Josiah Stamp, an early 20th-century economist, said, It is easy to dodge our responsibilities, but we cannot dodge the consequences of dodging our responsibilities. That was a century ago, but in a modern world, that is more transparent than ever, business ethics remains extremely important. Business ethics is a set of moral rules that govern how businesses operate, how business decisions are made and how people are treated. It’s a set of behaviour a business conforms to in all its dealings with the world; employees, environment, vendors, government.
The idea of ethics to business operations is morally discerning what is good or bad but pursuing and implementing the good.
In this era of globalization, where countries interact with each other through international trade, foreign direct investment, import and export, entry barriers into the foreign market has reduced. Globalization has created massive employment opportunities in host countries and also helped to reduce poverty yet, it has its own critics; the ethical aspect of globalization.
Multinational companies are expected to adhere to a certain code of ethics in their host countries. Multinationals undergo an ever-changing and complicated market, where right and wrong may be interpreted differently based on cultural differences, beliefs and perception and where what works in country A may not thrive in country B or even considered an insult! To this end, a lot of multinationals fall short of ethical practices, while some fall short due to greed and shady practices.
The common ethical dilemmas are; Employment law, Integrity, Social discrimination, Privacy and tech, accounting fraud, environmental pollution, manipulation and exploitation of venerable people and corruption and bribery.Organisations that desire to be truly ethical must under-study the rules and regulations governing the countries in which they intend to carry out business. These organisations must be aware of and be ready to conform to the host country’s domestic laws, not neglecting trade organisations as well as the international agreement between companies.
INTRODUCTION – CODE OF BUSINESS ETHICS
Ethics plays a vital role in the function of a business. The overall standards, reputation and image of a company often determines the conscious effort and importance of its’ ethical standards. In ethics, the principle of corporate right and effects comes to bear. An organisation has the responsibility to not violate the rights of other people and is fully responsible for its actions on people whether directly or indirectly.
Most companies implement their code of conduct and ethics in their company policies which they reiterate during their inductions and training, some go further by documenting in a booklet given to their employees so they are knowledgeable about them. It’s a blanket of the statement of values and beliefs that defines the company. It gives information on matters such as; management and employee practice, dealings with vendors, competition, company assets, conflict of interest, dealings with other stakeholders and relations with the civil society. Organisations should always strive to be ethically upright in all their relations with their internal and external customers; equal opportunity for employee placement and promotion without discrimination, transparent and honest accounting books, good working conditions with appropriate tools provided, management of waste as specified by government and industry standards, prompt payment of returns to investors.
A CASE STUDY OF WALMART
Walmart Inc formerly known as Walmart stores is an American retail corporation that runs a chain of discount stores, hypermarkets and grocery stores. The company was founded by Sam Walton in 1962 and became incorporated in October 1969. As of January 2019, Walmart has 11,348 stores and clubs in 27 countries of the world. Its headquarters is in Bentonville Arkansas, United States. Walmart expansion outside North America recorded tremendous success except in Germany and South Korea where it failed. The business strategy is low pricing, a strategy that spurred the small business into a gigantic no 1 retailer in the world.
According to PBS, Walmart is the biggest player in the industry and the largest private employer in the world with staff strength of 2.2 million people yet its staff lives below the poverty line. They also said the company claims it only stocks made in US products only whereas its wares are manufactured abroad in contestable factories. Walmart has been alleged of so many unethical practices over the years and a lot of lawsuits filed against her with regards to her employees, individuals, labour unions, environmental groups. The incessant lawsuits make one wonder if all of these allegations are mere allegations or won’t it be better for the retailer to divert these legal budget to best ethical practice. Let’s look into some of the incidences at Walmart.
Labour Union Opposition
Walmart operates an open system that doesn’t believe in third parties. It operates without a union. They encourage issues to be brought up individually to management notice, a system that allows issues to be discarded and swept under the carpet. According to the National Labour Relations Act, this act by the employer is offensive as employees have the rights to association. The complaint, filed with the National Labour Relations Board, alleges that Walmart violated federal labour law by bribing employees to report on co-workers who favoured a union. (www.washingtonpost.com) these charges were however denied by Walmart. Walmart needs to show an example by respecting and upholding the laws of the land; it’s the principle of corporate rights to its employees.
There was another serious allegation against Walmart, discriminating against women within its organisation. Women have also allegedly been underpaid than men. In June 2001 a group of six current and former female employees filed a sex discrimination lawsuit (seeking to represent up to 500,000 current and former Walmart workers) against the company.(Hoover’s Handbook, pg.907). Saying Walmart failed to offer equal promotion opportunities to women, even though it staff strength had more than seventy per cent of women working at the company, only a few of them are managers, as a result, Men are holding more management positions than women. Walmart is the nation’s largest employer of women, but unfortunately they are being treated without dignity and respect. (www.arkansasnews.com).
Though Walmart has recently introduced workplace diversity initiatives, intended to prevent further gender bias.( usgovinfo.about.com)Employee welfare- Walmart is being accused of paying their employee’s very low wages, with some of her employees earning between $12,000 and $17,000 per year. Walmart claims that in a bid to keep operating costs down, employees’ wages can only be so. Walmart’s ultimate defence is that it offers lower prices and somehow that justifies all sin (www.usatoday.com). Walmarts’ health insurance care is expensive; most of her employees can’t afford to pay because of their meagre wages.
Hence, employees who cannot pay for their health insurance have to rely on the government/state or their spouses from their tax. Walmart reacted to this situation by offering discounts on health care coverage. Members can save as much as 50% on services not normally covered by medical insurance. (www.ufcw324.org). Also, Employees who worked overtime didn’t get paid for this service. Walmarts policy clearly states that ‘every employee should be paid for every minute worked for”, so they have actually bridged a statement of policy they made. So in February 2004, a federal judge ruled that Walmart should pay workers for the outstanding overtime hours (Hoover’s Handbook) the case was pending for a while but eventually, Walmart maintained their policy was against such action, hence, managers who were involved in such atrocity were fired. Walmart should always scrutinize its pay practices and ensure every employee gets what is due. As the biggest private employer of labour, Walmart needs to provide a better welfare package for its staff.
Walmart has been accused of using illegal immigrants to work in the United States. They have been undergoing investigation in this regard. In October 2003 federal agents uncovered hundreds of illegal immigrants employed by outside contractors cleaning its stores.(Hoover’s Handbook, pg907) Hence the company was sued for breaking immigration laws. Walmart has accused the contractors of this act, saying the contractor given the job to hire employees on behalf of the company did not do their homework properly.
Walmart, therefore, has been indicted of gross negligence on behalf of the country in whole. It’s not enough for Walmart to say they didn’t know or it’s the contractor’s fault, the onus and responsibility are on her for the actions and inactions of its contractors as long as they are acting on behalf of Walmart.Labour violation- In January 2004, The New York Times reported on an internal audit in Walmart conducted in July 2000, which examined one week’s time-clock records for about 25,000 employees.
According to the report, the audit, pointed to large abuse of the child labour laws and state regulations requiring time for breaks and meals, including 1,371 instances of minors working too late, during school hours, or for too many hours in a day as permitted by law. There were 60,767 missed breaks and 15,705 lost meal times. Walmarts’ vice president for communications responded that company auditors had determined that the methodology used was flawed, and the company did not respond to it in any way internally.
Investigation by The New York Times reported allegations of bribery by a former executive of Walmart de Mexico that, in September 2005, the company had paid bribes via local fixers to officials throughout Mexico in exchange for construction permits, information, and other favours, which gave Walmart a substantial advantage over competitors. Walmart investigators found credible evidence that Mexican and American laws had been broken. Concerns were also raised that Walmart executives in the United States had squelched the allegations. A follow-up investigation by The New York Times, published December 17, 2012, revealed evidence that regulatory permission for siting, construction, and operation of nineteen stores had been incentive induced.
There was evidence that a bribe of US$52,000 was paid to change a zoning map, which enabled the opening of a Walmart store a mile from a historical site in San Juan Teotihuacn in 2004. After the initial article was released, Walmart released a statement denying the allegations and reports that it had found no evidence of corruption. Bribery is unethical behaviour in the business world.
In July 2014- American actor and comedian Tracy Morgan opened a lawsuit against Walmart seeking damages over a multi-car pile-up which the suit alleges was caused by the driver of one of the firm’s tractor-trailers who had not slept for 24 hours. Morgan’s limousine was apparently hit by the trailer, injuring him and two fellow passengers and killing a fourth fellow comedian James McNair. Walmart settled with the McNair family for $10 million. Morgan and Walmart reached a settlement in 2015 for an undisclosed amount.
In March 2018- Walmart was sued by former Director of Business Development Tri Huynh for claims of reporting misleading e-commerce performance results in favour of the company. Huynh stated the company’s move was an attempt to regain lost ground to competitor Amazon.
In September 2018- Walmart was sued by theEqual Employment Opportunity Commission alleging that Walmart denied requests from pregnant employees to limit heavy lifting.In October 2018- Walmart appeared in court over a 9-year long lawsuit. The case Brown v. Walmart Inc, U.S. District Court for the Northern District of California, No. 5: 09-cv-03339.” Walmart Inc has agreed to pay $65 million to nearly 100,000 current and former cashiers in California who accused the retailer of violating state law by refusing to provide them with seating while they worked”, in addition to the payoff, the retailer promised to provide seating to California cashiers. Although, Walmart denied any wrongdoing in this matter and reacted by saying” placing stools at cash registers would pose a safety hazard and make workers less productive.
The company further said the nature of cashiers’ work did not reasonably permit seating because they need to scan large items, stretch to see the bottom of shoppers’ carts, bag merchandise, and sometimes perform work away from registers”.Walmart also said it had a policy of offering stools to cashiers with medical conditions or disabilities, and store managers have the discretion to provide stools to cashiers on a case-by-case basis. Similar lawsuits were filed against Bank of America, HomeDepot, and JPMorgan in 2017.
Walmart must at all times respect labour regulation.In December 2018- as stated by Business Insider, Walmart is facing a lawsuit from Newyork attorney general alleged at the sale of contaminated toys with Lead. The attorney labelled the situation” a parents worst nightmare” as lead contamination can impair the proper development of brain cells in children. According to the tweet and subsequent statement, ‘the Cra-Z-Jewelz jewellery-making kits imported by LaRose between 2015 and 2016 were the subject of an investigation by the New York attorney general’s office. The Consumer Protection Safety Committee’s website holds that paint must not contain a concentration of lead that exceeds 90 parts per million “by weight of the total non-volatile content of the paint.” Walmart said it had removed the product from its stores. They went on further “We take our customers’ safety seriously and require our suppliers to meet all safety standards. As soon as LaRose Industries made us aware of the product recall nearly three years ago, we removed the items from our shelves and online and haven’t sold them since,”
Cite this essay
Code of Business Ethics. (2019, Aug 20). Retrieved from https://studymoose.com/code-of-business-ethics-essay