Comparing Codes of Conduct - Enron - Case Study Example

COMPARING CODES OF CONDUCT (Name) (University Affiliation) Table of Contents Table of Contents 2 Introduction 5 2. Emerging business ethics issues in the documents 6 2.1. Enron corp. 6 2.1.1. Securities Trades by Company Personnel 6 2.1.2. The Need for a Policy Statement 6 2.1.3. Business ethics 7 2.1.4. Ownership of Information 9 2.2CQUniversity 9 2.2.1. Respecting the Inherent Dignity of the Individual 10 2.2.2. Acting on the Basis of well informed Conscience 10 2.2.3. Members should be Part of Community Scholars 11 2.2.4. Uphold the Public Interest 11 2.2.4. Corporate Social Responsibility 11 3. Enron’s Code of Ethics Mandatory and Voluntary Aspects 12 4. CQUniversity’s Code of Conduct Mandatory and Voluntary Aspects 13 5. Corporate Governance and Transparency 14 Conclusion 16 6. References ….............................................................................................................................14 Executive summary This report is divided into three major parts with subsections underneath. The report starts with an introduction, which opens up the scope and objective of the report. First, the report will identify business ethic issues. Thirdly, the report shall asses both the mandatory and voluntary aspects in the two documents. Finally, the report will address issue to do with corporate governance and the stakeholders of the two institutions affected by the different codes of ethics. Next, it will identify the emerging transparency in the two documents. Introduction Both the Code of Ethic and Code of Conduct documents are integral in running the daily activities of an organization. Both the former and the latter help shape the activities carried by the stakeholders of a company if it is to realize its SMART goals and objectives (Seitz & O'Neill 1996). These documents give an organization easier time in decision making through reducing the ambiguity and consideration of the stakeholders ethical standards and perspectives (Schwartz 2002). As such, this report seeks to assess CQUniversity Code of Conduct and Enron Code of ethics. In the CQUniversity’s Code of Conduct document, the stakeholder groups affected include members of the CQUniversity council as a whole, the Vice-chancellor and Executive, senior staff, managers, supervisors and academic professional staff. In addition, the code of conducts affects all individuals who are employed on short terms such as contractors. Moreover, the code of conduct also affects anyone who may have contact with the University’s students, those who may use the University’s facilities, adjunct staff as well as volunteers. Furthermore, the code affects anyone representing the university in any scenario for example persons acting as agents of the University. On the other hand, Enron’s code of Ethics affects, all its employees, the board of directors, the managers, Enron’s affiliated companies, its subsidiaries, supervisors and attachés. As far as external contact with the company is concerned, the Code of Ethics also affect, partners, other company’s employees who may carry out business with Enron, contractors, vendors, customers and suppliers 2. Emerging business ethics issues in the documents 2.1. Enron corp. In Enron’s document, the business ethics issues that are fully addressed include Securities Trades by Company Personnel, The Need for a Policy Statement, Business Ethics Confidential Information and Trade Secrets, Use of communication, Consulting Fees, Commissions, and other payments and compliance with Antitrust Laws. In a larger extend, the code of ethics also addresses issues to do with Conflicts of Interests, Investments, and Outside Business Interests of officers and Employees (Vitell & Hidalgo 2006). 2.1.1. Securities Trades by Company Personnel Under this schema, the Enron’s Code of Ethics disallows or restricts any employee including directors and officers of the company, or its subsidiaries, and affiliated company from directly trading in Enron’s security, while possessing material, which is considered non-public information. In such a scenario, the involved party is advised to seek interpretation of the matter as well as a legal opinion in respect of the requirements the applicable laws 2.1.2. The Need for a Policy Statement The Insider Trading and Securities Fraud Enforcement Act allows the Securities and Exchange Commission “SEC” to put onus on companies whose company personnel violates insider trading laws. In response, Enron’s codes of has adopted a Policy Statement to avoid any possibility of persons employed or related to the company violating the Act. This measure is a precaution put to avoid the severe punishment that SEC could impose on the company in case of such a scenario. As such, the company would avoid damaging its reputation that has been achieved through many years of hard work. Some of the consequences in the Policy Statement include a civil penalty of up to three times the profit gained or loss avoided. Secondly, an imposed criminal fine of a million dollars in spite of how small or big the profit was. Under this policy also is the issue to do with Material Information. The code of Ethic defines Material Information as any information that any reasonable investor may consider very significant in his or her decision to buy, hold, one sell stock. Thus, it is any information that could reasonably affect the stock price in the market (Miller & Rogerson1999). Consequently, employees and affiliated companies to Enron possessing non-public material are not allowed to buy or sell the company’s securities. 2.1.3. Business ethics As regards business ethics, the Code requires that all Enron’s employee including its subsidiaries as well as its affiliated companies, are mandated to carry out the company’s business with the highest standards. The Code prohibits an employee from conducting himself or herself in manner that could be considered detrimental to the best interests of the organization (Mason 1995). The employee is restricted from carrying out activities that can bring him or her financial gain derived from the fact that he or she is employed with the company. The employees are expected to fulfill both moral and legal obligations in an open and prompt manner that reflects the company’s name. Moreover, the Code dictates that all advertisements on the company’s products should be truthful and never exaggerated or misleading at all. Additionally, the products and services of the company are expected to be of highest quality at any given time. The company does not condone any kind of bribes, kickbacks, lavish entertainment, bonuses or gifts in exchange of favors, privileges, special position and price. The code of ethics stipulates that employees do not reserve the right to publish any written or oral negative, libelous or defamatory statements concerning the company whether they in employment or after they have left. Concerning the relationship with the public, the code dictates that the company’s employees or members will at all times conduct an honest, candor and fair services towards the customers, employees, press, stockholders, suppliers, governments, bankers and even the press, stockholders, suppliers, governments, bankers and even the press. The Code of Ethics also addresses the issue to do with contracts. The Code dictates that the company’s attorneys must review each contract before it is submitted to the parties involved however small it might be. In that light, contract is defined as any agreement, term, letter of intent, and amendment, and bid, memorandum of understanding, fax, modification, supplement and telex. Every business conducted on behalf of the company or in relation to the company should strictly adhere to the laws and regulations of the company even though they may differ from those of foreign nations. (Lumpkin & Eisner 2006). Similarly, the employees are expected to comply with the executive stock ownership regulations or rather requirements that are set forth by the Enron’s Board of Directors. 2.1.4. Ownership of Information Regarding Ownership of Information, the code dictates that all information, concepts, ideas, discoveries including employee inventions remains to be the company’s property. Many would argue that an individual’s invention or discovery should not be owned by the company but rather the invent himself. However, Enron working ethics do not recognize that, since the company feels that it gives the employees an opportunity to explore thus using the company’s resources and acquired skills through experience to come up with their discoveries and innovations. Therefore, the company requires that such materials and information regarding the discoveries be made public to the company. The code requires that whereas an employee could have accessed or become aware of the company’s proprietary information, he or she is restricted from sharing it with the public or follow respective regulations if required to do so. Similarly, the employees are prohibited from using the Company Proprietary or Confidential information for their personal gains or benefit. 2.2CQUniversity As regards the business in the University, the Code of conduct addresses issues like Respecting the Inherent Dignity of Individuals, Acting based on well informed Conscience, being part of the community of Scholars and finally Upholding the Public Interest. Unlike, Enron’s Code of Ethics, CQUnivrsity’s Code of Conduct does not dictate it gives guidance on how well a member of the institution should carry himself or herself when going about his or her activities while at University. The University’s Code of Conduct advice the members on how they should behave for the good being of everyone. Contrastingly, the Company’s Code of Ethics stipulates on what should be done and what ought not to be done. It gives ultimatums. Accordingly, the Company’s Code of Ethics is established to benefit the organizations more than the employees. 2.2.1. Respecting the Inherent Dignity of the Individual According to the Code of Conduct, respect of an individual’s inherent dignity is the key value. The code advocates for the respect of an individual’s beliefs, ideas, feelings and attitude thus creating an environment where an individual can exercise the aforementioned attributes. The principle argues that all human being s have the same dignity as well as rights thus should be left to freely to express their views and desires. Furthermore, the principle calls for members to be honest, fair, courteous, and have proper regards for their rights while observing the rights and dignity of others. In addition, the principle stipulates for dignity in the place of work. In that, issues like sexual harassment, general harassment and workplace bulling is avoided. 2.2.2. Acting on the Basis of well informed Conscience Under this principle, the members are instructed to act upon information that is relevant to the situation they are in. they are supposed to do the right thing despite the situation they find themselves. They are supposed to be aware of the surrounding environment or situations, comprehend the importance of what is seen, understanding the importance of that situation, establishing possible consequences, think of what can be done to strive for the perfect situation and last but not least, acknowledging that they an individual responsibility to tackle that situation. Whenever members are taking their activities, they are required to abide by the Professional Ethical Standards. 2.2.3. Members should be Part of Community Scholars This principle recognizes University members as part of the University community of scholars. The principles thus give the University members the absolute right and obligation to actively participate in CQUnversity’s activities as well as well promote its operation. Under this principles, are key guidelines that members should adhere to: Respect of Academic Freedom and Behaving with Intellectual Honesty. The code also stipulates that members follow ethical principles as University teachers and the ethical principles as researchers. Additionally, the code restricts members from engaging in conflicting interests. The code also advocates for the respect of human and animal subjects. 2.2.4. Uphold the Public Interest Being a statutory body established through an enactment of the Queensland parliament, CQUniversity’s members are charged with maintaining the highest possible standards of corporate governance and public administration. Thus, the members are supposed to act with integrity and impartiality. 2.2.4. Corporate Social Responsibility Just like a business enterprise does, CQUniversity recognizes its duty and responsibility towards the development of a better community as well as respond to community needs and concerns. 3. Enron’s Code of Ethics Mandatory and Voluntary Aspects In Enron’s Code of Ethics, almost every part of the document is a mandatory required. They act like subsidiary laws and regulations to the company and everyone is required to abide by them. In fact, in the beginning of the document, there is a stipulation that everyone comply to the law and ethical standards of the company failure to which, one would face a disciplinary action which include termination. To start with, every individual is expected to comply with the policies under the Securities Trades by Company Personnel section. Here, it is dictated that no employee or member affiliated to the company should take part in the trade of securities while in possession of any material that is considered non-public information. Secondly, the Business Ethics section is also a mandatory in that, every employee is required to conduct his or her business in accordance with the highest ethical standards in place. Similarly, the employee is charged with carrying out any business in fair, honest, and condor manner. The employee is also required to disclose any personal invention or discovery regarding a concept or idea to the company and the company reserves the right to claim ownership of such. As such, the company shall be deemed to the author of the work with negotiation. Thirdly, the Confidential Company Information and Trade Secrets section requires every employee who may have accessed the company’s confidential or proprietary information to guide the information and not disclose it to the public. Moreover, the employees are prohibited from using such information for personal gains. Additionally, the employees are prohibited from gaining information such as trade secrets through improper means. The code makes it a mandatory for employees to respect the confidentiality of other people. As such, may not “hack” into third party systems or rather read other people’s pins as well as logins. Ultimately, the employees must comply with all the laws available, which include federal, state and foreign antitrust laws. As stated earlier, Enron’s Code of Ethic revolves around mandatory requirements thus there are little aspects of voluntary practices. The foremost voluntary aspect concerns about reporting any cases of possible violations to the company. The Code encourages any persons to feel free and report any concerns related to the violation of Enron’s Code of Ethic or any other law or regulation expected to affect the company. The next voluntary aspect concerns the principles of Human Rights. Under this code, every employee is encouraged to respect the human dignity and conduct business with other parties or stakeholders with integrity, respect, communication and excellence. Moreover, the employees are expected or rather encouraged to adhere to Enron’s Vision and Values statements. In Addition, the Code also asks any person transacting with the company, to do so in utmost good faith and always use his best judgement at any given scenario. 4. CQUniversity’s Code of Conduct Mandatory and Voluntary Aspects Much of the University’s Code of Conduct involves voluntary practices and little is dictated by the document. Ensuring dignity for others in the working environment is one of the mandatory requirements (Beauchamp 2004). The code prohibits any acts of sexual harassment and bullying. Another mandatory requirement is abiding by the professional ethical standards. The code dictate that members observe and follow the requirements of their respective profession. Adherence to intellectual honesty stands to be one of the University’s fundamental value and as such, members are required to adhere to the highest standards of honesty in professional practice and scholarships. Ultimately, members are mandated to maintain confidentiality. The University’s Code of Conduct aims at guiding the members rather than dictating the behaviour of individuals. Much of the provisions are aimed at outlining minimum expectations that the members are expected to conduct themselves. Some of these voluntary practices include members having respect for each other and having the core duty to take care for a safe working environment. Additionally, the members are encouraged to be respectful of the academic freedom thus feeling free to express academic ideas and pursue their academic endeavours irrespective of their field of study. Furthermore, the members are advised to avoid any conflict of interest thus developing an objective research studies. Members are also encouraged to act with integrity and impartiality. It is expected of members to maintain and enhance public confidence in the University 5. Corporate Governance and Transparency As far as corporate governance and transparency is concerned, both the two documents address the issue. Reputation is a very crucial factor in any organizations therefore, it is important for companies to observe appropriate principles of corporate governance and transparency in the day-to-day running of the business. As such, the code of ethics and conduct should always include the principles that uphold transparency and corporate governance (Barnett et al 1994). For example, Enron complies with the U.S Postal Service that any mail addressed to an NGO, firm, joint ventures and even associations, will be addressed by the official name and address of the organization thus the official company mails will not be addressed to an individual’s postal address thus enhancing transparency (Weiss 2008). Moreover, Enron’s code of ethic advocates for integrity, honesty and sincerity. To protect the company’s reputation, Enron has a policy that prohibits Tipping. The code restricts its employees from receiving or giving tips even if the tipping would affect the company’s stock prices positively. The company also advocates for any member transacting on behalf of the company to act in good faith and adhere to integrity. As regards to transparency, the company’s policy is to produce or give services that are of the highest quality. Similarly, all of its advertising and promotional products are dictated to be truthful and factual and not exaggerated or misleading. The company’s code also prohibits bribes, entertainment, bonuses or gifts in exchange of favours. All customers, suppliers, contractors and any other stakeholder are to be treated equal. Moreover, the code stipulates that all agreements should be honoured be it written or oral. In the case of CQUniversity, the code largely addresses the issue to do with corporate governance and transparency under the principle 4. The principle advocates for the need to uphold the public interest thus, members are required to act in the highest possible standards of public administration and corporate governance. The principle is set to correlate with the country’s law: the Public Sector Ethics Act 1994(Qld). Under this act, integrity and impartiality; promoting the public good; accountability and transparency; and commitment to the system of government issues are addressed. Accordingly, members are expected to show integrity in their use of the limited resources that have been allocated (Markus 2008). To enhance transparency, the code of conduct stipulates that members should not accept gifts in a return of favour. Members should always act with respect and trustworthiness to give the university a good reputation. The document stipulates that members demonstrate accountability as well as transparency. In effect, when given university resources to facilitate activities such as research, teaching and administrative activities, members are required to ensure that these resources are used accordingly and that there is no wastage. Members are prohibited from abusing or using the resources extravagantly. As a way of enhancing transparency the document requires members to accurately report on the use of resources they have been allocated. The reports are used to help keep accurate records of CQuniversity’s resources. Similarly, the document advocates for the reduction of personal use of University Resources. The code dictates that members who are given University resources should be accountable of the allocated resources thus the usage should be in position to withstand disclosure or rather public scrutiny. Ultimately, the members are also required ensure adequate security of the resources this would help avoid losses and replacement costs. Conclusion Ultimately, this report has been able to tackle all issues aforementioned in the introduction part. Accordingly, issues to do with the stakeholders affected by the code of ethics have been addressed. secondly, the report has been able to show the emerging business ethics in both the document. Thirdly, the report has also addressed the mandatory and voluntary aspects of the two documents and finally, the report handled the corporate governance and transparency in the documents. References Arcot, S., & Bruno, V. G.2009. Silence is not golden: corporate governance standards, transparency, and performance. Available at SSRN 1412889. Barnett, T., Bass, K., & Brown, G. 1994. Ethical ideology and ethical judgment regarding ethical issues in business. Journal of Business Ethics, 13(6), 469-480.Anand, A. I. (2005, May). Voluntary vs mandatory corporate governance: towards an optimal regulatory framework. In American Law & Economics Association Annual Meetings (p.44). bepress. Beauchamp, T. L., Bowie, N. E., & Arnold, D. G. (Eds.). 2004. Ethical theory and business. Dess, G. G., Lumpkin, G. T., & Eisner, A. B. 2006. Strategic management: text and cases. Richard d Irwin. Gotterbarn, D., Miller, K., & Rogerson, S.1999. Software engineering code of ethics is approved. 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Weiss, J. 2008. Business ethics: a stakeholder and issues management approach. Cengage Learning. Read More