The end of the 20th century and the beginning of the 21st century witnessed a refinement of the corporate world in regard to how business activities should be conducted. Most corporations and industries have in the recent past worked on formulating policies and strategies that are geared toward enhancing the business environment of the industry in which they are partakers. In addition, there has been a much need for industries and corporation to create for themselves a niche in the market, thus being in a position of competing effectively with other players in the market. Whereas the alignment of the structures of a business to deal with the external environment plays a critical role in positioning such a business to succeed in the market, there is a high need to create an internal environment that would be conducive for its production and other operational processes through formulation of a code of ethics (UN Habitat, 2010). One of Multinational Corporation that has adapted a code of ethics to manage and control its activities is Shell Oil Company.
Shell Oil Company
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Shell Oil Company is a US based oil company with an Anglo Dutch origin. This company is a subsidiary of Royal Dutch Shell with its headquarters in Houston, Texas. The company has approximately 22,000 employees based in the USA. This company has also been able to establish other branches across the globe, yet maintained the overall leadership of its activities in the United States of America. It is important for one to come to an understanding that despite the fact Shell Oil Company is one of the largest oil companies across the globe, it faces stiff competition that has forced it to develop a code of ethics that is geared towards guiding its employees in its activities in order to continue holding the position it has in the market.
Ethical system used by Shell Oil Company
There are various ethical systems that have been employed by different companies all over the world as they work on developing ethics that would oversee their success in the industry they are operating in. Shell Oil Company has been found to employ an end-driven system of the code of ethics in its activities.
How the Code of Ethics is used
There are various ways through which the code of ethics is employed in accomplishing important tasks by a business or an organization. Shell Oil Company’s Code of Ethics states that all person employed by Shell Oil Company must avoid conflict of interest between their private financial activities and their conduct in the activities of Shell Oil Company. This Code of Ethics has been used in numerous ways by this company to provide strict guidance to its employees in regard to the company activities and operations. This Code of Conduct is used by Shell Oil Company to enhance transparency and accountability among its employees. First, whenever there is a conflict between the activities of the company and that of its employee especially in terms of finances, there has always been a tendency to emerge corruption activities, with the employee working on gaining more financially from the activities of his employers. In this regard, the employees of Shell Oil Company are required by this Code of Ethics to report any breach of this code by the Executive Directors of Royal Dutch Shell, the Chief Financial Officer, the Chief Internal Auditor and the Executive Vice President-Controller to the chairman of the Audit Committee (Shell Oil Company).
The employees of Shell Oil Company are required by the Code of ethics of this company to be accountable to this code in every activity that they are assigned to undertake. As a result of this, the top management of this company is legally responsible adhere to this code, failure to which appropriate sanctions shall be taken against the party in question. With this in mind, the sanctions include serious disciplinary action that may include dismissal and removal from office or any other punishment as shall be determined by law that governs ethics among businesses and organizations. The accountability part of the Code of Ethics of Shell Oil Company addresses or rather focuses more on the management of this company. Therefore, any breach of this code of ethics shall attract sanctions that shall be determined by Audit Committee or the Board of Directors depending on the level of management of the person that has committed the offense (Malcom, 2001).
When and how is the code of conduct used?
There are different times when the code of ethics is employed in providing guidance to the overall behavior of its employees. For example, it is required that every transaction that is carried out by any employee of this company and on behalf of this company be accounted for. This must be done by reflecting every business transaction that is carried out on behalf of Shell Oil Company, failure to which this would be termed as a breach of the code of ethics that has been laid down by this company. Similarly, in cases where there is a breach of ethics, this code determined the procedure to be followed by the management team of Shell Oil Company in determining the kind of offense committed and the respective punishment that one deserves to be given. On the other hand, one need to understand that for every business or rather organization, there is a set of rules that must be adhered to. In this line of thought, companies have defined most of these rules in a Code of Ethics and in the Code of Conduct. In this case, the code of ethics guides the behavior of its senior employees to avert any conflict of interest especially in regard to finances that may arise between the company and its employees (Messmer, 2003).
Modification of the existing Code of Ethics
There are various reasons why a Code of Ethics may need to be modified by the company. It is important to revise the Code of Ethics from time to time to include remedies for emerging challenges in the corporate world. For example, in the past, white collar crime was not prevalent. Therefore, the Code of Ethics at that time did not focus on how such kind of crimes could be tackled in the society. However, recent reports indicate that there is a rise in cases of white collar crimes that has necessitated companies to come up with a Code of Ethics that would deter its employees from being involved in such kinds of crimes.
There are various channels that can be followed when revising or rather modifying a code of ethics. One of these channels is the identification of the impeding challenges that a company one is leading is facing and explaining to the rest of the management team how these challenges can be dealt with. In this regard, these challenges can then be tackled by including a clause in the Code of Ethics that would act as measure of what needs to be done and what should not be done. Therefore, involving the managers is one of the best options that could be explored in modifying a code of ethics of a company. It is however expected that there would be both resistance and acceptance of this modification. As a matter of fact, there are various departments in the organization that would feel that they have been secluded whereas other departments would warmly welcome these changes. However, if the corporate culture of an organization is aligned towards accepting changes from time to time, such a modification would be readily accepted and vice versa (Messmer, 2003).
A Code of Ethics remains as one of the most important and timely rules and regulations that are meant to protect the values of an organization. In this regard, a company such as Shell Oil Company has a Code of Ethics that is meant to put in check the actual conduct of its employees. This code of ethics is used on various occasions when determining whether certain action by its employees especially in the senior management promote or devalue the status of this company by avoiding any form of conflict with the financial activities of this company. Similarly, it must be recognized that there is need to modify the Code of Ethics from time to times just as emerging situations shall demand. In line with this, emerging trends reveals that corporate culture plays a critical role in the overall acceptance of rejection of the Code of Ethics by employees.