Microsoft Corporation's code of ethics and corporate social responsibility compliance

An Examination of Microsoft Corporation’s Code of Ethics A. Selected code of ethics: Microsoft Corporation (hereinafter alternatively “the company” or “Microsoft”). 1. Analyze whether the code of ethics is lacking in the area of corporate social responsibility The company’s code of ethics is divided into three sections: (a) “our priorities”; (b) administration and oversight of the compliance program; and (c) enforcement (see copy attached). Although the Microsoft code of ethics only mentions corporate social responsibility (CSR) in passing (i.e., “Microsoft’s commitment to corporate responsibility and integrity defines the work of our ethics and compliance program” (Microsoft code of ethics, 2017, p. 1), the company also maintains a separate CSR statement. This CSR statement generally reflects the chief executive officer’s (CEO’s) most recent guidance provided in Microsoft’s 2017 letter to shareholders where he emphasizes that “everywhere we operate, we focus on contributing to local communities in positive ways—helping to spark growth, competitiveness and economic opportunity for all\\\\\\\" (Nadella, 2017, p. 3). In addition, the company also maintains a separate code of business conduct that supplements and expands its code of ethics. 2. Analyze whether the code of ethics is lacking in compliance with legal mandates a. Describe the implications of being noncompliant with legal mandates. Given the high-profile nature of the company’s operations, and the fact that operates in nearly every country and territory in the world today (212 at last count) and has more than 100,000 employees working in more than 100 different countries (Among the world’s most ethical companies, 2013), it is not surprising that Microsoft has taken careful steps to comply with all relevant local and national legal mandates despite the challenges and complexities that are involved, including most especially the U.S. given its headquarters in Redmond, Washington. For example, the company emphasizes that, “Microsoft is committed to the highest levels of trust, transparency, standards conformance, and regulatory compliance” (Compliance, 2017, para. 2). Depending on the jurisdiction involved, the implications for failing to comply with legal mandates can be severe. For example, Section 406 of the Sarbanes-Oxley Act legally requires publicly traded companies such as Microsoft to disclose: · Whether they have a written code of ethics that applies to their principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions; · Any waivers of the code of ethics for these individuals; and, · Any changes to the code of ethics (Corporate ethics and Sarbannes-Oxley, 2016). Likewise, Section 406 of the Sarbanes-Oxley Act also requires publicly traded companies to implement a specific code of ethics for senior financial officers or provide justification for not doing so (Gaumintz & Lere, 2009). Not surprisingly, the vast majority of publicly traded companies already have a code of ethics in place because it is reasonable to suggest that few of the leaders of these companies want to be the position of having to explain to their shareholders the rationale in support of failing to provide such a code of ethics for their organization and senior executives (Gaumintz & Lere, 2009). In addition, other salient provisions of the Sarbanes-Oxley Act for publicly traded companies include the requirement for code of ethics to comprise standards reasonably necessary to promote: · Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; · Full, fair, accurate, timely, and understandable disclosure in the periodic reports required to be filed by the issuer; and; · Compliance with applicable governmental rules and regulations (as cited in Gaumintz & Lere, 2009, p. 65). To its credit, the code of ethics that is currently maintained by Microsoft conforms to the legal accountability requirements of the Sarbanes-Oxley Act that require a statement to the effect that violations of the code “may result in disciplinary action, up to and including dismissal” (Corporate ethics and Sarbannes-Oxley, 2016, para. 4). b. Describe two legal or ethical safeguards your chosen company has in place or could put into place. 1) All Microsoft employees must complete an annual Standards of Business Conduct training course, available in 16 languages. In FY17, as in previous years, course completion was more than 99 percent. In addition, mandatory trainings address the compliance risks of specific roles and business functions, while a variety of additional guidance options ensure awareness of our policies and our expectations for ethical behavior (Governance at Microsoft, 2017). 2) A legal safeguard provided by Microsoft is its semi-annual law enforcement requests report that provides information concerning all of the legal demands for user information the company has received from law enforcement authorities in different countries and the responses provided by Microsoft (FY17 reporting resources, 2107). 3. Analyze whether the code of ethics facilitates the development of an ethical culture Although the Microsoft code of ethics is a scant 271-words long, it does clearly communicate the top leadership team’s vision for the company’s business operations in a complex market environment that spans the globe and covers more than 100,000 employees. In isolation, however, the company’s code of ethics does not fully facilitate the development of an ethical culture at Microsoft. Nevertheless, when the company’s code of ethics is combined with the corresponding standards of business conduct and viewed in this context, Microsoft does provide a timely framework that facilitates the development of an organization-wide ethical culture. Some indication of the effectiveness of these ethical codes and standards of business conduct can be discerned from some of the awards and recognitions the company has received in recent years, including: · Voted “World\\\\\\\'s Best Multinational Workplaces” in 2011, 2014, and 2015 by Great Places to Work Institute; · Honored as one of the World’s Most Ethical Companies 2011-2017 by Ethisphere.com; · Fortune 100 Best Companies to Work For during 1999-2014; · DiversityInc’s Top 50 Companies for Diversity list for 2013; and, · Participation in the World Economic Forum’s (WEF) Partnering Against Corruption ( 4. Analyze how an employee would raise an ethical concern in this organization. a. Describe three resources available to employees. The company provides several resources for its employees to report ethical concerns, including the following: 1) An email address ([email protected]); 2) A telephonic contact (1-877-320-6738 or International Collect +1-720-904-6844); and, 3) By U.S mail (Office of Legal Compliance, Microsoft Corporation, One Microsoft Way, Redmond, WA 98052, United States) (Raising integrity concerns, 2017). b. Discuss which resources you would most likely use. The resource selected for reporting an ethical concern would depend on the type and severity of the issue involved. For example, a Microsoft employee who suspected that a co-worker was pilfering office supplies due to rampant interoffice rumors might want to report the problem using an email notice given the relatively minor nature of the suspected offense and its unproven nature. An email would provide the company with the opportunity to acknowledge receipt of the concern and conduct a preliminary investigation to determine if additional inquiries were needed. By contrast, a Microsoft employee who has concrete evidence or otherwise personally observes a senior executive engaging in duplicitous business practices that are in clear violation of relevant laws might report the issue telephonically in order to fully communicate the gravity and immediacy of the unethical conduct, or even more likely by using all three of these resources as well as any others that are available (i.e., fax and Microsoft’s Integrity Portal, any Microsoft manager, as well as the company’s human resources and finance departments) (Raising integrity concerns, 2017). 5. Include the code of ethics you analyzed in part A by copying and pasting the code into a separate document. Please include this document as a separate attachment. B. Develop a policy that instructs employees how to address unethical conduct observed at work by doing the following: 1. Discuss the conditions that would have to be present for an employee to blow the whistle about unethical conduct observed at work. Because all Microsoft employees are required to complete annual ethics and business practice training, it is assumed that everyone fully understands what they should do if they suspect unethical conduct, but such conduct frequently exists along a nebulous continuum that makes distinguishing questionable practices from unethical behaviors especially challenging. Nevertheless, a relevant Microsoft policy for this purpose would state: “Any employee who observes or suspects unethical conduct in the workplace should follow the reporting guidelines contained in the standards of business practice. It is Microsoft firm policy that there will be no retaliation against employees who report such unethical behavior in good faith.” 2. Describe the process the employee should follow if the employee decided to blow the whistle Again, depending on the nature and severity of the unethical practices that are involved, employees should first consult their immediate manager to discuss their concerns and reasons for reporting the incident(s). If this approach is inappropriate (i.e.., the immediate manager is the perpetrator), employees should take advantage of any of the reporting mechanisms described above with which they are most comfortable under the specific circumstances. C. Analyze the advantages and disadvantages of paying whistle-blowers based on your understanding of current laws While the school-yard code, prison rules of conduct and American culture in general condemn “snitches,” it just makes good business sense to reward whistleblowers handsomely when circumstances require it and when justified by a cost-benefit analysis. After all, most people would be highly reluctant to jeopardize their professional careers and reputations by revealing instances of wrongdoing unless there were some monetary benefits for them involved besides moral authority. Moreover, when it comes to the federal government and major contractors, there are enormous sums of taxpayer monies that are involved and paying a fraction of these to help recover the remainder also makes good business sense such as with the False Claims Act. The False Claims Act is the U.S. government’s main mechanism for recovering funds that have been paid out based on fraudulent claims under various entitlement programs, research and transportation grants, agricultural subsidies as well as defense and national security contracts (Vlahos, 2016). Individuals who report instances of wrongdoing under the False Claims Act can receive between 15% and 30% of the recovered funds. Since 2013, the federal government has recovered billions of dollars in taxpayer funds using the provisions of the False Claims Act (Vlahos, 2016). The federal government recovered fully $3 billion in scarce taxpayer monies in 2011 alone pursuant to the provisions of the False Claims Act (Justice Department recovers $3 billion, 2011). D. Analyze the impact the U.S. Sentencing Guidelines might have on an organization Although the U.S. Sentencing Guidelines have only been applied to a small number of organizations to date, the companies that have been targeted are believed to have caused more criminal harm to society than all individual criminals combined (Murphy, 2002). The high-profile cases involving the sentencing guidelines have caused increasing numbers of corporate leaders to recognize the potential outcomes, including personal liability, for failing to comply with relevant ethical standards and other legal requirements (Murphy, 2002). To help guide the process, three of the most important culpability factors for driving ethical behavior in organizations include corporate culture, human resources practices and competitive integrity (Gartenstein, 2016). Conclusion With operations that literally span the globe and more than 100,000 employees working in more than 100 different countries, developing, implementing and administering effective and timely ethical policies at Microsoft Corporation represents an ongoing and complex enterprise. Despite the challenges that are involved, though, the research showed that this company has established organization-wide ethical standards and standards of business conduct as well as corporate policies concerning reporting mechanisms for suspected breaches of ethical conduct. Although the research also showed that publicly traded companies such as Microsoft are legally required to maintain such codes of ethics or provide justification for their failure to do so, it is reasonable to conclude that Microsoft would still maintain these codes and standards even if they were not mandated given the company’s emphasis on ethical conduct by all employees.