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corporate values, credo, business principles, or whatever else you want to call them, will also speak to how a company conducts its business, its interaction with clients, expectations of employee behaviors, how employees treat each other, expansion through fair competition, and other key competitive drivers specific to the company Goldman Sachs business principles value creativity and imagination, which is important in investment banking, while AutoZone s code of conduct values cost control, which is a competitive advantage in delivering standardized auto parts Both are appropriate values given the drivers of their respective businesses, but neither at the expense of business and personal ethics Most experts explain how the establishment of a code will put management and employees on notice and discourage unwanted behaviors by restricting their actions On the contrary, such documents free employees to further the objectives of the company in new and creative ways, secure in the fact that their actions are aligned with the culture of the company and within established behavioral boundaries It empowers employees to actively improve the way things get done This creates ownership and an employee class that identifies itself as a part of the company How value statements are presented and enforced determines how they are received Opportunities can be lost if pent-up ideas and energy are never released due to fear The most complete and eloquent code means nothing if a company does not live by it Johnson & Johnson (J&J) exemplifies what it means to communicate and live by good corporate values J&J is a company synonymous with compassionate health care When people think of Tylenol, they think of safe and effective pain relief This view remains despite the fact that, in 1982, several people were poisoned when a murderer introduced cyanide into Tylenol bottles in the Chicago area J&J s response was true to its values It did not want its consumers feeling that it was playing Russian roulette with their lives by using its products, so it immediately withdrew all Tylenol products Some estimate this cost the company over $500 million, which illustrates the priority of J&J s corporate values Money was not the primary concern, and one only has to refer to their credo, which has guided the company since 1943, to understand The credo begins by announcing the responsibility of the company: The first responsibility is to the doctors, nurses, and patients, to mothers and fathers and to all others who use our products and
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services Note that it does not start with management, employees, shareholders, profits, or corporate accounts that buy the product Rather, the focus is on the people who use its products If this is the first priority, that frees a manager from having to consider short-term profits when faced with a moral dilemma The type of question a manager asks shifts from How can I address this problem at the lowest cost to What steps must I take to protect our consumers CEO James Burke did not have to think twice about quickly removing all Tylenol products from all shelves, regardless of cost It was in the best interests of those who used its products; and, in the long run, it was also the best decision for the long-term reputation and financial health of the company Johnson & Johnson s credo can be found in Appendix E
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The J&J example puts into sharp relief how senior management s decisions can be driven by a code of conduct As one moves down the hierarchy, it is not hard to imagine that the message could be diffused and may not even reach certain far-flung operations But if decision rights and procedures are properly defined and assigned, if corporate objectives are communicated and understood and cultural values are known and respected, then employees should not inadvertently bump into control boundaries on a regular basis, no matter how innovative their response to an objective Employees know what is expected of them; and operational key performance indicators will alert management if their efforts need to be redirected toward a company objective For a heavy industrial company, safety metrics are one example of a behavioral key performance indicator that might alert management or the board to a budding cultural problem If the number of accidents or incidents per hours worked begins to rise, the cause needs to be studied Have procedures changed Has awareness of known dangers atrophied, indicating a possible cultural problem Or could it be the result of one unpreventable accident The answer will determine the response as well as the increased threat level faced by the board A cultural problem would require new initiatives to review and improve process design, increase safety awareness, and make adjustments to evaluation and compensation schemes to incorporate safety objectives Regulators and workers unions tend to be
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