The purpose of this report was to review the codes of conduct of the Central Queensland University(CQU) and that of GlaxoSmithKline(GSK) in order to identify the different stakeholder affected, the ethical issues addressed by these documents, to explore the use of mandatory and voluntary practice in codes of conduct and finally to consider the application of corporate governance and transparency in these organizations.
Stakeholders are the lifeblood of an organization. These are the groups of people that without which a company would cease to be.
The report notes most importantly that both companies consider their employees and cliental as their most valuable stakeholders.
The ethical issues considered range vastly from concerns with intellectual property abuse to regulations concerning lying, bulling and simply ethical conduct. The report significantly establishes that, though vastly different in the services they provide and the stakeholders involved, both companies face the same ethical challenges.
When comparing mandatory regulations and voluntary practice the report establishes a significant difference between the lay out of CQU’s code compared to that of GSK.
The report highlights the different approaches in regards to phrasing similar aspects of the two documents.
As far as corporate governance and transparency is concerned the report discusses briefly the difference in governance method of the two companies and notes the similarities in how both parties engage the issue of transparency.
In conclusion the report notes that the most significant difference between the two documents is in the contradictory layout of the documents. CQU’s code has been put together as a document specifically designed to inform or right and wrong whereas GSK’s code inspires personal conviction and stewardship. Further study to be considered is the implication of the
different communication styles and how they affect the reader’s commitment to the organization and its stakeholders as well as the affect it has on motivation to make “the ethical decision”.
Table of Contents
This report seeks to explore business ethics through examining the codes of conduct of The University of Central Queensland and that of GlaxoSmithKline. The examination of these codes seeks firstly to identify stakeholder groups affected by these documents as well as the emerging business ethics issues that are addressed. This is covered in Part 1 of the report. Part 2 seeks to investigate the contents of the code of conduct by identifying which parts of the said codes are implemented as a result of mandatory requirements and differentiate them from the voluntary practices of the two corporations. Finally, Part 3 seeks to establish how these documents reflect on corporate governance and transparency within the organizations.
The power that a stakeholder/stakeholder group holds over a company is contrasting to its own dependence on the company (Ferrell, Fraedrich & Ferrell, 2011). If the stakeholder group is reliant on the existence of the company and the company does not relay on the specific stakeholders say the stakeholder has very little power. If however the inverse were to find itself true and the company was reliant on a certain stakeholder whereas the stakeholder group finds itself independent of the company the power is in the hands of that stakeholder group. For this reason it is important to establish what power each stakeholder group yield, but more importantly the wants, needs and desires of these groups.
Mitchelle et al (1997) suggested that stakeholders are identified by three distinct traits, power, legitimacy and urgency. It is these groups and individuals that provide the tangible and intangible recourses critical to a firm’s success. Stakeholders are defined as anyone that holds some form of a “stake” or claim in a company’s product, operations, markets, industry and outcomes. Including, but not limited to, customers, investors and shareholders, employees, suppliers, government agencies, communities. (Ferrell, Fraedrich & Ferrell, 2011)
In order to establish the stakeholder groups addressed by the above mentioned codes of conducts I have used, as a yardstick, the tell tails of stakeholders set by Mitchelle et al (1997) and Ferrell et al (2011) in the above mentioned studies.
The University of Central Queensland (CQU) was first established in Rockhampton in 1967 and was one of the first universities in Australia to offer comprehensive distance study. CQU strives to cater for the masses by providing online education from campuses based in Cairns all the way down to Melbourne and everywhere in between. The university also boasts with an increasingly large number of distance students, nationally and abroad (CQU, 2013) .
Considering the magnitude of students the university caters to and the physical distance between students and lecturers when it comes to international study it is safe that the university is utterly defendant on its teaching, communication and administrative staff. Should the university lose any of these groups it would quite possibly rendered incapable of operating. Therefore these groups are the universities primary stakeholders along with: Students
Executives and managerial staff
Governments within the regions they operate in.
The university’s secondary stakeholders are made up of groups such as: The
Special interest groups
In regards to purpose of the CQU Code of Conduct, it applies itself primarily to supervisors, employees and council members (CQU, 2013). These are the specific stakeholder groups that are directly affected by the Code of Conduct. However, the buck doesn’t stop there. The Code of Conduct effectively affects students, as it has direct implication to their learning,
The combined history of the two ventures that merged together to form what is now know as GlaxoSmithKline (GSK) spans back centuries. Tracing its roots back as far as 1715 this global health-care company is well established in the pharmaceutical, vaccine and consumer health industries with offices in more than 115 countries. (GSK, 2013) The wide influence span of GSK means that there is many that lay claims to a stakeholders position in regards to the company.
GSK’s stakeholders are as follows:
Health and welfare organizations
Special interest groups
Being such a large player in global health care GSK’s influence circle spans far and wide. Considering the nature of the services they provide every decision made my executives, researchers and administration staff have the potential to be life altering. Their Code of Conduct is primarily geared towards their employees including, management, doctors, researchers, accountants and administration staff. These stakeholder groups make up GSK and what it stands for; by abiding by the code of conduct they are falling inline with GSK’s larger vision.
More than simply providing the staff with a set of rules GSK’s code of conduct affects stakeholders such as: Patients by providing the absolute best health cover possible Share holders by following strict accounting and fraud disciplines that have been set in place. Governments by abiding to specific healthcare laws and regulations. Charities by donations provided.
The media by acting transparently
The competition by ensuring that privileged information is protected and by abiding intellectual information guidelines.
Emerging Business Ethic Issues
In order to understand ethics it is important to understand what it is not, to do this consider morals and law. Morals are defines as where as law is… Ethics however is the conflict between ones morals and the rules set by an organization. Alderson, W(1965) provides the following description of an ethical decision, “the point where the accepted rules no longer serve, and the decision maker is faced with the responsibility for weighting the values and reaching a judgment in a situation which is not quite the same as he or she has faced before.” In short, an ethical issue is defined as, “a situation, a problem, or even an opportunity that requires thought, discussion, or investigation to determine the moral impact of the decision(Ferrell, Fraedrich & Ferrell, 2011).
Considering QCU’s code of conduct one can deduce that the University’s council is addressing a number of emerging issues such as abusive and intimidating behavior, Sexual harassment and discrimination in part 1 of the code, simply work ethics like – showing up, being ready and motivated and conflicts of interest in part 2, intellectual property rights, privacy issues as well as conflicts of interest in part 3 and finally, conflict of interest, intellectual property & bribery in part 4 of the code (CQU, 2013).Similarly, GSK addresses issues such as lying, bullying, intimidation, intellectual property abuse, corporate intelligence, conflicts of interest and privacy issues throughout their code of conduct (GSK, 2013).
Codes of conduct – Mandatory and Voluntary Practices
Codes of Conduct are formal statements that provide employees with the guidelines and expectations of their job and workplace culture (Ferrell, Fraedrich & Ferrell, 2011). The Code of Conduct not only exists to advise the employee of right and wrong but they attempt to inspire by casting the vision of the company. Because of this these codes consist of a combination of mandatory requirements as well as voluntary practices. Mandatory requirements are best thought of as the “must haves” in the code of conduct document – the rules, the regulations and laws of a company in order for it to preform correctly (Adobor, H 2012). The voluntary practices however are what defines a company and its people, it’s the values, beliefs and voluntary policies initiated by management that sets one company apart from another (ASX Corporate Governance Council, 2007). At this point it is important to mention that voluntary practice is not defined as an “optional extra” that one should merely choose to follow. This is the voluntary part of the code purely because managers have chosen these attributes to define the company. They are as, if not more, important than the mandated requirements and they are what makes the company humane (Adobor, H 2012).
The University of Central Queensland starts off its code of conduct with a letter from the vice chancellor followed directly by a list of values that CQU holds to namely: Engagement, Leadership, a “can do approach”, openness and inclusiveness. This is the section of the code makes clear the vision that the company has for each of its employees, form supervisory staff to contractors, and the expectation the their University holds of their attitudes (CQU, 2013). The rest of the code is made up of four principals that are geared towards assisting in ethical decision making. The four principals are as follows: Respect the inherit dignity of the individual
Act on the basis of a well-informed conscience
Participate as part of a community of scholars
Uphold the public interest
These four principals are based off the Queensland Public sector and ethics act 1994. This is the mandatory part of the code.
GlaxoSmithKline’s code is remarkably different to that of CQU. It is littered with hope filled words like mission, sprit, values and beliefs. A snippet of the code’s introduction goes like this: “Our ‘Code’ embodies the Spirit of GSK, a company culture that inspires our sense of individual responsibility and collective purpose, and supports our global mission to “improve the quality of human life by enabling people to do more, feel better, and live longer”(GSK, 2013) Their “code”, striving to inspire a sense of individuality and responsibility, evokes an emotional response in the reader. Due to this personal approach the lines between mandatory and voluntary practices seem almost nonexistent. (Solomon, J 202007) For the purpose of this report the line that separates voluntary practice from mandatory is where principals differentiate themselves from nice ideas and take on the form of laws, rule, regulations and other requirements in accordance with Ferrell, et al(2011 ). As mentioned about GlaxoSmithKline have effectively littered their code with Voluntary practices. The area where it is most prevalent however is right in the beginning of the code under the heading, “what is it that makes GSK special” (GSK, 2013), the heading is followed by a walkthrough of their mission, spirit, values and behaviors. Similar to CQU’s code, the rest of GSK’s code is made up of mandatory practices covering integrity, transparency, and respect for the individual; procedure and taking responsibility for ones own self. (GSK, 2013)
In both documents it is important to note that mandatory fields are followed, our at least footnoted, by citations of the corporate policies that establish these practice.
Corporate governance and Transparency
In an attempt to lessen the risk of unethical conduct amongst employees companies have sought to develop a formal system of accountability, control and oversight that is know as corporate governance. (FFF, 2011) However, corporate governance is hardly confined to being a precautionary measure, according to the ASX CGC (2007) corporate governance is the “framework of rules, relationships, systems and processes within and by which authority is exercised and controlled in corporations”. It is this framework enables a corporation monitor risk, optimize performance, create value and to provide accountability. In todays business culture transparency has become essential to the success of a firm and is bedrock in a well functioning corporate governance system. (Magness, V 2008) “Transparency fosters openness, the freedom to express ideas, and the ability to question conduct” (Ferrell, Fraedrich & Ferrell, 2011). It is, simply put, being open towards stakeholders. Corporations strive to maintain a standard of transparency through disclosure (Ferrell, Fraedrich & Ferrell, 2011). Disclosure is sought by providing stakeholders with information in the form of annual reports, voluntary reports, voluntary communication and website information. (Solomon, 2007)
The University of Central Queensland was established as a university under the Central Queensland Universities Act 1998 and under this act the university is governed by the QCUniversity Council. The council exists to appoint staff, manage the University’s affairs and to manage the University’s finances. Beyond the council there are also a wide rather of internal and external stakeholders that provide the university with overall direction and leadership (CQU, 2013). The code of conduct provided by CQU reflects the Universities’ commitment to transparency through he principals mentioned in section 4, “Uphold the public interest. This section Touches on conflicts of interest, disclosure of gifts and benefits, demonstration of accountability and transparency and accurate reporting in accordance to the Financial Management and Professional Standard 2009(QLD).
Under law GlaxoSmithKline strives to, not only comply but, go above and beyond the regulations of the Sarbanese-Oxley Act 2002. (Sarbanese-Oxley Act, 2006) In order to do this they have appointed a number of board committees that govern the organization and have set in place several policies to assist. (GSK, 2013) The GSK Code of Conduct is amongst these and is an integral tool to the successful governance of the organization. GSK addresses transparency in the code of conduct by outlining principals such as internal accounting, finance and procurement regulations as well as transparency guidelines. In short, their guidelines they give are as follows: Assume others can see our actions
Ensure what we say or write is fair, and not misleading or incomplete Provide timely, relevant, and accurate information
Demonstrate conviction and take ownership
Escalate important information promptly
The most notable distinction between these two documents was the manner in which they were written and presented to the reader. CQU provides the reader with an informative, down the line, point by point; code of conduct that outlines exactly what is expected of the individuals, from whom it is expected and why these expectations are in place. The code of conduct provided the reader with clear guidelines with minimal reliance on corporate social responsibility. In contrast, GSK provides the reader of the code with an invitation to adopt, and to share in the same mission as the rest of the GSK team. They do this by smart use of phrases like saying, “it is our responsibility” instead of responsibility” instead of your responsibility. The evaluation of the two codes has brought about the conclusion that CQU’s code has leaned more towards Agency theory whereas GSK’s draws form the Stewardship theory by relying on the stakeholder’s commitment to the cause above strict governance. (Solomon, J 2007)
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Cite this Comparsion of GSK code of conduct
Comparsion of GSK code of conduct. (2016, Aug 13). Retrieved from https://graduateway.com/comparsion-of-gsk-code-of-conduct/