Business ethics Essay

Custom Student Mr. Teacher ENG 1001-04 7 November 2016

Business ethics

The term paper on ‘Ethical State and Ethical Practices in CHEVRON’ has been made focusing on the outline of the Code of Ethics of the specific organization and how it is practiced in the organization. The information was collected from primary and secondary research. Primary data was collected through survey which was used to determine response of both management and employee toward the code of ethics. Secondary data was collected through library research. The information gathered to understand the boundary addressed in the code of ethics as well as its application.

It discusses the ways of how can this code be successfully communicated and executed within the scope of the report. It also tries to link the impact of the ethical misconduct in an organization to its subsequent procedures to be followed to encounter this impact with a view to judge the effectiveness of the disciplinary process. According to the information and suggestions, the report sets out to do the qualitative research. On final notes, the report provides a summary based on the findings. The depth of the study allows us to summarize the findings into a conclusion.

The report reveals that the organization has a well-organized code of ethics. It reveals that guidelines are applied equally to all the employees.. Majority of the employees are satisfied with the ethical guidelines provided by the organization. They feel like valued citizens of the organization as their opinions are considered. 1. 0 Introduction A code of conduct is intended to be a central guide and reference for users in support of day-to-day decision making. It is meant to clarify an organization’s mission, values and principles, linking them with standards of professional conduct.

As a reference, it can be used to locate relevant documents, services and other resources related to ethics within the organization. A code is an open disclosure of the way an organization operates. It provides visible guidelines for behavior. A well-written and thoughtful code also serves as an important communication vehicle that “reflects the covenant that an organization has made to uphold its most important values, dealing with such matters as its commitment to employees, its standards for doing business and its relationship with the community.

” Ethical codes are adopted by organizations to assist members in understanding the difference between ‘right’ and ‘wrong’ and in applying that understanding to their decisions. An ethical code generally implies documents at three levels: codes of business ethics, codes of conduct for employees, and codes of professional practice. A code of business ethics often focuses on social issues. It may set out general principles about an organization’s beliefs on matters such as mission, quality, privacy, or the environment.

It may delineate proper procedures to determine whether a violation of the code of ethics has occurred and, if so, what remedies should be imposed. The code of ethics links to and gives rise to a code of conduct for employees. A code of conduct for employees sets out the procedures to be used in specific ethical situations, such as conflicts of interest or the acceptance of gifts, and define the procedures to determine whether a violation of the code of ethics occurred and, if so, what remedies should be imposed.

Moreover, a code of practice is adopted by a profession or by a governmental or non-governmental organization to regulate that profession. A code of practice may be styled as a code of professional responsibility, which will discuss difficult issues, difficult decisions that will often need to be made, and provide a clear account of what behavior is considered “ethical” or “correct” or “right” in the circumstances. Companies have been writing codes of business conduct for decades, but the role they play in shaping corporate culture is changing dramatically.

The focus is shifting from writing a comprehensive code of rules to regulate conduct to leveraging a values-based code that inspires principled performance among employees, management and executives. The focus of this report is to put a light on the state of ethics and analyze the ethical practice of an organization operating in Bangladesh. Therefore we have conducted our research on Chevron Bangladesh, a multinational company operating in Bangladesh.

This report intends to cover the interrelation between the code of ethics and its actual practice in today’s corporate culture. 1. 1 Origin The report titled “State of Ethics And Ethical Practices in Chevron” has been prepared for Mr. Neaz Ahmed, Course Instructor, Managing People at Work (M-501) as a partial requirement for the course. 1. 2 Objective The broad Objective of the report is to elaborate the guidelines of the code of ethics and analyze its practice in the organization. The broad objective is carried out through the findings of some specific objectives.

The specific objectives are as follows: • To understand the outline of the code of ethics of the organization • To identify the effective communication of the code of ethics to the employees • To address the areas of employee protection • To learn how employees can be motivated to comply with the code of ethics • To recognize the impact of the ethical practice on corporate culture 1. 3 Scope The focus of the study was to analyze the ethical practice of an organization in Bangladesh. Accordingly, the research was conducted on Chevron Bangladesh, a multinational organization.

• The selection of the organization, Chevron Bangladesh, enabled us to have a look at a standard code of ethics as the organization is serving worldwide. • The report was generated based on the opinions given by the HRM personnel of Chevron Bangladesh. Findings and conclusions are based on judgments provided by the respondents of our questionnaire which are often subjective. 1. 4 Limitation • Due to the company policy, we were restricted from conducting a formal survey on the general employees. Thus no quantitative analysis was made possible.

• The data collection was basically through the HR Personnel that may generate a little biasness on the findings. • The ethical practice of Chevron may not reflect the overall scenario of the corporate culture of Bangladesh. 1. 5 Literature Review 1. 5. 1 The evolution of codes Codes of conduct extend back to before World War II. One of the earliest company codes was Johnson & Johnson’s Credo, published in 1943 after General Robert Wood Johnson urged his fellow industrialists to embrace corporate responsibility to customers, employees, the community and stockholders.

Worldwide interest in business ethics and codes of conduct took off in the 1980s. Among the first large corporations to adopt codes of conduct were General Electric, General Dynamics, Martin Marietta (now Lockheed Martin) and several other defense contractors who saw business ethics programs as a way to self-regulate rather than submitting themselves to government regulation. In 2002, the Sarbanes-Oxley Act further bolstered the importance of codes of conduct by requiring public companies to have a code of conduct for top executives (and, if they didn’t have one, to explain why).

Then in 2003, both the New York Stock Exchange and the Nasdaq required listed companies to adopt and disclose a “code of business conduct and ethics” that applies to all employees and directors. Together with these regulatory developments, having a code became practically a mandate for public companies. 1. 5. 2 Signs of Code Effectiveness and Success Many corporate leaders agree that “doing the right thing” is its own reward, but they are also finding that a strong ethical culture benefits the bottom line.

In most organizations, the effects of having an inspiring code have been subtle but equally meaningful. Codes of conduct and code education are slowly permeating many corporate cultures, both helping employee understanding of their organization’s values as well as improving employee attitudes toward management. Current research by LRN shows that codes of conduct are having a positive impact on employee behavior and perceptions. Among the findings: • Seventy-nine percent of employees say their organization has a written code of conduct or ethics.

• Of those, 83 percent believe that management genuinely wants to promote ethics and integrity in the organization, 70 percent think management is trying to comply with the law, and 61 percent believe their organization has a code of conduct or ethics so management can protect itself. • Seventy-three percent of employees whose organizations have a written code of conduct or ethics say it makes the organization a better place to work. • Sixty-two percent think the code has helped alter behavior or direct decisions. • Eighty-two percent say they often apply their understanding of the code on the job.

• Forty-six percent of respondents say that employees know the rules, but that they don’t always follow them. • Only 4 percent of employees said the code had no effect. Applying Code of Conduct/Ethics on the Job Which, if any, of the following describe how the code of conduct or ethics at your company has influenced your company’s workplace? It has helped employees understand the conduct that company values 76% It has made it a better place to work 73% It has helped to alter behavior or direct decisions made on the job 62% People know the rules, but they don’t always follow them 46% It has had no effect 4%

1. 5. 3 Ethics Management Code of Ethics: Codes of ethics are norms, principles and behavioral rules of ethics set in a written form that contribute to clarifying what is considered legitimate and highly responsible in an everyday corporate business. Hotline: Hotline services can be provided within the company or out of company and offer notification opportunities for the actors concerned. Under the US Federal Sentencing Guidelines internal reporting mechanisms have to allow employees anonymity or confidentiality without fear of retaliation.

Eighty-three percent of 200 major companies that have adopted the Code of Ethics operate hotline services and have elaborated reporting regulations. Ethical Monitoring: Ethical monitoring is as crucial as an annual financial control since this allows assessment of how fundamental principles and behavioral rules laid out in the Code of Ethics are applied in everyday practice. Ethical Audit: An ethical audit is a process that analyses and measures corporate activities in ethically sensitive areas. 1. 6 Research Methodology 1. 6. 1 Research Method To complete this term paper qualitative methods are used.

This research is mostly descriptive in nature. To understand actual ethical practices qualitative method is appropriate. First fixed questionnaire was developed and were modified. Then interviews were taken and the findings were analyzed. Finally report was compiled and completed. 1. 6. 2 Data Collection Method The required data for this study was collected in two ways- • Primary Data Collection & • Secondary Data Collection Primary data was collected by interviewing HR representative with the fixed questionnaire, and then interview of other employees were taken to gather further information.

Secondary data was collected from – • Different documents or reports • Various web Sites • Different books • Previously collected data 2. 0 Company Overview Chevron is one of the world’s leading integrated energy companies and conducts business worldwide. Their success is driven by their people and their commitment to get results the right way—by operating responsibly, executing with excellence, applying innovative technologies and capturing new opportunities for profitable growth. Chevron is involved in virtually every facet of the energy industry.

Chevron explore for, produce and transport crude oil and natural gas; refine, market and distribute transportation fuels and lubricants; manufacture and sell petrochemical products; generate power and produce geothermal energy; provide energy efficiency solutions; and develop the energy resources of the future, including research for advanced bio fuels. Chevron supports Bangladesh’s goal of maximizing the nation’s energy potential by actively investing in projects that deliver more gas to Petrobangla, the national oil company. They have developed natural gas production in three fields: Jalalabad, Moulavi Bazar and Bibiyana.

In 2011, total daily production averaged 915 million cubic feet of natural gas (434 million net) and 4,000 barrels of condensate (2,000 net). Condensate is liquid hydrocarbon produced with natural gas. 2. 1 Company Roots Chevron trace their beginnings to an 1879 oil discovery at Pico Canyon, north of Los Angeles, which led to the formation of the Pacific Coast Oil Co. That company later became Standard Oil Co. of California and, subsequently, Chevron. They took on the name Chevron when they acquired Gulf Oil Corporation in 1984, nearly doubling our worldwide proved crude oil and natural gas reserves.

Chevron’s merger with Gulf was then the largest in U. S. history. 2. 2 Global Scope Chevron’s diverse and highly skilled global workforce consists of approximately 57,000 employees and about 3,800 service station employees. In 2011, Chevron’s average net production was 2. 673 million barrels of oil-equivalent per day. About 75 percent of that production occurred outside the United States. Chevron had a global refining capacity of 1. 96 million barrels of oil per day at the end of 2011. 2. 3 Technology and Emerging Energy Technology is propelling Chevron’s growth.

They are focusing on technologies that improve our chances of finding, developing and producing crude oil and natural gas. 2. 4 Environment and Safety As a company and as individuals, Chevron takes great pride in contributing to the communities where we live and work. They also care about the environment and are proud of the many ways in which their employees work to safeguard it. 2. 5 Company Vision • Chevron safely provide energy products vital to sustainable economic progress and human development throughout the world • They are people and an organization with superior capabilities and commitment • They are the partner of choice.

• They earn the admiration of all our stakeholders — investors, customers, host governments, local communities and our employees — not only for the goals they achieve but how they achieve them • Chevron delivers world-class performance 2. 6 Company Values • Integrity • Trust • Diversity • Ingenuity • Partnership • Protecting People and the Environment • High Performance 2. 7 Ethical Practices Chevron seeks to develop a culture in which everyone believes that all incidents are preventable and that “zero incidents” is possible. This requires active leadership and all employees to be engaged.

Chevron’s Operational Excellence Management System (OEMS) describes the company’s uniform approach to systematic management of safety, health, the environment, reliability and efficiency. Lloyd’s Register Quality Assurance, Inc. , attested that OEMS is implemented throughout the corporation and that it meets all the requirements of both the International Organization for Standardization’s environmental management systems standard (ISO 14001) and the Occupational Health and Safety Assessment Series requirements for occupational health and safety management systems (OHSAS 18001).

Business Ethics: Chevron takes seriously the conduct of its employees and requires questionable conduct to be reported. This may include, for example, violations of company policy or of the Chevron Business Conduct and Ethics Code. One reporting method is the Chevron Hotline, which is operated offsite by Global Compliance Services (AlertLine®), an independent agent. Governance: For Chevron, good corporate governance means being transparent with and responsive to stockholders while managing the company for long-term success.

Extractive Industries Transparency Initiative: Chevron believes that the disclosure of revenues received by governments and payments made by extractive industries to governments could lead to improved governance in resource-rich countries. The transparent and accurate accounting of these funds contributes to stable, long-term investment climates, economic growth and the well-being of communities. Ethical Decision Making: Ethical decision making is essential to the success of a Company. Some decisions are obvious and easy to make; others are not.

When faced with a difficult situation, asking the questions below can help to make the right ethical decisions. 3. 0 Ethical Practices at Chevron 3. 1 Code of Ethics The company has its own code of ethics. The Code explains Chevron’s policies for how they conduct business around the world. Each of the — employees, officers and members of the Board of Directors alike — must commit to understanding this Code and abiding by its principles. In a competitive global environment, everyone will sometimes encounter situations that will test his/her judgment and integrity.

When that test arises, employee can use this Code to answer the following questions before they act: Is it legal? If you think an action may be illegal, do not proceed. If you need information about which laws apply in a given situation, talk with your supervisor, manager or Chevron’s Law Department. Is it consistent with Company policy, including our Human Rights Policy? If the proposed action does not comply with Company policy, you should not do it. Is it consistent with The Chevron Way? Consider whether the action would be consistent with our Company’s core values.

If it were made public, would I be comfortable? Ask yourself if you would make the same decision if you knew that it would be reported on the front page of tomorrow’s newspaper. Four “yes” answers are required to qualify an action as ethical and in step with Chevron’s values. 3. 2 Dissemination of Code of Ethics Any individual is informed about the code of ethics whenever Chevron make a job offer to him/her. However, the Code cannot address every possible workplace situation. In such cases further assistance is given to the employee through updated training or post on company bulletin/notice board.

Employees are also guided to use the code appropriately by the following the subsequent ways- Read through the entire Code. • Think about how the Code applies to your job, and consider how you might handle situations to avoid improper, illegal or unethical actions. • Use the questions and answers to help clarify situations that you may encounter. • If you have questions, ask your supervisor, manager or contact another one of the resources listed in this Code. 3. 3 Application of Code of Ethics Each and every person of the organization shares the same policy of ethics.

The applied rules according to code of ethics are equal for the employees of all departments as well as of different level of management. There is no separate procedure for the top level management. If any high level personnel, even the CEO is accused of any ethical misconduct, he/she has to go through the same process of investigation and if proved guilty has to go all the way through subsequent punishment procedure like any other employee of the organization. 3. 4 Training on Ethics The organization carry out an computer based training on ethics annually. Name of the training is ‘Business Conduct and Ethics Code’.

Duration of the training is 60 minutes. This training is mandatory for employees of all departments and of all level of management. Combined effort of Human Resource department, Finance department and IC&T (Information, Communication and Technology) department ensures successful completion of this training. Employees are given a 30days period to go through the training. Employee will be notified through email about the training and the specified time period. They will receive notification throughout that particular time period until they complete the training.

If anyone fails to do the training within time he/she will be penalized for that. 3. 5 Management Support for Ethical Conduct Executive leaders of all departments regularly discuss about ethics and the importance of creating an ethical culture in management meetings or other settings. Timely and specific guidance from supervisors, managers, the Chevron Law Department, the Corporate Compliance group or local Compliance Coordinator are always available to support the employee. Head of Systems, Control and Compliance department act as an in-house ethics advisor for any types of ethical issues.

3. 6 Reporting Ethical Misconduct Each employee must speak up promptly if there is any reason to suspect that anyone in Chevron or its affiliates has violated Company policies or local laws. They must also report any activity that could damage the Company’s reputation. Employee can try to resolve the situation through a discussion with supervisor, local management or local Human Resources business partner. Another resource available to each of the employee is the Chevron Hotline. Anyone can call or submit a report to the Hotline, which operates24 hours a day, seven days a week.

This report will be taken seriously and investigated as appropriate by a third party. The organization recognizes that it is better to report a suspicion that turns out not to be an issue than to ignore a possible violation of the law or Company policy. 3. 7 Protection of Employee after Reporting There are no negative consequences to raising concerns in good faith using the hotline, and the Company assures employees that no retaliation will take place. Chevron does not tolerate any form of retaliation for reports made in good faith.

This includes blatant actions, such as firing, transferring, demoting, or publicly attacking someone, as well as more subtle retaliation, such as avoiding someone, leaving him or her out of professional or social activities, and so on. It includes actions taken by managers and employees alike. 3. 8 Monitoring Ethical Misconduct Ethical state of the organization is monitored quarterly. Human Resource department, Finance (compliance) department and IC&T (Information, Communication and Technology) department are equally responsible for this monitoring process.

3. 9 Disciplinary Methods Each of the employees must comply with Code, and with all Company policies. If they fail to do so, they may face disciplinary action, possibly including termination. Likewise any supervisor, manager, officer or director who is aware of any violation and does not promptly report and correct it may be subject to similar consequences. It is important to note, however, that violations of the Code, or the policies referred to in the Code, could result in discipline, including termination of employment and/or criminal prosecution.

All of these penalizing actions are taken silently so that these steps cannot create any form of inconsistency within the organization. Even if an employee is terminated according to the disciplinary procedure, he/she will not be informed about it until the time at which he/she has to leave the organization. After the order of dismissal the employee is not allowed to access any of the organization’s facilities. 3. 10 Reward System The company does not provide any rewards for complying with the codes or performing ethical behavior.

They believe that when each of the employees follows the Code, they communicate their commitment to the values that have made Chevron admired both as a business partner and as a valued citizen of the global community. If the employee rewarded for ethical behavior, they will treat it as an extra activity. But the organization expects ethical compliance as a prerequisite to work with them. 3. 11 Updating Ethical Guidelines Ethical guidelines of the organization are updated annually. Corporate Management department is responsible for these updating procedures.

The employees are made informed about these relevant updates through training materials, company bulletin, emails and company’s internal website. 3. 12 Previously Observed Unethical Conduct According to the company’s past records, unethical conduct that reported most frequently is abusing the company resources which include internet abuse, use of customer database for personal gain, revealing trade secrets to competitors etc.. Immoral behavior like- negligence at work, passing the blame, falsifications are never accounted within the organization.

3. 13 Challenges in Enforcing Code of Ethics The most frequent challenges faced by the authority in enforcing code of ethics are- Making the vast and diverse workforce respectful of the ethical guidelines, keeping up with the ethical standards while dealing with external bodies. It is not an easy task to provide a single, standard guidance for people of different level. Compliance with these standards also has to be ensured. In the course of doing business around the world, Chevron interacts regularly with different external bodies.

How they conduct themselves with these bodies can affect their reputation, their operations around the world, and their ability to work with government officials and other stakeholders. The trust that they depend upon from both local and global communities and governments is essential to their business, and they must continually earn it. 3. 14 Home Country versus Host Country Diversity is a fundamental value at Chevron. As stated in The Chevron Way, this means that “we learn from and respect the cultures in which we work. ” they also value “the uniqueness of individuals and the various perspectives and talents they provide.

” Discrimination is prohibited in hiring, rate of pay, promotion, demotion, transfer, layoff or termination. All of the employee must obey the letter and spirit of the law at all times, wherever they live or work. Sometimes there can be significant differences from one place to another and between regions within a single country. However, no matter where we work, we are all responsible for respecting all applicable laws and following the policies in our Code. 3. 15 Management’s Perception about Code of Ethics The management believes that they pursue a stable culture which results from a strong central governance.

According to them each and every cases of violation of ethics has been given due importance with proper, extensive investigation in a just way. As Chevron enjoys a strong reputation for honesty and integrity throughout the world, they feel that no major initiative should be taken at this point of time to improve their ethical culture. 3. 16 Employee Perception about Code of Ethics Employees of the organization perceive the code of ethics as a guideline which effectively defines their boundary and which is mandatory for protecting their rights at the work place.

The code of ethics as well as any update related to it is properly communicated to them. They are clearly informed about what to do and what not to do and also the proper channel to report any ethical misconduct. They feel protected and proud to be a part of such organization that follows guidelines equally applied for all employees. 4. 0 Conclusion A code is a tool to encourage discussions of ethics and to improve how employees/members deal with the ethical dilemmas, prejudices and gray areas that are encountered in everyday work. A code is meant to complement relevant standards, policies and rules, not to substitute for them.

According to our research, Chevron Bangladesh has a sound code of ethics. The guidelines are strictly followed ensuring harmony among the organization. Management serves proper support for employees to understand and to comply with the code of ethics. However, if employees face any situation not mentioned in the code they can consult with authorized personnel. If the employee is not comfortable discussing the matter with their supervisor, local management or Human Resources business partner, Chevron Hot Line would be an option for him thus confirming the employee satisfaction and commitment.

The codes of conduct offer an invaluable opportunity for Chevron Bangladesh to create a positive public identity for themselves which can lead to a more supportive political and regulatory environment and an increased level of public confidence and trust among important constituencies and stakeholders. References • Business Conduct and Ethics Code • Driscoll, Dawn-Marie and W. Michael Hoffman, Ethics Matters: How to Implement Values-Driven Management, 2000. • Principles of Stakeholder Management, The Clarkson Centre for Business Ethics, 1999.

• Krisztina Szegedi, PhD, Ethics codes and ethics management in the oil and gas industry • Kaptein, M. : Ethics Management – Auditing and Development the Ethical Content of Organizations. Kluwer Academic Publisher. • www. chevron. com/ • www. lrn. com/ Appendix Questionnaire with Answer 1. Does your organization have a written code of ethics? ? ? Yes ?No 2. If no, how do you define a conduct as ethical or unethical? 3. Does every employee in your organization receive the code of ethics? ? ? Yes ?No 4. How are the code of ethics or ethical guidelines (as applicable) disseminated?

(You can choose multiple options) ? ? To employees at induction ? ? To anyone who asks ? ? Incorporated in training materials ? ? Posted on the company bulletin board/notice board ? ?Posted on the company website or sent via e-mail ? Management meetings ?Others……………. 5. Is the code of ethics uniformly applied across the following? (You can choose multiple options) ? ? Different departments ? ? Different levels of management 6. Are employees required to certify that they will respect the code of ethics? ? ? Yes ?No 7. Does your organization carry out training on ethical work place conduct?

? ? Yes ?No 8. If yes, please select the training frequency, mechanism, department and level of management involved in such training. a) Frequency of Training ?Monthly ?Quarterly ?Semi-Annually ? ? Annually ?Other b) Mechanism (you can choose multiple options) ?Lectures ?Films and videos ?Case analysis ?Role playing ? ? Other Name: Business Conduct and Ethics Type: Computer based training Duration: 60 minutes c) Department responsible for conducting training (you can choose multiple options) ? ? Human Resources ? ? Other ? Finance ? IC&T (Information, Communication and Technology).

d) Level of Management Involved (you can choose multiple options) ?Middle Management ?Senior Management ? ? Other ? All level of management 9. How often do your executive leaders speak about ethics and the importance of creating an ethical culture in management meetings or other settings? ? ? Regularly ?Often ?Sometimes ?Seldom ?Never 10. As your organization is a multinational, are there differences between home-country and host-country ethical guidelines? ?Yes ? ? No 11. Does your organization have an in-house ethics advisor? If yes, please mention his/her designation. ? ? Yes ?Team head- System Control and Compliance.

?No 12. Is there a mechanism through which employees can anonymously report ethical misconduct that they have witnessed or faced? ? ? Yes ?No 13. Please select the extent to which employees in your organization report ethical misconduct that they have witnessed or faced. ?Regularly ?Often ? ? Sometimes ?Seldom ?Never 14. Is there a mechanism for protecting employees from retaliation upon reporting instances of ethical misconduct? ? ? Yes ?No 15. Which of the following consequences have been faced in the past by employees who reported ethical misconduct by their co-workers or supervisors? (You can choose multiple options).

?Unfriendly environment at work ?Adverse response from supervisor ?Barring from promotion opportunities or pay increases ? Relocation or reassignment 16. Does the code of ethics specify disciplinary measures for failure to comply with it? ? ? Yes ?No 17. If yes, what is the maximum severity of the discipline rendered? ?Verbal warning ?Written warning ?Suspension ? ? Dismissal 18. Are these actions taken silently or publicly? ? ? Silently ?Publicly ?Depends 19. What do you think is the most effective method for creating respect for ethics among those who violate the code of ethics?

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