Best Buy a Best at Business Ethics

Posted March 30, 2010 by Jonathan
Categories: Best Business

Ethics Management System

 A recent article by the Ethisphere Institute named 99 companies as the worlds most ethical. The company has been around for four years and implements a number of criteria in order for companies to show up on the list. The Ethisphere Institute measures the companies: corporate governance; corporate citizenship and responsibility; innovation that contributes to the public well being; executive leadership and tone from the top; industry leadership; legal, regulatory and reputation track record; and their internal systems and ethics program.

We chose Best Buy as our “Best Business” in corporate ethics management for many reasons. Best Buy has shown up twice now on Ethisphere’s list of top ethical companies. In order to evaluate Best Buy according to Ethisphere’s seven criteria, Best Buy had to submit an application, fill out an in-depth survey questionnaire, supply documentation and other materials for Ethisphere, as well as be subject to data analysis from Ethisphere. At the end of this process, Ethisphere gave all of the companies what they call an “EQ” score or Ethics Quotient. Only the companies that ranked above a set score standard made the list.

According to Ethispheres rankings, we can now show an evaluation of some top ethics priorities of companies such as Best Buy. This ranking shows that Best Buy has a positive legal history. They also have a good internal control system including an Chief Ethics Officer, Code of Conduct, and prevention and detection controls. Best Buy’s innovative products and services also contribute to a positive public well-being as we can see with their “green” policies and attitude on conservation.

Along with a number of other positives, Best Buy has helped in setting industry standards and has a visible executive leadership dedicated to ethics. We can see this through the ethics positions and programs they have implemented in their company. This excerpt has exemplified Best Buy’s current Ethics Management System. The following will provide information as to how Best Buy is using this system to control, protect, and develop the companies integrity.

Controlling

Best Buy has been recognized as a company that values their ethics system as one of the most important aspects of their company. They continue to improve on the way they handle ethical issues and constantly devise plans for dealing with issues before they become a hazard to the company. Best Buy has realized that have good ethics management systems in place can save them large amounts of money and extinguish small problems before they turn into huge expenditures. One way that they have been so successful at doing this is by controlling their stakeholder’s integrity in everyday business activities.

It is clearly outlined in their Code of Business Ethics, every stakeholder has their own interaction with the company, and Best Buy does a great job of tailoring its Ethics Management System to control every member up and down the stakeholder spectrum. Controlling integrity for Best Buy starts with the relationship between the customer and the employee and the idea that trust should be at the core of the interaction. Best Buy explains that the obligation of the employee is to: treat all customers fairly and honestly, communicate in a respectful and helpful manner, provide prompt and accurate customer service (Best Buy 20).

At the heart of controlling ethics is the skill of communication. If the members of a company aren’t sure of what is expected of them then they tend to no comply directly with what the company is trying to accomplish. It is essential for a company with a good Ethics Management System to communicate up and down the stream to inform and manage all aspects of ethics. Best Buy has excelled in making sure their values and goals are communicated to their employees, and they also have a great system for employees to offer feedback and report ethics flaws back to the managers of the company (Best Buy 9-13).

Finally, in order for Best Buy to stay recognized as the best ethics managers and to control the business in the future they need accountability throughout the organization. It is imperative for a company like Best Buy to hold their employee’s to standards and rules so they can control the integrity within the business. The control can easily be seen by the last page of the Code of Business Ethics for Best Buy; where they require every employee and manager to sign a personal commitment that they have read, understand, and are going to comply with every part of Best Buy’s Ethics System (Best Buy 50). In order to lead your industry managing proper business ethics it is vital to have a good control mechanism within your Ethics Management System to ensure good integrity practices.    

Protecting

Best Buy, like most large corporations, invests a lot of time and money in protecting their image and integrity. Their duty to employees and customers  involves incorporating a check and balance system for the purpose of eliminating activities that could tarnish their reputation. The tool utilized for protecting their integrity is their “Business Code of Ethics”.

The “Business Code of Ethics” that Best Buy created has many sections that are focused on protecting their integrity. The following items can be found in their code of ethics: harrasment free workplace policy, privacy policy, environmental policy, wage and hour standards, financial integrity policy, protection of company assets and intellectual property policy, fair dealing policy, and a personal commitment to all of their stakeholders. The subjects that Best Buy touches upon in their code of business ethics encompass a wide range of topics that could greatly affect their integrity if managed unethically.

By stating these topics in their code of ethics, Best Buy is accepting responsibility for the activities involved in managing these topics ethically. Through their code of ethics, Best Buy is essentially creating a corporate culture based off of ethical management. With the rules set out before their company requiring all stakeholders to comply, they are taking huge steps in protecting their integrity and reputation within the corporate world.

Developing

 The devopment of managerial ethics with Best Buy started by creating  their own Ethics program. This involved hiring ethics officers to oversee the implementation of their code of ethics. Best Buy has developed their code of ethics in two ways: one, by requiring all employees to sign a compliance form stating they understand and agree to abide by the code of ethics; and two, by using social media to keep employees refreshed on Best Buys code of ethics and current programs in progress to continually develp Best Buys code of ethics.

According to the site, Compliance Building, using social media to keep your employees informed of your ethics policies is a rising trend. They pay particular attention to the new and upcoming workforce. They state that Generation Y has grown up with social media and is going to be in control of its future. Because of the fact that they have used it throughout their lifetime, there is good evidence that social media is going to be around for a long time. By using social media to inform your workforce of company ethics, companies are increasing their employee reach and keeping all stakeholders updated on current ethics activities.

Best Buy is benefiting from using this source to develop their business ethics program. We can see by the award they have received from Ethisphere that Best Buys ethics program is successful. If they continue to keep their ethics management activities in the spotlight with employees, they are going to be more likely to have increased compliance and awareness essentially leading to a more ethically managed company.

References:

 

 

 

 

Advertisements

Improvement of Principles and Transparency Organizational Policy

Posted February 22, 2010 by Jonathan
Categories: Dilemmas, Ethics Governance

The major dilemma facing companies who are struggling is whether to have large scale layoffs to help with the financial difficulties or to employ a shared sacrifice doctrine. The shared sacrifice idea can make the company appear more socially responsible and more compassionate towards their labor force. The important thing about dilemmas is that there are two points of view that see the situation in two totally different lights. I believe an important aspect of improving principles and governance documents is to make sure they are expressed to current and future employees. If the employee knows that the company employs a shared sacrifice mentality they will feel more secure about their assembly line position not going away in the near future. This dilemma is easily resolved by just communicating the organizations values and codes of conduct to the employees. Had Toyota been using a voluntary exit program in their downsizing process then the pressures of fiscal shrinkage could have been limited on all members of the organization. Whether a company decided to implement a policy of shared sacrifice or not is very important to their image. If they are known for downsizing by laying off many lower level workers then they could be turning away lots of talent in the manufacturing sector. However, if a company seeks to provide their employee’s with job security and options for employment they could see a major increase in positive moral among its labor force. It is imperative that this issue is addressed among policymakers for an organization so that this dilemma doesn’t end up costing the company.

Voluntary Exit Programs Could be the New Word for “Lay-Off” Soon

Posted February 22, 2010 by Jonathan
Categories: Ethics Governance


The dilemma between sharing sacrifices and isolating the sacrifices to the lower end employees is constantly being debated and discussed to see which philosophy will benefit the company more. This could be resolved by implementing programs to allow employees to voluntarily resign their positions within the company. These programs would offer incentives to those who wished to exit and freed up a lot of sacrifice on those who couldn’t bear the burden of it anymore. A prime example of this new doctrine of managing employee turnover is seen in the Memo from Alberta Health Services. This section will help explain the incentives which are offered by early voluntary termination:

The initial version of the VEP Expression of Interest Form, Part C, contained a statement that indicated the VEP payment amount would be “inclusive of any and all termination entitlements”. This does not include the payout of any accrued vacation or other earned entitlements that get paid out on termination. It does mean that employees who receive the VEP payout are not entitled to other severance/termination benefits such as Employment Standards Code severance payments.

These programs are beneficial to the company because their employees can choose to leave and it doesn’t force the company into a situation where they have to lay off people. Toyota might want to look at implementing some of these Voluntary Exit Programs (VEP) into their own philosophy and try to alleviate some of the pressure placed on others inside the organization. The quandary between shared sacrifice and layoffs will not be solved soon and actions such as voluntary exit programs will become a more familiar face in human resource codes.

Source:

McGillivray, S. (2009). Unted Nurses of Alberta. Retrieved Feb. 19, 2010, from Alberta Health Services, Edmonton, AB, Can.. Web site: http://www.una.ab.ca/news/archive/LofUonVoluntaryExit.

The Debate between Employee Sacrifice and Shared Sacrifice

Posted February 22, 2010 by Jonathan
Categories: Dilemmas

When a company encounters troubles during the course of doing business and is forced to realign their labor structure, who will be at risk? Will it be the lower level employees who feel the burden or will the sacrifices be shared by all members of the organization?  Over the past couple months the pressure of staying alive in the automotive industry has been on Toyota; after recalls on two pieces of equipment on or around the accelerator pedal they are struggling to recover and get back on their feet. Toyota is now focused completely on repairing the issues with the recalls and eliminating this problem so they can go back to doing business at a high level like they are used to. As a result, they have shut down many factories and lots of workers are left wondering if they will have a job from one day to the next. The positive aspect of this from the employee’s point of view is that Toyota believes in a doctrine of shared sacrifice. They will do whatever it takes to retain as many employees as possible during an economic downturn. This excerpt from The Lane Report shows the ripple effect this type of employee retention policy has on even the head of manufacturing in Kentucky:

At Toyota, it’s shared sacrifice. That means that all employees, including myself, share in the pain. Bonuses for everybody in the company were discontinued. Overtime was eliminated. Some members throughout North America worked only 34 to 36 hours a week. The executives in North America took base pay cuts. In some cases, employees from closed plants in Indiana, Alabama, and Texas were dispatched to Kentucky to help run this plant.

Overall, I think the policy of shared sacrifice is socially responsible for the company and can help the image for the company, as well as, boost employee morale. Others argue that the top executives who have worked hard their entire lives don’t deserve to shave their paycheck for the sake of a lower level manufacturing employee. In this case, it is very easy to see the points of view for both sides and leads to this issue becoming a dilemma for a company to debate and discuss when implementing these human resource policies in the future.

Source:

Lane, E. (2010). One-on-One: “The Key to Success for Any Plant Is Being Flexible and Creative”. Retrieved Feb. 19, 2010, from The Lane Report, Lexington, KY. Web site: http://www.kybiz.com/articles/article.cfm?id=1117.

Personal Value Ethics: Will They Help or Hinder Us?

Posted February 5, 2010 by Jonathan
Categories: Management Ethics, Personal Values

Often the top managers have a fiduciary duty to guide the company in a positive direction no matter what; regardless of their own personal values. It is impossible to ignore the relationship between a person’s personal ethical values and their management ethics. There are countless times when a top executive has to make a decision for the company; sometimes this decision can have a negative impact on the decision makers themselves. If the decision that is made is unethical according to an executive’s personal value ethics; will they continue to carry-out their fiduciary duty? Alignment of executives with the same values as the company is very hard but is essential for many companies. In the case of Bank of America their CEO Ken Lewis is being charged with committing fraud. In this quote the extent of the lawsuit is described:

Cuomo also sued the bank’s former chief financial officer Joe Price and the bank itself for not disclosing about $16 billion in losses Merrill had incurred before it was bought by Bank of America in an effort to get the merger approved. Afterwards, Lewis demanded government bailout funds, Cuomo said. (Business Week)

The actions by the former CEO were clearly unethical, he was trying to defraud taxpayers and the company’s image suffered because of his poor decision making. In this example it’s apparent that Lewis’ personal value ethics hindered his management ethics. I believe that our ethical values of self interest and personal virtue will ultimately help our management ethics and help us avoid situation like the one faced by Bank of America.  The conclusion we reached was that an executive’s personal value ethics can be very impactful on their management ethics. The conflict between ethical behavior and honoring a fiduciary duty towards a company is a science that must be approached cautiously because of the immense ramifications of decision making.

Source:

  • Hosmer, L. T. (1995). Brief Summaries of Ten Ethical Principles. Academy of Management Review, 20(2), 396-397.
  • Arnold, D. G. (2005). The justification of human rights. In R. J. Zwettler (Ed.), Perspectives in business ethics (pp. 25-29). New York, NY: Mc-Graw Hill.

Ethical Principles in Our Personal Management Ethics

Posted February 5, 2010 by Jonathan
Categories: Management Ethics

Two of the most prominent ethical principles that impact my personal management ethics deal with economic efficiency and self-interests.  According to Hosmer, “Basic rights are meaningless without the essentials of food, clothing, and shelter.”  For this reason, he states that we should strive to maximize necessary output by operating as efficiently as possible.  This can be linked back to the Free Market Capitalism Philosophy of Business Ethics which states that business decisions should be made to maximize shareholder financial value.  Since management cannot possibly be aware of each shareholders individual situation, making decisions based on economically efficient principles is essential to a company’s overall prosperity.

As managers, we run into dilemmas when making decisions because of a condition known as “Pareto Optimality” in which it is impossible to make one person better off without harming someone else (Hosmer).  Since this is inevitably true, managers must also apply the ethical principle of self-interest when making business decisions.  Hosmer states that “our long-term interests are usually very different from our short-term desires,” and this is absolutely true when managers consider strategic decisions for their organization.  Thus, managers should use the principle of self-interests to make decisions based on facts rather than intuition or impulse.

Source:

  • Hosmer, L. T. (1995). Brief Summaries of Ten Ethical Principles. Academy of Management Review, 20(2), 396-397.

Two Ethical Principles in Our Personal Value Ethics

Posted February 5, 2010 by Jonathan
Categories: Personal Values

Through discussion, we have found that the two most important ethical principles we use to define our personal value ethics are those of self interests and personal virtues. Intertwining these two principles leaves room for productivity maximization while simultaneously cutting out room for unethical loop holes.

As written by LaRue Hosmer, the ethical principle of self interests can be defined as “never take any action that is not in the long-term self-interests of yourself and the organization to which you belong.” It should go without saying that these actions should be made without interfering with other’s rights. As Denis G. Arnold explains in his essay “The Justification of Human Rights” people must claim freedom and well-being as necessary qualifiers for their success and thus must acknowledge these rights to all other people as well.

Hosmer also writes about the ethical principle of personal virtues. He states that, according to this principle, we must treat others with courtesy and fairness. Further, one should “never take any action that is not honest, open, and truthful, and which you would not be proud to see reported widely in national newspapers and on television.”

As a group we have found it exceptionally important to combine these two ethical principles when defining our personal value ethics. While the reality that other people are going to look out for their own self interest is true, the principle of self interest is not sufficient by itself. Individual and group decisions could be made that could be potentially hazardous to others, but due to a lack of transparency to the public, could still be in our best self interests. That is why we couple it with the principle of personal virtues. We take every action we can to accommodate our self-interests while making sure we would be proud to openly report any action we take to the public.

Source: