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Core Principles of Fairness,
Accountability, and
Transparency

Class Instructor: Ms. Marion Pia B. Calderon

B U S I N E S S E T H I C S
 Module 3: The Core Principles of Fairness,
Accountability, and Transparency

Notions of Accountability, Fairness and Transparency

Business leadership affects the moral capability and performance of organizations. Business
leaders influence the scope and character of formal ethics programs and the integration of
ethics into everyday organizational life. However, most practicing business leaders in most
countries most of the time are not held accountable for dysfunctional moral, social, and
environmental performance. Many are seldom held accountable for adverse impacts of their
decision-making, for example, deepening poverty, social disintegration, and environmental
degradation. There is a need to convince managements that they should develop their " integrity
capacity" which is the individual and/or collective capability for repeated process alignment for
moral awareness, deliberation, character, and conduct that demonstrates balanced judgment,
enhances sustained moral development, and promotes supportive systems for moral decison-
making. These four key dimensions of integrity capacity- process, judgment, development, and
system-should present challenges for business leaders so that they become more aware of
moral concerns and thus respond more effectively to the problems that arise (Petrick and Qinn,
2001). The concept of "accountability" is discussed further below.

Accountability
The record on business leadership accountability is mixed at best. In Great Britain,
continental Europe, and Australia, the practice of social and environmental accounting has
gained a strong foothold and expanded the scope of business leader accountability beyond
maximizing shareholder wealth. The works of the Institute of Social and Ethical Accountability
and other empirical research groups have demonstrated the corporate social performance-
financial performance link. Unfortunately, many of today's' business people are not made to
account for their activities and outcomes, especially for the things that go wrong and for their
unethical actions. In terms of global accountability, many corporate leaders act under the myth
that the public interest is synonymous with corporate property rights. Corporate business
leadership's external accountability only becomes an issue where a solid line is drawn between
two spheres.
Why is accountability important? Sound accountability structures are the most important
aspect of prevention and detection of corruption A civil society organization without proper

Business Ethics
 Module 3: The Core Principles of Fairness,
Accountability, and Transparency

accountability systems is fragile and open to rumors about mismanagement and abuse of
power. Worst of all, it will prevent it from enjoying respect and full legitimacy in the eyes of its
stakeholders including those duty bearers whom it intends to engage with advocacy.

Accountability-what it is:
To be accountable is to be liable to explain or justify one's actions and decisions.
Accountability is the process of explanation and justification.
Holding to account is the process of requiring explanation and justification, but it is also
about testing, forming a judgment, and if necessary, taking action.
Accountability implies responsibility: it is reasonable only to hold people to account for those
things for which they are responsible.

Accountability-what is is not:
It is not synonymous with responsibility.
It does not imply a management relationship.
It is not a "one off" annual event.
It is not the same as appraisal.
It is not about confrontation, "putting someone in his place" or "giving him a hard time"

Accountability Structures
Accountability is the ability to account for your actions and performance to your
stakeholders. Accountability includes the fact that persons (your stakeholders) are willing and
able to hold you accountable. With the willing and able aspects of the definition, we have an
operational understanding of accountability which can guide us in asking questions to
accountability structures in the organization. Accountability, then, is the obligation to
demonstrate that work had been conducted in compliance with agreed rules and standards or
to report fairly and accurately on performance results vis-a-vis mandated roles and/or plans.

Business Ethics
 Module 3: The Core Principles of Fairness,
Accountability, and Transparency

Fairness
It is the quality of making judgements that are free from discrimination. Judges, umpires, and
teachers should all strive to practice fairness. Fairness comes from the old English faeger,
meaning "pleasing, attractive." This makes sense given that the word is also used to describe
physical beauty. Fairness can refer to someone's good looks, or if someone is very pale and
blond, you might notice the fairness of her complexion. When someone shows fairness in
making a decision, he is pleasing all parties involved and offering a solution that is attractive to
everyone.
Fairness-in the context of a business organization-involves balancing the interests involved
ina ll decision-making including any decisions related to hiring, firing (including the investigatory
process), and the compensation and rewards system. Recent research has expanded the
meaning of equity or fairness. Historically, equity theory focused on distributive justice, the
employee's perceived fairness of the amount of rewards and who received them. However,
organizational justice draws a bigger picture. Employees perceive their organizations as just
when they believe rewards and the way they are distributed are fair. In other words, fairness or
equity can be subjective; what one person sees as unfair may be perfectly appropriate for
another. In general, people see allocations or procedures favoring themselves as fair.
Overall, fairness has to do with justice, which is to give to another that which is due him or
her. More concretely, justice:(1) looks at the balance of benefits and burdens distributed among
members of a group; and/or (2) can result from the application of rules, policies, or laws that
apply to a society or a group. In general, the results of actions override utilitarian results.

Business Ethics
 Module 3: The Core Principles of Fairness,
Accountability, and Transparency

Transparency
Transparency is essential in building families, and through families, in strengthening civil
society as a whole: "The human family does not submerge the identities of individuals, peoples,
and cultures but makes them more transparent to each other and link them more closely in
their legitimate diversity" (CV 53). On the organizational level, the instrumental salience of
transparency is referred to in two instances (CV 47, 65). In the first case (CV 47), transparency is
identified as an important mechanism for guaranteeing social accountability. The discussion is
focused on the role that transparency plays in international and non-government organizations
(NGOs) working in humanitarian projects. This understanding of transparency as a means for
organizational accountability is consistent with previous Catholic Social Thought (CST)
documents. Appropriate information disclosure is necessary to inform donors about how their
money is used by these organizations. Benedict XVI makes precise indications about the kinds of
information that should be disclosed, such as the percentage of funds directly used to help
people, the activities and the results achieved, and how these organizations' budgets are
distributed among different organizational functions. Transparency allows stakeholders to
understand whether the activities of social institutions such as international organizations and
NGOs provide a genuine service to civil society and whether money is used appropriately.

Notions of Competence, Professionalism, and Responsibility

Studies show that moral character and technical competence are viewed as being equally
important for worker excellence. The greater the need to engage with co-workers who have
different values, interests, and needs, the more important it becomes for employees to be able
to connect with colleagues, to understand different perspectives, to balance sometimes
conflicting claims, and to act competently both interpersonally and ethically. In order to do that,
a responsible worker needs a minimum set of skills, as well as moral and relational qualities
(Whetstone, 2003). The following are the minimum competencies expected of professionals:

Business Ethics
 Module 3: The Core Principles of Fairness,
Accountability, and Transparency

Technical skills encompass the ability to apply specialized knowledge or expertise. When
your think of the skills of professionals such as civil engineers or oral surgeons, you typically
focus on the technical skills they have learned through extensive formal education. Of
course, professionals do not have a monopoly on technical skills, and not all technical skills
have to be learned in schools or other formal training programs. All jobs require some
specialized expertise, and many people develop their technical skills on the job (Robbin and
Judge, 2013).
Human skills is the ability to understand, communicate with, motivate, and support other
people, both individually and in groups, which defines human skills. Many people are
technically proficient but poor listeners, unable to understand the needs of others, too weak
at managing conflicts. Because managers get things done through other people, they must
have good human skills (Robbins and Judge, 2013).
Conceptual skills are the skills and the mental ability that managers must have to analyze
and diagnose complex situations. Decision-making, for instance, requires managers to
identify problems, develop alternative solutions, and select the best one. After they have
selected a course of action, managers must be able to organize a plan of action and then
execute it. The ability to integrate new ideas with existing processes and innovate on the job
is also a crucial conceptual skill for today's managers (Robbins and Judge, 2013).

The Relationship of Accountability/Stewardship/Responsibility with Ethical Businesses

Scholars have recently considered ethical leadership from a new angle by examining servant
leadership. Servant leaders go beyond their own self-interest and focus on opportunities to help
followers grow and develop. They do not use power to achieve ends; they emphasize
persuasion. Characteristic behaviors include listening, empathizing, persuading, accepting,
stewardship, and actively developing follower's potential. Because servant leadership focuses on
serving the needs of others, research has focused on its outcomes for the well-being of
followers. What are the effects of servant leadership? One study of 123 supervisors found it
resulted in higher levels of commitment to the supervisor, self-efficacy, and perceptions of
justice, which all were related to organizational citizenship behavior (OCB). This relationship

Business Ethics
 Module 3: The Core Principles of Fairness,
Accountability, and Transparency

between servant leadership and follower appears to be stronger when followers are focused on
being dutiful and responsible. Second, servant leadership increases team potency (a belief that
one's team has above-average skills and abilities), which in turn leads to higher levels of group
performance. Third, a study with a nationally representative sample of 250 workers found in
higher levels of citizenship associated with a focus on growth and advancement, which in turn
was associated with higher levels of creative performance (Robbins and Judge, 2013).
Responsibility for one's education and work experience has also been found to be ethical
behavior in organizations. Some studies reported positive influences between education or
employment or work experience and ethical behavior.

Business Ethics