Critical Analysis of the Code - Coca-Cola Enterprises - Essay Example

? Coca-Cola Enterprises Contents Introduction 3 Critical Analysis of the 3 Strengths: 6 Weaknesses: 6Component 1: Effectively Communicated 7 Component 2: Values Oriented and Embedded 8 Component 3: Responsibility and Accountability of the Leaders and the Ethics and Compliance Department 9 Conclusion 10 References 12 Introduction According to Forbes (Badenhausen, 2012) Coca-Cola is globally regarded as the third most powerful brand, only surpassed by Apple and Microsoft. The historical origins of Coca-Cola can be traced back to 1899 (Coca-Cola Enterprises, Our story, 2012). Its successful existence for more than a century can be attributed to the organisation’s firm belief in conformity to ethical, moral and legal standards as embodied in their code of business conduct (CBC) (Coca-Cola Enterprises, Code of Business Conduct, 2012). In this regard, the aim of the paper is to present a critical analysis of Coca-Cola Enterprises’ code of business conduct in terms of incorporating the three key components which exemplify the organisation’s values and adherence to business ethics. Critical Analysis of the Code Following a search for the organisation’s code of conduct, one oriented towards the stakeholders of the company was found: the Ethics and Compliance Office (Coca-Cola Enterprises, Code of Business Conduct, 2012). It was revealed that the Ethics and Compliance Office was tasked with the mission of designing an appropriate working environment that adheres to ethical standards. As such, it was disclosed that the “Code, serves as the foundation of the ethics and compliance program at CCE” (Coca-Cola Enterprises, Code of Business Conduct, 2012: Paragraph 2). Thus it is explicitly communicated that the Coca-Cola Enterprises’ (CCE) code is a tool which serves as a guiding principle for assisting various stakeholders to gain an in-depth understanding of the respective roles that they play in the organisational setting. The first page of the CBC contains a welcome message from the organisation’s Chairman and Chief Executive Officer, as of 2011, John F. Brock (CCE, CBC, 2012). It is through this message that the values of the organisation are effectively introduced: the need to abide by and follow the “RIGHT Way model of ethical values; (where the acronym RIGHT means maintaining) Respect, Integrity, Good judgement, Honesty and Trust” (CCE, CBC, 2012: p i) and forms an intergral value foundation of the organization’s way of doing business and conducting behavior with those they interact with. Similarly, another welcome message was produced by CCE’s Chief Compliance and Risk Officer and Vice President, Janice Placente, reiterating the mission of her office. The inclusion of these messages is relevant and consistent with content that is crucial in a code of conduct to affirm support from the top officers of the organisation’s hierarchy. This approach is also consistent with Erwin’s (2011) study, which indicated that integrating such items as part of the code implies it is of high quality, and so was effective in enforcing the guidelines contained therein. There is a table of contents which highlights the major points that are presented, as well as relevant supporting information. The entire code contains twenty-one pages from the introduction to the references. The major areas include: guidelines for personnel in interacting with colleagues; promotion of safety and health standards; preventing substance abuse; working with customers and suppliers; interacting with competitors; avoiding conflicts of interest; protecting company assets; maintaining accurate records; ensuring that the organization abides by laws on anti-corruption; ensuring that insider dealing is strictly avoided; preserving and conserving the environment; as well as actively collaborating with government agencies, as required (CCE, CBC, 2012: p. iii). The contents are indicative of the CCE’s commitment to provide guidelines to all stakeholders: from management to employees, customers, suppliers, competitors, and government agencies. Therefore it can be comprehensive and intensively produced. Based on a closer examination of the code was found that there are questions and answer sections which detail various scenarios that expand on the issues presented. This is consistent with Erwin’s study, which explicitly identifies comprehension aids through the form of information disseminated through questions and answers format, situational cases, concrete examples, and other commonly encountered situations (Erwin, 2011). These comprehension aids are effective in assisting various stakeholders to visualise scenarios and assist in their decision-making processes. Likewise, according to Stevens (2008), “culture and effective communication are key components to a code’s success. If codes are embedded in the culture and embraced by the leaders, they are likely to be successful” (Stevens, 2008: 601). These two components are specifically relevant and applicable in terms of the CCE’s situation, given that it serves millions of clienteles numbering about 170 million and spans international domains such as Western Europe, Great Britain, Luxembourg, Belgium, Monaco, Norway, France, the Netherlands, and Sweden (CCE: Our Company, 2012: paragraph 1). Therefore, issues of cross-cultural communication need to be addressed and the code should be dissemminated in such as way that its guiding principles can be clearly understood across these different cultures. In a study written by Kaptein and Wempe, the authors emphasised the internal and external relevance and purpose of the code of conduct, to which: “Internally, a code increases the consciousness with respect to the moral aspects of the undertaken activities (orientation function); supplies clarity regarding responsibilities (explicitating function); sets a minimum amount of expectations which are valid for everyone (committing function) and creates a system of checks and balances because employees can force each other to live up to the code (internally correcting function). Externally the code increases the recognisability of the firm (distinguishing function), enlarges the trust of the stakeholders in participating in the company (legitimizing function) and creates a system of checks and balances since stakeholders can direct the firm to abiding by the code (externally correcting function)” (Kaptein and Wempe, 1998: 857). From the contents as embodied and integrated in CCE’s code, it is evident that the key components for addressing internal and external ethical issues are effectively addressed. As indicated in the Ethics Resource Centre (2001), a code of conduct should contain the following elements: A memorable title; A letter issued by the leadership; A table of contents; An introduction-prologue; Core values; Code provisions-substantive matters; Information and resources (Ethics Resource Center, 2001, p. 4). In this regard, the following strengths and weaknesses have been noted: Strengths: The code contains all the necessary ingredients as detailed by the Ethics Resource Centre (2001), as well as in Erwin’s (2011: 538) discourse which indicated the presence of the following essential elements: a leader’s message, accessibility to the public, easy to read, integration of a non-retaliation statement, value statement, identification of risk, use of aids to enhance comprehension, and effective presentation structure; It is very up-to-date, having been written in 2011. Therefore, it is significantly applicable to contemporary times. The presentation style is exemplary as it is visually appealing and yet comprehensively informative. The resources page indicates the contact information in email, address, and landline format whichever is preferred by the user. It is intensive, yet concise and accurately written to be straightforward and direct. It is written using English as a universal medium of communication. Weaknesses: There is no indication that the code is designed to adapt and adjust to cross-cultural perspectives in terms of according opportunities for translations in other languages; or in defining how it is to be communicated and disseminated to other cultural users. In referring issues for further clarification, the code frequently indicates: ‘please refer to… either company policies or directing inquiries to specific departments.’ It would be more effective to include the applicable link or contact addresses to indicate proactive assistance and support, as required. Aside from the minimal weaknesses, CCE’s CBC contains all the key components and ingredients that should be included, as noted from different research (Erwin, 2011; Ethics Resource Center, 2001). However, its effectiveness cannot be solely measured by the incorporation of critical components; rather, the code’s effectiveness should be monitored in reference to the extent by which violations of policies and guidelines have either increased or decreased over a period of time. As noted by Yallop (2012: 510), ‘codes of ethics are regarded as an important factor in generating ethical behaviour. However it is unclear how effective a code of ethics is in dealing with ethical issues and making ethical decisions when required’. As such, CCE should be vigilant in terms of monitoring the code’s effectiveness through evaluating complaints or violations of policies, and determine what necessary changes or improvements could be made. Component 1: Effectively Communicated The CCE’s code of conduct was readily located and accessed relatively easily. Therefore, it is expected that for employees and other users, the same convenience and ease will be accorded through the following link: http://ir.cokecce.com/phoenix.zhtml?c=117435&p=irol-govconduct. Furthermore, this official website contains the following image where the complete CBC can be effectively accessed: CCE Code of Business Conduct - August 2011 Source: Coca-Cola Enterprises: CBC (2012). The code is presented in the most visually appealing manner and the red colour that is associated with Coca-Cola is used as a background. The information and content validates the organisation’s ability to effectively communicate their practice guidelines and the principles presented herein. Likewise, all necessary contact information is provided for stakeholders who require further clarification of relevant issues and concerns. According to Stevens (2009: 15), “good communication is the first requirement for effectiveness…Communication plays a central role in code effectiveness; members must be aware of the code and know why it exists.” Similarly, as noted and found in various studies, the fact that the code is communicated does not necessarily indicate that all stakeholders will necessarily abide by the ethical rules and standards. As emphasised, “while strong evidence exists showing that codes are effective under the right conditions, they sometimes fail to prevent unethical behavior” (Stevens, 2009: 15). One of the most important ingredients for effective communication is the ability of managers to relay and encourage reporting of unethical behavior and to insure that their reporting will be confidential and will not render them subject to retaliation. Component 2: Values Oriented and Embedded The CCE has specifically indicated that the code is the basis for guiding various stakeholders in abiding by ethical standards and as such, it is commendable that the values of the organisation are clearly and explicitly integrated in the CBC, as presented below: “Respect: Does your action demonstrate respect for all parties involved? Integrity: Does it reflect the highest personal and public standards even when no-one is watching? Good Judgment: Is it the result of considering all options and how they will affect all parties involved? Honesty: Is it truthful and does it avoid deceptive practices? Trust: Does it build trust in me and CCE and show trust in others?” (CCE, CBC, 2012: 2). The assurance provided to stakeholders for reporting unethical behavior is contained in the following provisions: “Protection against Retaliation: CCE will not tolerate retaliation against you for making good faith reports and/or participating in investigations of actual or suspected violations of this Code. Reporting in good faith means that you share full and accurate information you have about a situation and you believe your report to be true. Retaliation is a violation of our Code. Individuals who retaliate will be subject to discipline, consistent with local law” (CCE, CBC, 2012: 3). Consistent with the findings noted by Steven’s (2009) “when communication is discouraged or absent, silence can kill a company” (15). Thus the values of CCE, when properly communicated, disseminated and embedded within the organisational culture, make the CBC effective and enforceable. In addition, “codes which become organisationally embedded have effective leaders who can create and manage ethical cultures. Codes work when employees see organisational actions which are in line with the code” (Steven, 2009: 16). Component 3: Responsibility and Accountability of the Leaders and the Ethics and Compliance Department The finding regarding the ability of leaders to communicate that the presence of the code does not necessarily justify effectiveness was noteworthy: “communicating a code from the top often leads to the code being ignored” (Steven, 2009: 15). This was supported accordingly: “creating a code will not insure that ethical behaviour will occur; ethics, the code, and ethical decision-making must be infused into the organisation and not ordered from the top down” (Neube and Wasburn, 2008: 1). The welcome addresses delivered and integrated with the CBC by the Chairman and Chief Executive Officer as well as the Vice President and Chief Compliance and Risk Officer do not appear as commands or orders that must be complied with autocratically. The tone of the messages is cordial and reinforces respect for human rights and the need to ensure safety, security, and equal accordance of ethical, moral and legal standards. Stevens (2009) appropriately concluded that by ensuring that the codes are appropriately integrated within the culture of the organization; as well as guidelines are effectively disseminated and communicated across the hierarchy, employee behaviour would be expected to adhere to ethical standards. However, the codes themselves are not assurances of complete absence of organizational problems or violations to various regulations. They merely provide directions towards the RIGHT path of doing business. The fact that CCE has consistently been successful through exhibiting global leadership in their field of endeavour is an indication that abiding by the CBC has contributed to an exemplary corporate image and adherence to business ethics and corporate social responsibility as promoted and imbibed by management and workers alike. Conclusion The Code of Business Conduct (CBC) of Coca-Cola Enterprises has been successfully analysed through describing, in greater detail, the contents of the code as well as the components that make it effective. The values of the organisation, which form the basis for designing the CBC, have clearly and explicitly been integrated therein. As such, the strengths and weaknesses of the CBC have been identified in terms of the incorporation of key components and ingredients as well as determining the need to incorporate culture through providing effective translation of the CBC in other languages where the organisation operates. Finally, it has been revealed that the three key components exemplified in the CBC include effective communication, embedded values, and genuine support from management. As codes are merely guidelines for ensuring ethical behaviour, management and ethical compliance officers must always assume a proactive stance and be vigilant in examining whether there is a need to improve on the guidelines or to confirm that these principles effectively guide the organisations’ stakeholders in doing what is right, according to the universal rules of ethics and morality. References Badenhausen, K. (2012) Apple tops list of the world's most powerful brands, [Online] Available: http://www.forbes.com/sites/kurtbadenhausen/2012/10/02/apple-tops-list-of-the-worlds-most-powerful-brands/ [29 December 2012]. Coca-Cola Enterprise (2012) Our company, [Online], Available: http://www.cokecce.com/ [29 December 2012]. Coca-Cola Enterprises (2012) Code of business conduct, [Online], Available: http://ir.cokecce.com/phoenix.zhtml?c=117435&p=irol-govconduct [28 December 2012]. Coca-Cola Enterprises (2012) Our story, [Online], Available: http://www.cokecce.com/about-cce/our-story [29 December 2012]. Erwin, P. (2011) 'Corporate Codes of conduct: the effects of code content and quality on ethical performance', Journal of Business Ethics, 99, pp. 535 - 548. Ethics Resource Center (2001) A guide to developing your SHRM Chapter’s code of ethics, [Online], Available: http://www.shrm.org/about/Documents/chapter-coe.pdf [28 December 2012]. Kaptein, W. and Wempe, J. (1998) 'Twelve Gordian knots when developing an organisational code of ethics', Journal of Business Ethics, 17, pp. 853 - 869. Neube, L. and Wasburn, M. (2008) 'Strategic collaboration or ethical leadership: a mentoring framework for business and organisational decision making', Journal of Leadership and Organisational Studies, 13, p. 1. Stevens, B. (2008) 'Corporate ethical codes: effective instruments for in?uencing behavior, Journal of Business Ethics, 78, pp. 601 - 609. Stevens, B. (2009) 'Corporate ethical codes as strategic documents: an analysis of success and failure', Electronic Journal of Business Ethics and Organisation Studies, 14 (2), pp. 14 - 20. Yallop, A. (2012) The use and effectiveness of codes of ethics – a literature review. Proceedings of the International Conference Marketing - from Information to Decision, pp. 502 - 514. Read More