Analysis_Ericsson_Code_of_Ethics

08/12/2010 |Alonso Martínez Guevara | Table of Content 1 Ericsson – A short Company Profile 4 2 The Code of Business Ethics – Introduction into the Content 4 2.1 Guiding principles 4 2.2 Responsibility for compliance 4 2.3 Reporting Violations 5 2.4 Treating employees with and respect and protecting human rights 5 2.5 Compliance with laws, rules and regulations 7 2.6 Communication and financial information 8 2.7 Conflict of interest 8 2.8 Protect assessment of Ericsson 9 2.9 Protecting information 9 2.10 Protecting the environment 10 2.11 Corporate Responsibility 10 3 The Code of Business Ethics – A Thorough Analysis 11 3.1 Hofstede Geert, cultural dimensions 11 3.2 Dimensions applied on Ericsson 12 3.3 The power distances 12 3.4 Uncertainty avoidance 12 3.5 What are Ericsson’s reasons for implementing the Code of Business Ethics' 13 3.6 How are the Swedish values portrayed in Ericsson’s Code of Business Ethics' 14 3.7 Moral development of corporations 15 4 Conclusion 17 1 Ericsson – A short Company Profile ERICSSON is one of Sweden's largest and most well-known companies. It is a provider of telecommunication and data communication systems, and related services, covering a range of technologies, including especially mobile systems, multi-service networks, enterprise services, transmission and transport technologies, advisory services, management and optimization services, 3G and 4G mobile telephony, multimedia messaging services, general packet radio services (GPRS) and Bluetooth wireless technologies. It was founded in 1876 as a telegraph equipment repair shop by Lars Magnus Ericsson in Stockholm, Sweden. Nowadays Ericsson dominates the world market for cellular telephone systems with 40% of the market share. Ericsson has offices and operations in 170 countries worldwide, with 80,060 employees it total, and it furthermore holds the highest number of patents, 25000[1]. The Code of Business Ethics – Introduction into the Content 1 Guiding principles Everything that is meant to be read needs a proper introduction. A code of ethics is no exception to this. Therefore Ericsson included the “guiding principles” to their Code of Business Ethics. The part ponders on the statement that Ericsson has always aimed at maintaining the highest level of integrity and ethics within their company. Upholding integrity seems to be of specials relevance for the company as they are keen to point out that “integrity is critical to maintaining trust with customers, partners, employees, shareholders and other stakeholders”.[2] Furthermore the code is meant to be seen as the company’s commitment to maneuvering truthfully and openly. The accentuation of both integrity and truthfulness within the first part of the Code of Business Ethics points at the special position that these values have within the corporation. Ericsson is a provider of telecommunication and data communication systems and is therefore very much dependent on their customers’ loyalty and contentment. Within this commitment to customer satisfaction lays their pledge to integrity and truthfulness. 2 Responsibility for compliance A code of Ethics is made to serve as a guideline for ethical behavior. But a guideline does not necessarily result in action. Therefore Ericsson also included a few paragraphs discussing the responsibilities and possible disciplinary action derived from the code. Reading and following the Code is considered mandatory for each employee. In order to ensure an even bigger pressure to comply, it is clarified that not obeying the code may result in both disciplinary and legal action. Interestingly the code puts a very big emphasis on the responsibility of the managers. They are seen as vital for the proper installment of ethical rules. And a right leadership style is meant to enhance the moral behavior of everyone within the company. This is especially remarkable when one considers the Swedish managing style. Swedish managers are normally known to leave a lot of space to their employees so that everyone has the possibility to create something of their own. Entrusting the manager himself with the task of guaranteeing ethical behavior and disciplining those who do not act accordingly is therefore especially notable within a Swedish company like Ericsson. 3 Reporting Violations When it comes to reporting violations the code offers clear instructions as well. Every member of the organization is expected and encouraged to report conduct that clashes with the ideas put forth in the code. Concerning the report of misconduct the requested behavior would be to disclose it to corresponding manager. If this manager is involved himself, the solution would be to report to the manager next up in rank. Interestingly Ericsson tries to take into account the fact that different countries or cultures have different ways of dealing with misconduct. To provide for these differences they also always include that exposure should be done “in accordance with locally established procedure”.[3] On the one hand it seems reasonable to assure that reporting takes place in a way according to country standards. On the other hand this may seem as a loophole for unethical behavior within the borders of one specific country where the procedures of dealing with misconduct are not as strict. Whistle-blowing is also being mentioned within this part. This concept is being considered important especially in dealing with issues concerning questionable auditing procedures. This focus on whistle-blowing and proper reporting then leads to the short emphasis on the idea that discriminating an employee that has reported violations will not be accepted under any circumstances. What seems very interesting when it comes to this issue is that it is being dealt with in only one sentence. When reporting a violation one of the biggest fears for the employee is what they will have to go through afterwards. Many wrongdoings go undetected because the people informed do not feel like they will be able to handle the trouble that come from reporting. Therefore it is very notable that Ericsson does emphasis the importance of reporting, but does emphasis the protection of whistleblowers as much within this part. 4 Treating employees with and respect and protecting human rights For Ericsson, the well-being of their employees and workers seems to be truly important in all aspects. That is why Ericsson´s Code of Business Ethics is rooted within the United Nation’s ten Global Compact Principles[4]. These principles cover important issues regarding four main areas: human rights, labor, environment and anti-corruption. The aspect is being thoroughly dealt with in the Ericsson’s Code of Conduct, publicly posted on their webpage, and is being summarized in this part of the Code of Business Ethics. In this section it is seen that Ericsson attached its ideology to these ten principles. This can be shown with statements such as “anyone should be entitled to their human right” and “anyone in Ericsson should not be forced to suffer physically or mentally in any way”[5]. Both of these statements are directly linked to the first and second principle of UNGB. Human Rights • Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and • Principle 2: Make sure that they are not complicit in human rights abuses. What is also noticeable in the code are numerous statements associated with equality between workers, working conditions, elimination of discrimination and environment. All of them are aspects derived from the principles of UNGB and which have been adapted to the ideology of Ericsson. Of specific interest here is the mentioning of the word equality which is a value well associated with the Swedish culture and overall values. Egalitarianism will be discussed further on in the essay. Labor • Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining • Principle 4: the elimination of all forms of forced and compulsory labor • Principle 5: the effective abolition of child labor; and • Principle 6: the elimination of discrimination in respect of employment and occupation.   Environment • Principle 7: Businesses should support a precautionary approach to environmental challenges; • Principle 8: Undertake initiatives to promote greater environmental responsibility; and • Principle 9: Encourage the development and diffusion of environmentally friendly technologies.    Anti-Corruption • Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.  It is natural that Ericsson, being a responsible multinational corporation, follows the United Nations Global Compact’s statements and also complies with them. It is clearly shown that Ericsson puts forth efforts to establish a globally recognized policy framework for the development, implementation, and disclosure of environmental, social, and governance policies and practices, sharing best and emerging practices to advance practical solutions and strategies to their challenges and also to help companies linked with this organization against any kind of adversity. As mentioned earlier, the section “Treating employees with respect and protecting human rights” summarizes the Code of Conduct. This provides an opportunity to mention additional aspects of interests, under this topic, regarding the Code of Conduct. According to a review[6] made by a Swedish labor union, Unionen, Ericsson’s Code of Conduct is considered as giving one of the most detailed descriptions regarding discrimination and how they will prevent this. Further evaluation emphasizes that the Code of Conduct is of high standard comparing to other Swedish industrial companies and written in a detailed way with ambitious wording. Conclusively, respect and equality are two key words being brought up frequently and seem to permeate the Code of Conduct. 5 Compliance with laws, rules and regulations The knowledge and compliance of laws, legal requirements and issues is really important for Ericsson. These are crucial aspects in their success that we can see clearly throughout their history, since 1986, when Ericsson was transformed into a limited liability company, until nowadays, when Ericsson enters into new countries and makes associations with other companies (Sony and LG). Without compliance with numerous laws, rules and regulations, all of these examples would not be possible; the company knows that the only way of not having any problem with stocks, conventions, contracts, etc., is by having a strict monitoring of all legal affairs. [7] This section in the Code of Business Ethics describes and comments on four vital concepts such as International business dealings, antitrust, accounting and financial reporting and insider trading. Regarding international business dealings the employees involved in international business and foreign affairs must be familiar with the specific laws and regulations in order to avoid boycotts, trade embargos and sanctions. Concerning antitrust fair competition is mentioned as being the basis for business development and innovation for Ericsson. That is one of the main reasons why Ericsson is dedicated to grow and advance while consistently complying with the law in each of the countries in which the company operates[8]. When dealing with matters regarding the accounting and financial reporting Ericsson follows strict accounting principles and standards to report financial information accurately and completely. This is done in order to ensure that the financial and accounting reporting complies with the laws and regulations. Lastly in this section, but not of less importance, the concept of insider trading portrayed. Ericsson’s employees are not allowed to buy or sell stock securities when having inside information on hand. Forbidden is also to share inside information with anyone within or outside the corporation. It is of importance to keep all crucial information within the company, when it might have significant effect on for instance the trading price of the stock. 6 Communication and financial information To improve Ericsson’s operations, it is essential to have knowledge about the financial situation, understanding the financial statements of each specific unit and improving involvement. Available information concerning financial information has to be balanced in a way that avoiding insider crimes and reporting rules of the exchange price according to the frameworks. Information which could have inputs of the stock exchange price and other future impact of the business has to be managed with special claims. It is Ericsson’s responsibility to express the information correctly externally through a person authorized by the company.[9] 7 Conflict of interest Employees have to avoid all type of personal gain through other business opportunities outside Ericsson and using assets and information from Ericsson to make own profits. An employee may not engage in other businesses which could disturb their performance for Ericsson, with or without compensation, and avoiding employments outside Ericsson. An employee has to avoid conflict of interest regarding services in any board of director of another company. Even though it may be for a non-profit company, the engagement first has to be approved by the boss. Benefits and gifts are not allowed to be received by employees since they can have influences of the business and relations but Benefits and gifts in accordance to restrictions of the law are acceptable. Bribes and kickbacks are forbidden to anyone, directly or indirectly, when it often is unlawful or unethical. Any case according this, it is obligated to report to the Group management. Concerning disclosure of conflicts, employees of Ericsson have to report any exception of interest of conflicts. Thereafter the Group Function Legally Affairs and the employee have to determine the conflict and address it. The topic “conflict of interests” is interesting to be discussed more intensely due to the reason, that there are always a lot of executives who have other assignments, sitting in board of directors and committee for other companies, which could then be a source for a conflict of interest' To get a clear vision of the situation at Ericsson Corporation, we examined the board of Directors, putting special focus on the last CEO, Carl-Henric Svanberg. Here the following conclusions could be made. Carl-Henric Svanberg’s assignments did not overlap as much as we expected but we still found a “conflict of interest”. His assignment at BP was signed while Carl-Henric Svanberg was still CEO of Ericsson.[10] According to the guidelines discussed in the code of ethics an assignment with another company could be source of a “conflict of interest”. And when regarding to the annual report 2009, page 28, it is stating; everyone, board of the Directors, members of the management and all the employees have to follow the guidelines of the code of Business. Even that all has to perform well to achieve a good standard of Ericsson. In the Business of conduct, there are critics against Benefits, kickbacks etc but where could you finding the regulation of severance pay' The Swedish Business newspaper, Dagens Industri, has many articles about the severance pays in Ericsson, upsetting a lot of people, when Ericsson not has made their best financial years.[11] 8 Protect assessment of Ericsson An obligation of an employee of Ericsson is to protect properties such as information, human capital and the assets in general which belongs to Ericsson. Any risk of Ericsson’s assets, it is obligated to report it to the security department. Avoiding risks, employee should have knowledge about the Security Directives of Ericsson, hence instruction of handling; communication systems, information and intellectual properties. The requirements and standards are to protect the properties including the assignments every employee has to sign before their employment at Ericsson. The objectives of the communication system are using them in a purpose of Ericsson and the business. It is completely forbidden to use Ericsson’s communication system to handle, spread or use any kind of information of racism, obscene and propaganda. It is important using the instruction of personal codes and pin-code to every system. When an employment is over, all assets used by an employee, is obligated to be returned. 9 Protecting information This section in the Code of Business Ethics deals with how Ericsson’s information shall be protected within the company. All information proprietary as well as confidential needs to be protected. Depending on what information is considered the level of protection varies.[12] Protecting information is for the time being the most significant part in the Code of Business Ethics.[13] It concerns Ericsson’s private information as well as the information about customers and third parties. Ericsson has stated very clear directives on how employees shall act in order to maintain and further this protection. Employees are not allowed to duplicate proprietary information outside their duties for Ericsson, store company information on private computers or disclose information not made public yet.[14] Rules are stated in an unambiguous and concrete manner on what employees must do respectively and what they are not allowed to do. Disclosure of information can damage Ericsson and its reputation, as well as their customers and subcontractors. Therefore it is vital to restrict access of certain information only to those needed and who have authority for it. 10 Protecting the environment For Ericsson, as a world leading provider of telecommunications equipment, the environment is an area with great importance both related to employees’ daily work as well as for the stakeholders’ view of the firm. Ericsson’s main goal concerning the environment is to reduce their products’ energy consumption and work is therefore concentrated on methods on how to improve the energy efficiency. One tool Ericsson uses is LCA, life cycle assessment, which measures the products impact on the environment.[15] Guidelines concerning the environmental focus are based on ISO 14001 and the Group Environment Policy. ISO 14001 is an international standard used for providing a framework towards the company’s environmental policy. The Code of Business Ethics states seven commitments from the Group Environment Policy that Ericsson shall strive for. This section is fairly short in the way that it does not give further information regarding the content of the commitments. Considering the objectives stated in the Code of Business Ethics they can be seen as easy understandable and comprehensible, but relatively standardized. Comparing to one of Ericsson’s main competitors, Nokia, their emphasis is likewise on reducing the environmental impact of the product as well as life cycle thinking.[16] Further findings show that Nokia as well as Ericsson emphasize the importance of sustainability. Nokia, a Finnish company with Scandinavian values, also highlights the importance of equality. The motive for this comparison, both of environmental aspects but also in general, is to draw the conclusion that the content of these Codes, established by two Scandinavian companies, do not portray big differences. To protect the environment in accordance with Ericsson’s policy, the Code of Business Ethics encourages the employees at Ericsson to handle environmental issues strictly professional and by that they will also improve Ericsson’s work toward a more sustainable society in the future. 11 Corporate Responsibility Corporate Responsibility for Ericsson is a concept about building enduring values, including economic, environmental and social aspects, for both employees as for the firm’s stakeholders. Ericsson strives to be responsible citizen and wants its brand to be associated with respect, human rights and environmental protection.[17] Emphasis is also on how to behave in an ethical way. Ericsson’s work towards a more sustainable society is mainly founded on three principles; economic prosperity, environmental performance and social equity.[18] The company takes on a large corporate responsibility, which is shown by the creation of the yearly Corporate Responsibility rapport and the “Ericsson response program”. The idea is that a sustainable and responsible approach in Ericsson’s work will result in value creation for the company and for the society as a whole. In portraying the obligations of corporate responsibility in the Code of Business Ethics increases awareness to Ericsson’s employees on how their work affects the society and that it is essential for them to have this in mind. This section in the Code of Business Ethics appeared relatively short, which can be explained by the existence of a yearly written sustainability rapport, which is done in a more detailed manner. The Code of Business Ethics – A Thorough Analysis 1 Hofstede Geert, cultural dimensions The five cultural dimensions of Geert Hofstede are helpful when comparing the various business behaviors in different countries. These differences are distinct between the individual countries, especially for those with a big geographical gap between them, e.g. one of the Scandinavian countries compared to Asia. The Scandinavian countries, such as Sweden, have a low power distance which becomes especially obvious when they are being compared to Asian countries. The supervisor in Asian countries expects a lot of respect from his employees and is a person of high authority. On the contrary, a boss in one of the Scandinavian countries is oftentimes seen as equal member of the team who can be questioned as well as consulted at any given time.[19] The five identified dimensions by Hofstede are; Power distance, Individualism vs. Collectivism, Long term vs. Short term, Masculinity vs. Femininity and Uncertainty avoidance.[20] [pic] 2 Dimensions applied on Ericsson Ericsson as a multinational company is really attached to the traditional values of the Swedish culture. We will use Hofstede’s dimensions as a tool to analyze how the typical Swedish values are associated with Ericsson’s Code of Business Ethics. The focus will be put on the dimensions of power distance and uncertainty avoidance since these can be associated the most with Swedish values. [21] 3 The power distances Swedish culture has a really low indicator of power distance. The boss and the employee are seen as equals. The hierarchy is low, among one of the lowest in the world. As an employee, you have the freedom of making decisions, is not necessary to ask the supervisors before you make a decision.[22] How to apply this to Ericsson' How does it work in Ericsson as a company' “Power distance- policy” is that the decision making process has strictly to follow the organizational hierarch, no one it is allowed to take “short cuts“, the leaders and the managers have to be involved in the decision making process. The decision has to go in the “right” way towards the company. Is important to mention the fact that at Ericsson you can approach and talk with the CEO, no matter of what title you have in the company.[23] How apply this to Ericsson’s code of business' Ericsson’s code of business is composed by parts which are for everyone, no matter of what title you have, it is adapted to all the employees, easy to read, without any bureaucratic language, addressing to the whole company. 4 Uncertainty avoidance The indicator of tolerance level may vary depending of the country we want to analyze. In Latin countries this indicator is higher than in the Nordics ones. For example, in Sweden, is more common and appreciated to be structured and scheduled; the punctuality is more important for Swedish culture than for other cultures. The business meetings are more structured; they use to have a schedule program or protocol. Having meetings in restaurants, like Latin countries do, is not a common activity in the Swedish culture.[24] Even when the business culture of Ericsson is strict, at the same time is forgiving. The employees could make mistakes and be apologized, but they are not allowed to duplicate them.[25] Applying this on Ericsson’s code of business, we can find some similarities, according to uncertainty avoidance. The code of business is structured, with compliance with norms and regulation, not adding something over what is necessary and it is even focused on the safety for the employees, to make them feel comfortable, hence more structured oriented. 5 What are Ericsson’s reasons for implementing the Code of Business Ethics' The implementation of a Code of Business Ethics has become more important to companies during the last years. The public confidence for the companies has up till now decreased because of several earlier scandals in the business sector[26]. For firms to gain their stakeholders’ trust focus has now been put on developing Codes of Ethics. The main motives for a company to implement a Code of Ethics can be divided into defensive and offensive reasons[27]. |Defensive |Offensive | |Shareholders' pressure |Improving corporate reputation | |Consumers' pressure |Increasing market shares | |Financial scandal aftermath |Clarifying company's goals | |National/Community/International regulations |Differ from competitors | |Restoring social climate |Develop customer loyalty | | |Controlling staff's behaviour | | |Employee's contribution | Figure 2 Ericsson’s Code of Business Ethics pervades by mostly offensive reasons for having implemented the code. Both Ericsson’s Code of Conduct and the Code of Business Ethics are directed towards its employees and its subcontractor. Controlling the employees’ behavior, the employees’ contribution to the company and to enhance the firm’s reputation are aspects that are clearly shown and further on interpreted in Ericsson’s Code of Business Ethics. The Code of Business Ethics states that employees shall not comment externally about Ericsson which is one way of controlling the behavior of employees. Furthermore, guidelines concerning how to protect Ericsson’s confidential information are also stated in the Code. These are typical aspects which support the argument of Ericsson implementing offensive reasons regarding the Code. The main aspects regarding the improvement of corporate reputation are in Ericsson’s code associated with their work towards the environment and how to improve the energy efficiency as well as their attitude towards corporate responsibility. Nowadays stakeholders’ put more interest in these aspects which then forces Ericsson to emphasize this in a greater way. The sector of telecommunication consists of several competitors to Ericsson, such as Nokia, Motorola and Siemens. Having this in mind it is of great importance for Ericsson to continuously work on their corporate reputation and to clarify their company’s overall goals. The Code of Business Ethics is in this aspect used as a tool to be able to differentiate and also to be one step ahead of their competitors. However, the implementation of the Code of Business Ethics can be discussed as having been created from a defensive view point as well. Ericsson has been involved in a few major scandals. Between 1998 and 1999 six employees at Ericsson were prosecuted having committed crimes regarding the firm’s accounting policy and aggravations regarding the tax controls[28]. Furthermore, in 2002 two current employees, and one former employee, were arrested for giving documents, containing confidential information, to the Russian government[29]. Because of this it is obvious that employees as well as other stakeholders lost confidence in Ericsson. With this in mind, the implementation of the Code of Business Ethics can be seen as from a defensive reason to overcome these financial scandals. Due to these scandals, the company implements the Code in order to regain trust from their employees as well as their clients. Another defensive aspect concerns the laws and legal requirement Ericsson is exposed to. It is stated in the code that Ericsson shall comply with all laws and regulations applying to its businesses and to the participation in international business. Ericsson’s code is significantly driven by laws concerning human rights. Sweden, as well as the other Scandinavian countries, has a characteristic of having low uncertainty avoidance which emphasizes strict regulations and concentrates on having formal rules. This can be associated with the defensive reason of implementing the Code. In conclusion, the offensive reasons overweigh the defensive ones for Ericsson having created the Code. Regaining trust because of earlier scandals has to be seen as an extra vital aspect. Essential is also the aspect of controlling the employees’ behavior due to the fact that it is clear that the Code is directed towards its employees and subcontractors. 6 How are the Swedish values portrayed in Ericsson’s Code of Business Ethics' The Swedish culture is known for being dominated by social values mainly focusing on egalitarianism. The Swedish behavior is strongly balanced towards conceptions such as “lagom” and “Jantelagen”[30]. “Lagom” and “Jantelagen” both emphasize the importance of not acting superior to another. Individuals strive towards a middle way meaning that they shouldn’t behave in a more special way than another person and that the concept of status isn’t of much importance. Punctuality, structure, formality and strictness are also values associated with the typical notion of the Swedish culture. As stated earlier, Sweden gained a low score regarding power distance[31], in Hofstede’s study regarding cultural dimensions, emphasizing the fact that the hierarchical level only exist for the sake of convenience, that people in Sweden are treated in the same way regardless of their position. Ericsson’s Code of Business Ethics is written in an unambiguous and a very formal way and can be associated with the Swedish underlying values of being accurate and structured. According to Mats Storsten, working as Director at Group Function Sales and Marketing at Ericsson, the Code of Business Ethics is well met by their employees. “When looking at the table of content to the Code of Business Ethics I mean that we meet the demands well. Sweden is not a country associated with cartels and bribes, I would say that we are “best in class”. The labor market in Sweden and the way we treat people is also stable, comparing to other countries”[32]. This can be seen as a bit of “lying” in the values of the Swedish values and in the culture. A general aspect when looking at Ericsson’s Code is the notion that Sweden or Swedish values truly permeate Ericsson’s philosophy due to its large emphasis on laws regarding human law[33]. 3.7 Moral development of corporations Researchers have long tried to analyze a company’s ethical and moral standards and plot them into categories according to their development in this field. One scheme aiming at a fitting classification was devised by Reidenbach and Robin in the year of 1991. The two scientists believed that it should be possible to classify companies according to their stage of moral development. They came up with this concept when using previously developed scales to measure an individual’s moral development. When identifying their dimensions Reidenbach and Robin took into account the idea that a company’s cultural beliefs and values are being formed on the ideals of the organization’s members and on the reinforcing effect of a company’s success. The company’s culture both constitutes to these values and beliefs but is also being altered according to newly developed beliefs. [34] The model positions the companies is plotted in one of five categories according to their moral development. The paper will now offer a short description of each of the stages: • Stage 1 –Amoral Company: The sole aim of the company is monetary success. Therefore all activity is aimed at productivity and profitability and actions are seen as social if they result in profit. These organizations do not have a code of ethics and their main value is greed. • Stage 2 – Legalistic Company: Companies on this stage also focus mainly on making profit. But while being profitable they always try to work in compliance with the law. All their actions and behavior has to be based on legality and not necessarily morality. When these companies have a code of ethics they serve mainly as internal guides as to what behavior is legal. • Stage 3 – Responsive Company: Organizations that are being categorized in this stage aim at achieving a balance between profitability and doing right. Most of the companies have complied with a greater social pressure when devising their code of ethics. Therefore these documents do have a larger societal orientation than the ones of stage 1 or 2 companies. While the codes do include standards and values concerning integrity, confidentiality, quality and more, they do mainly aim at identifying potential harmful behavior. • Stage 4 – Emerging Ethical Company: The companies within this category have just reached the first step to acting ethical. Their aim is to do right and to serve their surrounding as well as themselves. Ethical values have become part of the company’s culture but the management still lacks the experience and expertise to see for a proper integration of the values. Therefore the ethical planning lacks organization and long-term orientation. Within these organizations the code of ethics has become an active document saying that action is being derived from it (handbooks, committees, ect.). • Stage 5 – Ethical Company: Ethical and economic goals are seen as equally important. Ethical development and behavior are seen as core elements of the companies mission and goals and each employee is encourages and does take ethical decisions. The Code of Ethics is being lived within the whole company at any level. Since these stages have been developed by Reidenbach and Robin the general approach to business ethics has changed. Public awareness for ethical issues has risen in the last two decades and most companies do now have some form of Code of Business Ethics. Companies that want to stay in the public’s favor do have to offer at least some moral guidelines and exhibit this attitude within their doings. But their findings are still generally applicable to companies in today’s economy. The only thing that has changed is the amount of companies that can be placed in one category or the other. When trying to place Ericsson in a category according to their moral development one first has to provide a quick analysis of the company’s code of ethics and they way it is being formulated and implemented. As most companies Ericsson does include the most basic aspects within their Code of Business ethics. The code calls for human rights, integrity, respect, protection of the environment and it offers some practical guidelines on how wrongdoings must be reported and dealt with. But within its ten pages it does not go into very much detail. The paper is not engaging itself and does focus very much on the protection of information, laws and regulations. While the interested employee might find some information on how to deal with delicate situations and some broad guidelines on how to treat customers, suppliers and the environment, they will not be drawn into the paper and feel engaged to act upon their knowledge. Even though every new employee of Ericsson has to sign the paper in the beginning of his employment, this signature will not necessarily lead to action. It is good, that the company offers its employee with guidelines for proper behavior, but in a sense the code does not go much further than the extent what the general public expects from a company as big as Ericsson. Seeing this, Ericsson would be placed in stage 3 with the other companies that show a growing concern for their stakeholders and are just evolving to become corporate citizens. Conclusion After having carefully analyzed the Ericsson’s Code of Business Ethics and Code of Conduct, our team has come to the conclusion that both documents are extremely important for the company and its international reputation. However, we also think that it is important to point out some aspects that we found critical in order to really understand the complexity of the problem. According to Hofstede, the power of distance in Sweden is really low but after having talked with the Director at Group Function Sales and Marketing at Ericsson, we realized that this indicator is actually quite high in the Ericsson Company. Its structure is in fact very hierarchical. This fact makes us think that Ericsson has changed its values throughout the years that it has been expanded all around the world competing in an international environment where competition is more crucial that ever before. Nowadays, Ericsson is following values and systems that are more characteristic of those an American company would life up to, such as hierarchy, individualism and task oriented systems. We know that Ericsson keeps all of its employees informed at all times about the Code of Business Ethics and Code of Conduct via the company’s intranet and that all employees are constantly introduced to the latest version. However, we think that this is not enough to make them feel part of the philosophy as well as to make them conscious about the values that the company stands for and the importance of compliance with the Code of Business Ethics and Code of Conduct. Most of the effort undertaken by Ericsson is focused on either the legal requirements or the protection of confidential information but other principles and values within the codes don’t really seem to be aspects that the employees live day by day in the company. We think that the company should put more effort into the bonding of the employees to the company and with that to the identification of each employee to the values and codes carried out by Ericsson, offering special seminars and individual trainings as well as customized exercises related to theses topics, not only via intranet as they have been doing but also using alternative media in order to make work more dynamic. The lack of effort concerning this aspect, and also the fact that the company implemented theses codes only very recently (2008), make us think that Ericsson implemented its Code of Business Ethics and Code of Conduct only to follow the trend of other multinational companies rather than to look for the benefits that these codes would bring to the employees and overall work environment. Appendix 5 Interview Interview Questions • There are two ”dimensions”(Geert Hofstede) which are typical for Sweden, according to the teachers here, these are; “Power distance”(the power distance in Sweden is very low, the boss is an equal, no hierarchy) and uncertainty avoidance (Sweden has low, when we “prefer” to have norms, principles, set schedule comparing to other countries). How do you think that we could apply that to Ericsson' Power distance: Ericsson is organized in a strict hierarchy, like any other company. Salaries and benefits follow strict the different levels you are working within, i e you have to be a "Vice President" and high up in the company to be able to fly in Business Class, for all other employees it will be Economy class etc. When it comes to making decisions, we are following strict the organizational hierarchy, all managers along the line has to be involved, you can not "shortcut" anyone. So, the only thing that really supports the "power distance" theory is the fact that anyone in the company can just stop our CEO in the corridor and ask something..... But that does not mean that they are "equal" when it comes to making decisions and so on. Another factor supporting this theory is that we very often only promote managers from our own employees. Kurt Hellström is one example, he worked his way up from the floor to the CEO position. On the way he has of course met a lot of persons within the company, worked as peers for many years and therefore it is "easy" to start talking to old collegues even if you have advanced to the CEO position. With Svanberg the story was quite different. He came from outside and did not know people within Ericsson. So, in his case the "power distance" was much higher compared with Hellström. Another "general" factor in Sweden is the well known "du-reformen". Earlier you always talked to older persons, teachers, managers etc starting with "Ni". This was "cancelled" in Sweden and from now on you only say "du" to people (the only exeption is our King+family), making the "distance" shorter. Uncertainty avoidance: Our culture is very "forgiving", you can do something wrong without being fired, but not to many times. The good thing with this culture is that people dare to take action and drive good initiatives, the bad thing is that it is difficult to stop not so good initiatives. • When did Ericsson implement their “Code of Conduct/Code of Business Ethics'” • How do you measure the implementation of the ten principles (HRM-principles)' How do you promote the ten principles, like any posters in the office to get the spirit etc' • Have anyone of Ericsson’s employees been involved in some scandal because they have not acted “in line” with Ericsson’s Code of Business Ethics' The big drive was spring 2008 when all staff (electronically) would sign the Code of Conduct.We had in Svanberg's leadership bought us a lot of new companies with many employees and have taken over many personnel from our customers in so-called managed services business where we run customer networks. The need was therefore great to do it for the entire staff because so many were new. The campaign was run on its intranet that includes video where management presented the whole thing. Prints are "old" and obsolete, now online! • How often shall the employees sign the “Code of Conduct/Code of Business Ethics”' It is stated in the CoBE that one has to sign it in regular intervals, how shall that be interpreted' Is it for example a period of 4 years' I think that you sign at only one opportunity, in the beginning of your employment. Where does it say that you sign regularly' • You mentioned earlier that the Swedish culture could be portrayed in your Code of Business Ethics, can you develop this thought' Is there any specific parts you want to emphasize' When looking at the table of content to the Code of Business Ethics I mean that we meet the demands well. Sweden isn’t for example a country that is associated with cartels or bribes (we are probably “best in class”). Our labour market in Sweden and how we treat people is also stable, in comparison with strikes in France and other countries. • Can you state any concrete example of any conflict of interest you have experienced during your time in Ericsson' It may happen that employees are involved in these situations. But, the company will solve this in a discrete way, it never goes external and to public knowledge. The result is probably that the employee has to leave the company. “Key people” who voluntary leaves the company could sometimes be put in quarantine, sign an agreement that the person cannot start working at a competitor one year from leaving Ericsson. • What is your strength in the Code of Business Ethics' What is being most emphasized' Concerning the Code of Business, I believe that we meet all the criteria very well, it may lie in the Swedish culture. However, the area which is of most importance at the moment is “Protecting Information”. It concerns both our proprietary information, but also unique information about our customers and cooperation partners. All information belongs to the company and can’t go public. We are working a lot with environmental questions regarding recycling our products, solar cells for the electricity supply… 1. Sources General • Ericsson - Code of Business Ethics • Ericsson -Questions and Answers document • Interview Mats Storsten, (yrke) Ericsson • Nokia - Code of Conduct Articles • Journal of World Business 40 (2005) 91–109, A comparative study of the contents of corporate codes of ethics in Australia, Canada and Sweden • UW-L Journal of Undergraduate Research VII (2004) “The Implementation of Corporate Ethics: A Comparative Study between Motorola and Ericsson” • Reidenbach. E. and D. P. Robin: 1991, ‘A Conceptual Model of Corporate Moral Development. Journal of Business Ethics 10(4). 273–284. Lecture material • Lecture International aspects of Ethics and values 2010-11-08 Power Point slides • Lecture International aspects of Ethics and values 2010-11-29; PowerPoint slides Internet sources • http://www.thelocal.se/754/20041221 • http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html • http://www.ericsson.com/thecompany • http://www.ericssonhistory.com/templates/Ericsson/Article.aspx'id=2057&ArticleID=1864&CatID=376&epslanguage=EN • http://www.ekobrottsmyndigheten.se/press/nyheter/2005/4/Atal-vacks-mot-sex-anstallda-eller-tidigare-anstallda-samt-en-revisor-pa-Ericsson/ • http://investing.businessweek.com/businessweek/research/people/overview/overview.asp • http://di.se/ • http://www.geert-hofstede.com/hofstede_sweden.shtml ----------------------- [1] http://www.ericsson.com/thecompany [2] Appendix : Code of Business Ethics page 3 [3] Appendix : Code of Business ethics page 3 [4] http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html [5] Appendix: Code of Business Ethics: Treating employees page 4 [6]https://www.unionen.se/UploadFiles/Dokument/Om%20Unionen/Best%C3%A4ll%20och%20ladda%20ner/Rapporter/UNI%20038_Uppforandekod.pdf [7] http://www.ericssonhistory.com/templates/Ericsson/Article.aspx'id=2057&ArticleID=1864&CatID=376&epslanguage=EN [8] Appendix: Code of Business Ethics: Compliance with laws page 5 [9] Appendix: Code of Business Ethics: Communication and Financial page 6 [10] http://investing.businessweek.com/businessweek/research/people/overview/overview.asp [11] http://di.se/ [12] Appendix: Questions and Answers page 8 [13] Interview Mats Storsten [14] Appendix: Code of Business Ethics: Protecting information page 8 [15] Appendix: Questions and Answers page 9 [16] Nokia Code of Conduct page 5 [17] Appendix : Code of Business ethics page 10 [18] Appendix: Questions & Answers page 10 [19] Lesson, Sales mgt, Guy Spielberger, 20101124, Ecole de Management. [20] http://www.geert-hofstede.com/hofstede_sweden.shtml [21] Lesson, Sales mgt, Guy Spielberger, 20101124, Ecole de Management. [22] Guy spielberger, 20101124. [23] Interview Mats Storsten, 20101202 [24] Lesson, Sales mgt, Guy Spielberger, 20101124, Ecole de Management. [25] Mats Storsten, 20101202 . [26] http://www.thelocal.se/754/20041221/ [27] Lecture International aspects of Ethics and values 2010-11-29; PowerPoint slides [28] http://www.ekobrottsmyndigheten.se/press/nyheter/2005/4/Atal-vacks-mot-sex-anstallda-eller-tidigare-anstallda-samt-en-revisor-pa-Ericsson/ [29] “The Implementation of Corporate Ethics: A Comparative Study between Motorola and Ericsson” [30] Lecture International aspects of Ethics and values 2010-11-08 Power Point slides [31] A comparative study of the contents of corporate codes of ethics in Australia, Canada and Sweden [32] Interview – questions to Mats Storsten (Appendix) [33] “The Implementation of Corporate Ethics: A Comparative Study between Motorola and Ericsson” [34] Reidenbach, R. E. and D. P. Robin: 1991, ‘A Conceptual Model of Corporate Moral Development. Journal of Business Ethics 10(4). 273–284. ----------------------- |International Aspects of Ethics and Values |Ericsson- Analyzing the | | |Code of Business Ethics |