Evaluation of Wal-Mart's Code of Ethics

Evaluation of Wal-Mart's Code of Ethics

PHL/323 Ethics in Management

June 1, 2012

Dr. John Rhome

Evaluation of Wal-Mart's Code of Ethics

A business code of ethics is a written guideline developed by an organization to its employees, management, and stakeholders regarding the expected conduct and behavior of the organization (Business Dictionary, 2012). Individual morals, standards, and principles are important, but they are also crucial in the workplace. The purpose of a code of ethics policy is to provide its employees, administration, and board of directors the guidelines for the organization's course of action, its principles, and its ethical standards. Each organization should develop a code of ethics for its specific industry. The code of ethics should focus on the major factors, which are industry specific. The integrity of an industry and its workers are essential to the general success of the organization.

This evaluation will focus on Wal-Mart's code of ethics. This analysis of Wal-Mart will include an overview of the company, its history, mission statement, its ethical system, and Wal-Mart's use of its code of ethics for its associates, management, and board of directors. This analysis will include information on modifying existing ethics policies, the reactions expected from associates and managers, the effects of organizational culture, and the effects on the organization as a whole.

Wal-Mart's History, Overview, and Mission

In 1962, Sam Walton founded the first Wal-Mart discounted store in Arkansas. Saving consumers money to create a better lifestyle was the fundamental objective of Sam Walton. Wal-Mart has since developed into a worldwide chain of discount stores, super-stores, and clubs as it continues to maintain its original company passion. This year, Wal-Mart fell to the number two spot in the Fortune 500's annual ranking of America's largest corporations (CNN Money Magazines, 2012). "Wal-Mart operates more than 10,000 retail units under 69 different banners in 27 countries, has more than 2 million hard-working associates who serve 200 million customers and members every week" (Wal-Mart-Annual Report, 2012, p. 5). As Wal-Mart continues to grow globally, it continues to observe various organizational principles, and yet its mission statement remains the same of "helping customers save money and live better" (Wal-Mart-Annual Report, 2012, p. 1).

Wal-Mart's Ethical System

Wal-Mart's ethical system seems to be closest to a utilitarianism system, which is the belief that the greater good for the greater number. The utilitarianism ethical system consists of two principles. The first principle is the act that includes individual behaviors that encourages the greatest service. The second principle is the rule that implements common guidelines, that promotes complete happiness for all. Wal-Mart's statement of ethics incorporates the utilitarianism ethical system in its policies as for the greater good for the greater number. Wal-Mart's statement of ethics is a principle carried throughout the entire organization that defines the organization including how coworkers care for each other, for suppliers, and especially the consumer.

Wal-Mart's ethics policy describes its objectives, policies, outlooks, and expected behavior that builds integrity within the working environment for all of its shareholders. The code of ethics begins with a message from Michael Duke, president and CEO. The president's message reflects the rich history Wal-Mart has created, touches on the importance of adhering to policies for the entire organization. The message also discussed three basic principles established by Sam Walton in 1962. Those principles are respect for the individual, service to its customers, and always striving for excellence. By the implementation of the utilitarianism ethical system, Wal-Mart proves that its concern has been for the greater good, and the greater number by looking beyond just the company's interest, but also for its associates, managers, board of directors, suppliers, and customers.

Wal-Mart's use of its Code of Ethics

Wal-Mart's statement of ethics policy begins with its three basic beliefs of respect for the individual, service to the customer, and striving for excellence. It is followed by its vision statement of promoting ownership of its ethical culture to all stakeholders. A set of guiding principles outlines what is expected for each associate in making the right decisions while ensuring integrity (Wal-Mart-Annual Report, 2012, p. 5).

Wal-Mart's expectations of its associates, management, and board of directors are to follow ethical principles in all decisions. One requirement of the statement of ethics is for associates, management, and its board of directors to apply the guiding principles daily. Another requirement is for each associate to learn the policies that pertain to every individual duty. Cooperation is essential when maintaining privacy for any ethics investigation involving associates, management, board of directors, or any third parties that is associated with Wal-Mart. Another requirement of managers and supervisors is that each is to communicate and implement the policies, rules, and regulations to the associates under each individual's supervision. Wal-Mart's ethical standards apply to all third parties including suppliers, law firms, consultants, contractors, and other service providers.

Wal-Mart's statement of ethics differs slightly for its Chief Executive Officer (CEO) and its Senior Financial Officer (SFO) because each is responsible for maintaining financial integrity. The CEO and SFO are equally duty-bound by laws that require them to follow ethical business and accounting practices. Some standards and responsibilities for CEO's and SFO's are exhibiting honesty at all times, responding to investigations from auditors, and maintaining required paperwork in an investigation. Another