Ethics 3 assessment PDF

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Code of Ethics As we chose our employments, there comes a time on how the company responds in a time of crisis or a critical decision. In those times, the company’s core values and beliefs will truly show itself to make a large impact on any decisions that might be made. In this instance, PepsiCo’s values and code of conducts very much follow an ethical stand that many of us believe in. Per PepsiCo’s values, and “The PepsiCo Way, it indicates the company will Act with integrity, Voice opinions fearlessly, Raise the bar on talent and diversity, Be consumer-centric, Act as owners, Focus and get things done fast, Celebrate success.” (PepsiCo, 2020, p.3) They also go on to state that they believe that acting ethically and responsibly is not only the right thing to do, but also the right thing to do for their business. A.1 Corporate Social Responsibility Through a company’s values and code of ethics, it can truly define how a company may act and do its diligence in its own corporate social responsibility. PepsiCo covers all basis in their code of conduct on how all employees should act within their ethical guidelines. The company states that the company and all personnel is expected to embrace the principles of their code, and “Show respect in the workplace, Act with integrity in the marketplace, Ensure ethics in our business relationships, and Perform work responsibly for our shareholders.” (PepsiCo 2020, pg. 4) These principles really show how the company deals with all facets of their shareholders and sets up the actions for the company. For the company’s primary stakeholders, it sets the precedence that in the workplace, the employees should show respect in the workplace. How there should be no discrimination, and to treat each other fairly and equally. How each employee treats another can take precedence for the setup of the company culture, and the happiness of

employees. Even in the secondary stakeholders, the company indicates to ensure ethics in their business relationships with other business partners, and their work to be complete properly for their shareholders. PepsiCo is certainly a brand founded upon trust, and as such, the company stands by their code, and states that their code applies to everyone in their company from every employee up to their board of directors. A.2a Legal and Compliance In regard to the compliance with PepsiCo, the company shares this information within their code of conduct. Within the entirety of the code of conduct, it discusses many different types of wrong doings that an employee or the company can make as well as some examples that should be reported the to compliance department. For example, the company lists some violations as “fraud, theft, bribery, and other corrupt business practices, accounting or auditing irregularities or misrepresentations, human rights violations, illegal discrimination or harassment, actual or potential conflicts of interest, and guidance on any national, regional, tribal, state or municipal legal requirements that apply to the company or to the job.” (PepsiCo 2020, pg. 5) In the case of a violation of the guidelines and compliance, the company asks that any legal or compliance issue be reported, following up with their supervisor, or the law department so that these wrongdoings can be handled properly and adequately. Employees make up the company, but if the company is found out to be not compliant in these areas of legal mandates, there are significant ramifications to this for the company. For example, if PepsiCo is found guilty of releasing inside information for trading, then there can be strict penalties that come down from the SEC, which also may relate to the company being heavily fined. In addition to the fines, the company would lose much trust and credibility. For a company that sells food products,

a loss of trust can lead to a loss of business. Trust is easy to be lost, but very hard to get back, especially in the eyes of a consumer who has multiple options to choose from. A.2b Safeguards PepsiCo also does make sure to discuss laws to safeguard any illegal activity that may be not non-compliance with the law. As such, in the section for complying with the laws, it indicates that the company indicates the Anti-Bribery which demands that all employees must comply by. In addition to this being a possible crime, the company specifically lists this and states that “To comply with anti-bribery laws, no employee should ever offer, directly or indirectly anything of value, including a gift or entertainment, to any government official or his or her representative to: obtain or retain business, influence business decisions, or secure and unfair business advantage.” (PepsiCo, 2020, pg. 18) This is a requirement and protocol that every employee must follow in order to keep compliance of every employee. The company guidelines also discuss that we have to adhere by the Anti-Bribery law, and if in violation of these laws, it must go through the company’s legal department. For example, this would not allow the employee to discuss with a competitor company inside information that can cause huge ramifications to the company. This information can include prices or rates, the current market or customers of the company. Having all employees be following this law makes each employee acknowledge this act, and make sure that these actions are eliminated. It also provides a source for where the employee to contact to make sure that they are not in any violation of this law. Another safeguard that PepsiCo brings to attention is the Insider Trading and Transaction in PepsiCo Securities. As the company does have the sale of stocks, the mandates that no employee should be selling inside information, which is a federal law. This is explained that this law

prohibits the buying or selling of securities based on “inside information” which is information not available publicly, and it could affect the price of the securities. It is indicating that any inside employee knowledge should not be sold to any other parties, which includes things such as giving tips to friends or family to buy or sell securities due to this information. The disregard for either laws can have serious ramifications to the violator, as these are federal laws, and not only risk termination of employment, but federal court and crime. A.3 Analysis of the Code of Ethics For PepsiCo’s code of conduct (ethics) it does go over the do’s and don’t of the employee in great detail. The values of the company are a large driving factor which does go into the development of the ethical culture of the business. It indicates that the values are not only something to be followed by employees, but firstly with the leadership of the company as well. The company’s value is what a trusted company should be for the sales of a consumer goods. As it is also such a large corporation, it does outline the resources that the company can provide, as well as the obligation that all employees has to the company property and to each other to facilitate an ethical workplace environment. Even though the code of conduct outline of many laws and rules for within the company’s, but in doing so, protect the company as well as their employees with their provided guidance. A.4 Raising Ethical Concern Within the code of conduct, it asks that if an employee encounters an unethical behavior, that the employee has a responsibility to speak up and report this information. The outline provides that if an employee has observed the situation or if this brought by someone else, this should be reported one the resources and contacts listed for reporting. If an employee is unsure if

the situation is in the level of a violation of the code, the employee should be reporting this to their manager or supervisor so that the manger can follow up, and make sure that it is reported to the proper contacts. With a suspected violation, the code of conduct lists a toll-free number for United States employees for 866-729-4888. PepsiCo had created this 24 hour hotline for all PepsiCo employees, as well as all facets of business such as for suppliers, consumers, contractors, and agents. The company also provides their Compliance and Ethics department address for a posted mail to the company as well as the email address of [email protected]. In the presence of a violation of a code, I would firstly check with my supervisor on the violation and obtain their opinion of the matter. If action should be taken, I would certainly call the hotline to discuss the matter, and have an inside personnel to make sure that I am taking proper protocals. I would provide with all investigations, and make sure that the case is provided the most information I can provide as I believe that protecting the company is not just protecting myself, but the livelihood of thousands of individuals and families. B.1 Whistleblowing Throughout an employee’s time at work, the employee may at one point in time come across something that they believe is truly not fitting of the workplace. Maybe it is something that may even be illegal, and not tolerated at work. At this point in time, the employee generally would need to consider the severity of this issue, and/or the act has not been committed yet, so the employee thinks over how serious this problem is. Now whistleblowing comes generally from a very serious factor. One person making an error on a note is not something that can necessarily be whistle blown on, but if an employee is taking client’s Social Security Number to

sell online, then this is a much more serious issue which affects the company as well as it being a federal crime. If the situation feels like a gray area, it might always be good to have this discussion with the employee’s manger or direct supervisor first to obtain their opinion and to at least have the conversation documented. Also, another way for the employee to determine the severity of this issue is to see what the impact of the unethical act can cause to either the company, coworkers, or the clients as the victim of this act. It may be correlated to a law being broken, or ruin a reputation of the company or persons, which ultimately may require action. B.2 Process of Whistleblowing Once the act is identified as a considerable act, the employee should be able to follow a proper protocol on how to report the offense. Generally, the first step taken is to bring this to the attention to the employees’ immediate manager, as long as the manager is not the one causing the problem. Now in most situations, the manager should be able to take it from here, and make sure this is followed up on. If this is not taken care of by the manger, the employee should consider maybe informing their friends and family, and as well providing any tracking and notes that the employee had discussed with the manger. If the manager does not work, then the next step will be to follow the chain of command. Essentially, informing the director (the manager’s boss) and request a meeting to discuss the current situation. To not go around the manager’s back, the employee can ask the manager to request a meeting with the manager’s boss, but if this gets rejected by the manager, then the employee can also consider different options. Most companies, especially larger corporations will have a company human resources or an ethics officer that will handle these sorts of situations. There also may be a hotline for the company the employee could call to provide the whistleblowing information.

If all steps are taken, and the company decides not to take any action, then it maybe necessary for the employee to go outside of the company to raise these concerns. For example, an industry such as life insurance is a much-regulated industry, and as such, there is a department of insurance that the employee can follow up on to provide information. If not, the employee may even contact the press to get this information disclosed outside of the company. C. Payment for Whistleblowers In regard to payment and money, who does not like money? Especially in the current world where many frauds are held against the government, the federal government incentivizes the reporting of these actions so that they may be able to prosecute the wrongdoers. “Under the False Claims Act, whistle-blowers who report corporate wrongdoing against the government to prosecutors can be awarded 15 to 30 percent of whatever damages the federal government recovers, which are to be three times the damages the government has sustained.” (Trevino & Nelson 2017) This creates a large incentive and benefit for the whistle blower as whistle blowing on the company essentially can entitled to a large total sum of money. For example, if a company based on the whistleblowing was fine for $100,000,000, being entitled to 15 to 30% of the fine, the whistleblower can receive between $15,000,000 to $30,000,000. On the other side, for disadvantages, even though there is much monies that can be paid by whistleblowing, not everything is always going to be positive. For one, money would only be paid out of the government wins the case against the corporation. They may not necessarily win, and no money maybe paid out. Also, in most cases, the whistleblower will become a non-trustable person within the corporation and will most likely have to look for a new livelihood whether the case is won or lost. This law does not protect the whistleblower to keep their job, and as such, it almost guarantees the loss of employment. Also, most coworkers and management will most likely

know that employee being as the whistleblowers, so there will always be a negative stigma towards that employee. D. U.S. Sentencing Guidelines In the business world, it is an ever-evolving world where anything and everything is susceptible to change. One of the largest things to change the business world in 1987 where the U.S. government took on the imposing of federal sentencing guidelines. This “imposed federal sentencing guidelines for individual offenders, and as a result the trend has been toward increasing fines for both individuals and organizations convicted of felony crimes.” (Trevino & Nelson 2017) With these changes, the Commission updated the sentencing guidelines so that the organization can be convicted of a federal crime even if only one employee is caught breaking a law. This makes the organization to become stricter with their workforce as one employee’s mistake can cause large implications to the entire company. Most of these penalties “involves the company to make a restitution and to pay a substantial fine, which is not tax deductible.” (Trevino & Nelson 2017) At worst, a company may suffer from what’ called a “corporate death penalty” which is essentially the division of all of the company’s assets, and even auditing companies that the organization may become involved in these investigations. The ultimate loss of a company is the loss of the company and organization.” (Trevino & Nelson 2017) As a result of these sentencing guidelines, it created fear in many companies, and as such companies had created a system or protocol so that any employees can report any wrongdoing. For example, an anonymous reporting hotline or online forms for the employee to fill out. These sentencing guidelines also had companies to revise and update their business code of ethics and conduct so that any wrong doing is outlined, and can be avoided.

D1. Culpability Scores In the penalization of companies and organizations, not all crimes are equal, and there must be a way to differentiate different crimes in association with the correct penalty. To complete this, the U.S. Government assigns a culpability score as assigned by the court to complete the penalty on the base fine multiplied by the culpability score. “Every defendant starts at a culpability score of 5 and can move up or down depending on aggravating or mitigating factors.” (Trevino & Nelson 2017) As such, there are different ways that may increase or decrease the culpability score, which in total will lead to the overall penalty fined to the organization. A few of the aggravating factors that may increase the penalty size is going to be size of the organization, as well as the degree of the participation or disregard of the criminal act by management or upper level personnel in the organization. Another way for increasing the culpability score would be the “obstructing, impeding, (or attempting to obstruct or impede) an investigation, a prosecution, and so on can result in up to 3 point being added.” (Trevino & Nelson 2017) On the other hand, there are also ways for a company to mitigate some factors and decreasing from the base culpability level of 5. For example, if a company has an effective program in place already to prevent violations, and to locate any violations of the law can result in a reduction of points for the company. The company can also self-report, cooperate, or even accepting the responsibility for the misconduct can result in a large reduction of culpability score to minimize penalties. No matter what, a penalty and reputation will always be a negative consequence, but by proving incentives to companies to have protocols in place reduces the likelihood of these penalties.

Resources Trevino, L.K, & Nelson, K.A. (2017). Managing business ethics: Straight talk about how to do it right (7th ed.). Hoboken, NJ: Wiley. ISBN: 9781119298519...