Best Buy's Code of Ethics - Essay Example

?Best Buy’s of Ethics: An Analysis Among the US companies worth analyzing its of ethics is Best Buy’s, because of its success story. Founded in 1966, the company (originally named Sound of Music) started simply as a small music store in St. Paul, Minnesota until it achieved its break in the ‘80s in which time (1983) its present name Best Buy was adapted. Today, Best Buy – named Company of the Year in May 2004 by Forbes Magazine (Stopper, 2006, p. 34) – is now one of America’s leading specialty retailing companies at home and abroad (Best Buy, 2009, p. 4). Best Buy’s Code of Ethics: Summary Best Buy’s code of ethics is readily accessible on the Internet in different languages – something Bernardi and Lacross (2005) considered “best practice” in corporate transparency (p. 34). Best Buy (2009) defines ethics as “putting principles into action,” which to the company is a matter of integrity and self-restraint (p. 1). Aiming “to be a responsible, values-driven global enterprise,” (p. 6), Best Buy declares its values into four strong statements: (1) “unleash the power of our people;” (2) “learn from challenge and change;” (3) “show respect, humility and integrity;” and (4) “have fun while being the best” (p. 5). These are achieved through mutual partnership, honest and accurate information, respect for employees’ autonomy, recognition of work, strict observance of confidentiality, zero-tolerance on retaliation, responsibility to stakeholders, respect for diversity, legal compliances, health and safety in the workplace, respect for the physical environment, financial integrity, fair competition, corporate social responsibility, protection and proper use of company assets, and protecting intellectual property. These values are well-ingrained in the companies stated responsibilities: Responsibility to each other – deals with the company’s internal environment, ranging from the relationship of management to employees, employees to the company, and employees to their co-employees; responsibility to customers – tackles the company’s ethics in advertising, market distribution, and relationship with diverse customers; responsibility to shareholders – emphasizes financial integrity, transparency, and the safeguarding of the company’s assets; responsibility to business associates – highlights fair competition and conflict of interest; responsibility to communities – spells out the company’s corporate social responsibility and its legal and responsible global operations; and the special obligations of employees with financial reporting responsibilities -- stresses honesty, accountability, compliance, objectivity, promptness, and full disclosure. Following Takamine’s Justice Model, which integrated both the Blanchard-Peale Model and Velasquez Model (Takamine, Date, p. 38), Best Buy’s code of ethics can be summarized as follows: Justice in Best Buy’s code of ethics can be categorized into three: distributive, retributive/corrective and compensatory justice. Distributive justice is expressed in the company’s commitment to strict compliance to “applicable national, provincial, state and local laws and regulations that govern pay rates, overtime, meals and rest breaks and child labor” (Best Buy, 2009, p. 16); on the distribution of responsibilities at different levels of the organization, specifically citing greater responsibility on its managers; and to the company’s strong commitment to its consumers’ and shareholders’ satisfaction. Retributive or corrective justice almost dominate the company’s code of ethics as it centers on curving misconduct among its people. Misconduct shall be dealt with accordingly giving due consideration not only on the act itself but also on its impact on the company’s stakeholders. Compensatory justice is implied as the consequence of Best Buy’s conduct of distributive and retributive justice. Utilitarianism is evident in Best Buy’s code of ethics, as it clearly expressed its recognition of its responsibility to all its stakeholders. Even in making decisions utilitarianism is evident in the company as it listens to its people with the end view of attaining balance among its stakeholder’s differing interest, and ultimately taking side with the greater good. Stability can be seen in Best Buy’s code of ethics, as this has not been changed for years; although it has been supplemented with a Finance Code of Ethics, aimed at keeping its finance people in check. Best Buy’s code of ethics is governed with a combined use of deontology and teleology. Deontology is when it emphasizes the fulfillment of the obligation or duty of each part of the organization and inculcates into the organization the allegiance to rules, procedures and standards. Yet, it subscribes to teleology in meting out disciplinary actions. Integration in Best Buy’s code of ethics is expressed in the company’s respect for diversity among its employees and customers, in giving equal opportunities, in its actions to weed out obstacles to the process of reporting misconduct, in its acknowledgement of its responsibility to all its stakeholders, and in its recognition of the company’s CSR and environmental responsibility. Consistency between what the company believes and values and what the company does is actually the banner slogan of Best Buy’s code of ethics. In fact, to Best Buy, consistency is integrity. Walking the talk is something that the company’s code of ethics would like to emphasize. Finally, Best Buy’s code of ethics has been proven effective as it is able to slowly achieve culture change in most of its retail stores worldwide and as it has dramatically increased its productivity. Furthermore, the effectiveness of Best Buy’s code of ethics could be seen in its aim to transform people and community lives. Best Buy’s Code of Ethics: Strengths and Weaknesses Strengths The strength of Best Buy’s code of ethics lies in the following: (1) its beliefs; (2) its recognition on the difference between principles and action; (3) its consideration on both its internal and external environment in making its policies, processes, and decision-making; and (4) its direction. First, Best Buy’s strongly stated beliefs encapsulate values that are essential to inspire positive change in the organization. For example, unleashing the power of the people does not only give freedom and autonomy to the people, but more importantly it accords them respect, recognition and trust; it proudly tells its people that they have what it takes to be the best and that they can be relied upon. Such attitude to the people inspires and encourages higher performance and healthy work environment. As Vickers (2005) has stated, to develop an ethical corporate environment, leadership must be able to inspire the organization to overcome cynicism (p. 26) – the unseen negative energy force corrupting corporate cultures. Second, by differentiating principle from action, which demonstrates Best Buy’s cognitivist and pragmatic metaethic, the company is able to develop a code of ethics that is enforceable and realizable. As the U. S. Sentencing Commission noted (1994) in developing company’s ethics program, the code of ethics should be “capable of preventing misconduct” (as cited in Robertson & Fadil, 1998, p. 454). By emphasizing the necessary interconnectedness of principles and action, Best Buy has also shown its sincerity to make the company ethical. Third, by considering both its internal and external environment in making its policies, processes, and decision-making, Best Buy is able to weigh all sides of its stakeholders, thus broadening the base of its decisions, making them more inclusive and more acceptable to many. Furthermore, this could prevent the development of groupthink, to which Scharff (2005) blames WorldCom’s fraudulent practices (p. 35). More importantly, this makes the company attain its integrity. As Bernardi and Lacross (2005) explain: “In the integrity mode, the firm becomes proactive in the promotion of ethical behavior and engages all of its stakeholders; the company begins to ‘walk the ethics talk’” (p. 34). Fourth, Best Buy’s direction to transform people’s lives – those people that work for Best Buy, those that Best Buy serves, those that Best Buy deals with in the conduct of its business (government agencies, business associates and competitors), and the community in which Best Buy operates – makes its code of business ethics powerful for two interrelated reasons: First, transforming people’s lives calls one to transcend one’s personal interest and limitations, thus imbedding an altruistic motive; second, by doing so, the person doing the act is ennobled, while the person receiving the act is touched, creating better relationships and healthier business environment. Above all, Best Buy’s code of ethics is strong because it is able to communicate to its people that ethical practice is the company’s business. This can be sensed in the issues and processes that the company considers vital to the achievement of its goal. In fact, Brian J. Dunn, Best Buy’s current president and COO, has been awarded the Excellence in Communication Leadership (EXCEL) Award in 2009 (Best Buy Leader, 2009, p. 6). Weaknesses The weakness of Best Buy’s code of business ethics is its utilitarian view, which essentially contradicts the company’s goal to transform peoples’ lives. Takamine (Date) has correctly observed that succumbing to the greater good does not always constitute fairness and justice. In my view, this is compromising justice, which I believe is not transformational; instead this may be giving a wrong signal to the people that compromises are okay provided they are for the greater good. Moreover, although it is good to address equitably the company’s various stakeholders, Best Buy must recognize that such is an ideal thing especially in a free-capital market, where interests inherently clash rather than meet. For example, company owners want more from employees but are willing only to give less to employees; while employees do not want to settle for less. That is why there are labor laws, which aim more to regulate this inherent conflict between management and employees. And this is another area where Best Buy’s ethic shows weakness. Though Best Buy vehemently proclaims its high regard to its people, which it considers to be the company’s backbone and driving force, it fails to demonstrate this in its code of ethics in terms of employees’ compensation. I believe that in order to make a difference in the lives of employees, being legalistic in dealing with them in terms of compensation is not enough. Not all that is legal may be ethical; not all ethical may be legal. In other words, compliance of the law does not guarantee justness and fairness, though it may affirm integrity. Moreover, such approach is too conventional, which is incapable of bringing about change, because change must go against conventions. Evidently, just like any other corporate businesses, Best Buy turns to the legal approach when the interest of the capital is at risk. This implies that corporate ethic practice is being upheld not to address the flaws of the free-market economic system, but simply to justify corporate interest and make it appealing to society. Such I believe does not constitute but rather blurs justice and fairness. However, this does not mean that corporate ethic is not feasible; rather it emphasizes more the necessity of business ethic, given the limitation that the system imposes. Suggestions Best Buy’s code of ethics appears to be comprehensive and well-formulated as it addresses the various interests of all of its stakeholders and as it tries to address social issues that it sees relevant to its ethical operation. Yet a closer scrutiny would reveal some points for further improvement starting from its ethical framework to the issues it addresses and how identified issues are addressed. First on its ethical framework, much of the practices that Best Buy advocates reflect a pragmatic view, which is understandable because business requires concrete results. In fact, reputation and integrity matters a lot in business today because it is increasingly correlated with income earnings. Thanks to Enron and WorldCom scandals, because their fraudulent practices compelled corporations to observe ethical practices? Though pragmatism is not in itself negative, it cannot effect the transformation that Best Buy would like to create in the culture of the organization. Pragmatism may solve practical problems, but ethical dilemma, which marks an organization, cannot be solved with pragmatism. Furthermore, the company is seemingly undecided as to which metaethic should best guide its practices, because it uses different metaethic in different issues/situations. For instance, when it comes to employees’ practices, the company is determinedly deontologist, but when it comes to decision making (e.g. disciplinary action, conflict of interests) the company is teleologist. Again this illustrates pragmatism – whichever work well in specific situation is ethical. This I believe is not ethical at all, because at worst this is opportunism. For example, in its global operation Best Buy instructs its agents and employees that in case where the domestic law is in conflict with Best Buy’s code, the domestic law prevails – of course, because if not, then Best Buy may not be able to operate; but in case the local business practice runs in contrary to Best Buy’s code, the latter prevails – why is this so? Is it because Best Buy believes its code is superior? What about cultural ethic? What about respect for diversity? Again, such conduct illustrates pragmatism. And as I have stated, it does not resolve an ethical dilemma. As I see it, it would be much better for Best Buy to instead adopt the metaethic of cognitivism, not because it is knowable and teachable as Takamine (Date) explains (p. 57), but because it appeals to reason. In a world that is too much differentiated at all level and aspects of life, I think one thing that could bring things to light – which to me is the essence of ethic – is reason. Even in understanding people’s dilemma and situations, reason can capably respond to it. And if Best Buy would like to transform people’s lives, it must rise above conventions and this can be achieved by combining cognitivism with deontology. Even in dealing with conflicts between interests of its stakeholders – which Columbia (2001) explains is an inherent tension in business ethics (as cited in Vikers, 2005, p. 26) – in which utilitarianism seems ineffective, cognitivism with deontology will result to decision that would make Best Buy rise above the others, because such ethical path is not easy. It requires not only objectivity but more importantly courage and determinism. In fact, what makes it hard to become ethical is because ethics require us to go beyond the comforts of our zones. Second, on issues that Best Buy identifies to be ethically relevant to its operation, the company basically addresses issues that are among the top list concerns of the international community today such as, environment, diversity, healthy and safe workplace, corporate social responsibility, child labor, and sexual harassment. However, the manner by which these issues are tackled in Best Buy’s code of ethics does not fit-well with the vision of the company to transform people’s lives. For example, non-discrimination of employees’ on the basis of age, sex, race, color, ethnicity, citizenship, national origin, sexual orientation, gender identity, creed, religious preference or belief, disability, marital/family status or any other characteristic is addressed simply on the basis of honoring uniqueness and finding its productive place in the organization (Best Buy, 2009, p. 14). The code of ethics is silent as to the implication of this in the framework of human rights, which to me does not fully address the issue. Though, this must have been an approach to tackle the issue in a more pleasant way; however, this also waters down the issue of workplace discrimination. Yet, it invokes legal laws in protecting such characteristics from being the bases of discrimination. Again, Best Buy is trying to tow a safe path; yet it is envisioning an aggressive ethical transformation in the organization. I suggest therefore that to be truly transformative, Best Buy must head on the issues and from there, define the company’s ethical position. This would better clarify the company’s standpoint and would enlighten the organization. References Bernardi, R. A. & Lacross, C. C. (2005). Corporate transparency: Code of ethics disclosures. The CPA Journal 75 (4), 34+. Best Buy. (2009). Best Buy code of business ethics. Retrieved from http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDE3NTMwfENoaWxkSUQ9NDMwMTk4fFR5cGU9MQ==&t=1 Best Buy leader knows how to communicate. (2009, July/August). Communication World 26 (4), 6+. Robertson, C. & Fadil, P. A. (1998). Developing corporate codes of ethics in multinational firms: Bhopal Revisited. Journal of Managerial Issues 10 (4), 454. Scharff, M. M. (2005). Worldcom: A failure of moral and ethical values. Journal of Applied Management and Entrepreneurship 10 (3), 35+. Stopper, B. (2006). Best Buy: Customer-centric innovation. Human Resource Planning 29 (3), 34+. Takamine, K. (date). The ethical conundrum: Examining ethical leadership in organization. Place of publication: Publisher. Vickers, M. R. (2005). Business ethics and the HR role: Past, present, and future. Human Resource Planning 28 (1), 26+. Read More