Company Description and Benchmarking the Codes of Conduct
The company selected is XYZ Limited, which is a medium size public corporation selling foodstuffs. The company serves its customers with variety of foodstuffs and services that fit with the needs of customers in an effective manner. It operates with 4500 employees with a focus to become the market leader and provide and best and high quality foodstuff. Throughout its expansion in different countries, the company realized the need of an effective ethics program as till now it operates without a formal ethics program. In accordance to the Federal Sentencing Guidelines for Organizations, XYZ Ltd is also encouraged to set up an ethics program.
For setting an ethics programs, it is vital to have all essential information of code of conduct used by similar companies in the industry (Trevino & Nelson, 2010). With an aim to offer the best service possible, management of XYZ Ltd. undertaken some research regarding the code of conducts of three similar companies in the industry. The companies selected to look into are Kellogg, Kraft Foods, and Heinz. Kellogg’s code of conduct emphasizes on integrity, which is a key to its success and directing it towards becoming one of the world’s most ethical companies. Kellogg’s code covers integrity, fairness, accurate, trust, and respect. It has a solid foundation of integrity. The company employees are encouraged to work with its K Values that charge them to act with integrity and demonstrate respect (Kellogg’s, 2008).
Its code focuses on treating everyone fairly and with consideration. The company code of conduct are not set due to some kind of accountability, but it believes that it is a right thing to do as well as good for business. Being a multinational company, Kellogg operates with Global Code of Ethic reflecting its commitment to function all through the globe in a way that is respectful and ethical, whether it is interacting with customers, consumers or each other. The company supervisors, Human Resources business partners, the head of local legal department, General Counsel, or the personnel working in its Office of Ethics and Business Conduct are always ready to resolve employees query as well as guide them to work as per set code of conduct. At Kellogg’s employees’ believe in acting with integrity and show respect in everything they do (Kellogg’s, 2008).
On the other hand, Kraft Foods in its code of conduct focuses on its objective to earn and maintain trust. The company’s code of conduct includes total 10 rules, which are to be followed by all whether they are employees, supervisors, senior level management, and board members. All rules set are part of company’s commitment to integrity (Kraft Foods Inc, 2011). Its code of conduct concentrates in areas like ethical risk, providing guidance to assist others in identifying and dealing with ethical issues, offer mechanisms to report unethical conduct, and facilitate in developing a culture of honesty and accountability.
The company code of conduct guide its employees in handling different ethical matters and depict the value guiding them in their decisions, mainly the most important value – trust. Ten rules in its code of conduct are giving Kraft Foods complete business loyalty, never trade on inside information, honor confidentiality, never misappropriate corporate opportunities and ensure proper use of corporate assets, provide accurate information, comply with laws, rules, and regulations, honor Kraft Foods’ Values, report any concerns, address reports of concerns about Director behavior, and encourage others to report concerns and do not retaliate (Kraft Foods Inc, 2011).
In contrast to the code of conduct of Kellogg’s and Kraft Foods, the code of conduct of Heinz concentrates on unwavering commitment to integrity. The company believes in conducting business ethically, guided by the enduring principles set by its founder. Heinz employees follow its Global Code of Conduct to make sure that all its businesses perform and behave in a constantly legal and ethical manner. Its global code of conduct is the foundation of all-inclusive and continuous compliance with all corporate policies and processes. Its Global Operating principles reflect its values, commitments, and expectations to employees and the public (Heinz, 2012).
Ways Ethical Challenges Affect Business and Creating a Code of Conduct
Today, companies really operate in a competitive business environment, in which it really becomes difficult to attain a significant position in the minds of customer and survive in long run. In regard to attaining a leading position, the company employees, employers, suppliers, associated may also get indulged into ethical dilemmas, which may direct them towards different ethical challenges. For example, to release a product before competitors does, the company may skip some of its quality aspects and face claims related to serving food which is not healthy or safe to eat (Trevino & Nelson, 2010). In addition to this, other ethical challenges, which can be faced by the company, are unfair treatment, marketing irresponsibly, keeping dishonest books and record, trading on inside information etc. All these challenges may hurt company image in long run and could direct towards creating a negative image in the mind of its customers.
Code of Conduct for XYZ Limited:
The code of conduct suitable for XYZ limited is as follows:
XYZ Ltd. cone of conduct includes doing business ethically which includes integrity, trust, fair treatment, and respect. The company code of ethics including 6 rules reflect its commitment to operate respectfully and ethically, in its interactions with its employees, consumers, suppliers, stakeholders, board members etc. The key rules, which will be followed by the company and all associated with it, are:
- Work with integrity and always show respect to each other.
- Never trade on inside information.
- Respect and maintain trust and confidentiality.
- Always provide accurate information and ensure proper use of all corporate assets.
- Always work as per set rules, laws, and regulations (Shaw, 2010).
- Respect company values and work as per the set values.
The code designed for XYZ Limited will significantly help it improving its ethics program as it will provide a framework to all to operate and work ethically. Set code of conducts are essential to make sure that everyone follow it and work accordingly so that, company may become able to avoid different ethical challenges. Code of conduct is useful to avoid ethical challenges and there negative effects on business and its growth (Jennings, 2011). After reviewing the Federal Sentencing Guidelines for Organizations, explain how these guidelines influence the ethics program you created.
Influence of the Federal Sentencing Guidelines on Ethics Program
The Federal Sentencing guidelines significantly influence the ethics program created for XYZ Ltd. The guidelines demand that the company strengthens its code of conduct to create an effective compliance and ethics program. Company if, follow the guidelines and create meaningful compliance and ethics program, cooperate in criminal investigations, report violations, discipline responsible employees, and take the appropriate steps to control and detect criminal conducts, would get significant incentives also (Ferrell, Fraedrich & Ferrell, 2008). The guidelines make a positive influence on company’s ethics programs, as with this its management would become able to implement its ethics programs effectively.
The guidelines provide a framework to the company regarding the ethical behavior expected from it, which in turn would make it easy for all of its employees to practice code of conduct. The guidelines mention that the company should always try to promote a culture that boosts ethical conduct and a dedication to compliance with the law (Finder & Warnecke, 2005). These guidelines will improve the functionality of company’s ethical program as this will help its management in implementing it thoroughly to make sure everyone work in expected ethical manner.
Challenges in the Adoption and Enforcement of the Codes of Conduct
Adopting and enforcing a code of conduct is not as easy as making it. XYZ Ltd. may also face various issues in adopting and enforcing its new ethics program. One key issue is employees’ resistance to it due to their inability to understand the reason behind implementing it. For dealing with this issue, it is vital that the company top management introduces it to all and supervisors assist employees in understanding the benefits of code of conduct (Hoffman, 2006). For employees involvement it is vital to resolve their doubts and queries that can only be done through effective communication.
Other key issues in adopting and enforcing code of conduct is legal and regulatory issues as a code of conduct applied by company may not be applicable as per national laws or other laws working in that areas. To handle these types of issues, it is vital that code of conduct is designed by considering all essential laws and regulation. Every industry has its own regulations, which need to be adapted effectively to have an effective code of conduct (Shaw, 2010). Continuous support from top management as well as their communication with others regarding its benefits is also vital to make every one ready to adopt and enforce it.
Keeping Codes of Conduct Relevant in the Years Ahead
Codes of conduct are usually guided by a state or industry guidelines for organizations. Such as Federal Sentencing Guidelines influence companies ethics programs. These guidelines influencing organizations are updated from time-to-time with changing economic, political, social, cultural, and technological forces on business and society. So, to ensure that codes of conduct of XYZ Ltd. remain relevant in the years ahead, it is vital for company management or responsible employees to keep a watch over these guidelines and changes done in this (Somers, 2001). By keeping a regular update of changes in state or industry guidelines only, it would become possible for the company to make sure that its codes of conduct are relevant with its business environment.
Ferrell, O.C., Fraedrich, J. & Ferrell, L. (2008). Business ethics: ethical decision making and cases (7th ed.). USA: Cengage Learning.
Finder, L.D. & Warnecke, A.M. (2005). Overview of the federal sentencing guidelines
For organizations and corporate Compliance programs. Retrieved from http://apps.americanbar.org/crimjust/wcc/OVERVIEW%20OF%20THE%20FEDERAL%20SENTENCING%20GUIDELINES%20FOR%20ORGANIZATIONS%20AND%20CORPORATE.pdf
Heinz. (2012). Ethics and Compliance. Retrieved from http://www.heinz.com/our-company/ethics-and-compliance.aspx
Hoffman, B. (2006). Art and Cultural Heritage: Law, Policy and Practice. UK: Cambridge University Press.
Jennings, M. (2011). Business Ethics: Case Studies and Selected Readings (7th ed.). USA: Cengage Learning.
Kraft Foods Inc. (2011). Code of Business Conduct and Ethics for Non-Employee Directors. Retrieved from http://www.kraftfoodscompany.com/assets/pdf/Code_of_Business_Conduct_and_Ethics_for_Directors.pdf
Kellogg’s. (2008). Global Code of Ethics. Retrieved from http://www.kelloggcompany.com/content/dam/kelloggcompanyus/PDF/KelloggsCodeOfEthics.pdf
Shaw, W.H. (2010). Business Ethics (7th ed.). USA: Cengage Learning.
Somers, M.J. (2001). Ethical Codes of Conduct and Organizational Context: A Study of the Relationship between Codes of Conduct, Employee Behavior and Organizational Values. Journal of Business Ethics, 30, pp. 185-195.
Trevino, L.K. & Nelson, K.A. (2010). Managing Business Ethics (5th ed.). USA: John Wiley & Sons.