesn’t have power to impose final judgment, but may help employees and companies resolve conflicts. Second, Marriott provides free calls credit for employees to call if they believe they are becoming subject to discrimination, harassment, or unfair termination of employment. Marriott started making inquiries three days after receiving the call complaint. Third, Marriott allows employees to voice their complaints at in front of a panel of other employees who determine if the employee’s complaint is vaid, based on applicable Marriott directives.


Responsibility to Shareholders

Companies are responsible for satisfying their owners share. Employees may be tempted to make satisfactory decisions interests rather than the interests of the owner. For example, some employees may use company money to buy computers for personal needs rather than corporate interests.

  1. How Companies Ensure Responsibility

    Company managers monitor decisions to ensure that they make it for the benefit of the owner. Employee salaries may be direct related to company performance. In this case, the employee does not focus on maximizing the company. The owner of the company realizes that the company will need money to fulfill responsibilities such as employee safety and pollution protection. The company’s business provides a safe environment and pollution-free represents the costs of its business enterprise.

  2. How Shareholders Assure Responsibility

    In recent years, there have been many shareholder activities, namely active business of shareholders in influencing company management policies. Shareholders have been very active especially when they are not satisfied with the salary company executives or other policies. A company manager can satisfy shareholders by ensure that the funds invested by shareholders used well. If these funds are used to cover costs incurred less necessary, then the company’s profits will decrease, which will reduce the returns received by shareholders or their investments. One of the main concerns of shareholders is the salary provided to company executives or CEOs and other executives.



Responsibilities to Creditors

Companies are responsible for fulfilling their financial obligations to their shareholders creditors If the company is experiencing financial problems and cannot fulfill their obligations or liabilities, they must notify creditors. Sometimes willing to extend the payment due and even give advice to the company how to improve conditions their finances. A company has a strong incentive to satisfy responsibility to creditors. If the company does not pay the debt creditors may be forced to admit bankruptcy.


Responsibility to the Environment

The production process used by the company, as well as the products produced, can be damaging the environment, the most common environmental destroyers will be discussed then, along with the recent actions that have been made by companies to improve the environment.


1. Air pollution

Some production processes that cause air pollution, are harmful to the people who breathe it. For example, the production of fuel and iron, too car users, increase the amount of CO$_2$ in the air.


2. Soil pollution

The soil has been polluted with toxic waste from several production processes. A form of soil pollution is solid waste, which does not decompose from time to time. As a result of littering, soil not only looks invisible attractive, but also no longer useful for other purposes such as agriculture.


Responsibility To Community

When a company builds a community base, they become part of the community and rely on it for customers and its employees. The company shows its concern for the community by sponsor local events or make donations to local social groups. Decisions of corporate managers that maximize social responsibility can conflict with maximizing firm value. Costs involved in achieving the goal will have to be charged to the customer. So, tendency to maximize social responsibility towards the community will reduces the company’s ability to provide fair-priced products to customers consumer.


Business Responsibilities in an International Environment

If firms compete in an international environment, they must responsive to cultural differences. Companies and some countries do not all have the view that rewarding customers large or large suppliers as unethical. Nevertheless, the company tend to apply ethical guidelines and corporate responsibility in international framework. Thus, they build a global reputation to conduct business in an ethical manner.


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