Motorola's Ethics Policy

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mOtorola’s ethics policy

An Assessment

Motorola is an international provider of wireless telephone, two-way radio and messaging products and systems, as well as networking and Internet-access products to commercial, government and industrial customers. Embedded semiconductor solutions are also delivered to customers in the networking, computing, transportation, wireless communication and digital consumer/home networking markets. Founded in 1928 as the Galvin Manufacturing Co. and still headed by a member of the Galvin family, Motorola has experienced explosive growth and now has more than 120,000 employees—affectionately known as “Motorolans”—located in nearly 100 countries around the globe. In addition to its recognition as the inventor of the walkie-talkie and the cellular phone, Motorola is known for its exemplary commitment to the field of corporate ethics. Indeed, the company’s code of conduct is considered by many to be a model of high ethical standards in the workplace.

Given the close affinity between Motorola’s ethics policy and its business practices, the present assessment will review Motorola’s Code of Business Conduct, discuss Motorola’s Ethics Renewal Process (MERP), examine problems and challenges pertaining to the company’s ethics policy, and evaluate the overall effectiveness of its ethics compliance program. The assessment concludes with recommendations for strengthening Motorola’s ethics policy to ensure that the company remains committed to high ethical standards for many years to come.

C ode of Business Conduct

The two central tenets of Motorola’s Code of Business Conduct—constant respect for people and uncompromising integrity—epitomize the company’s core ethical principles. In fact, these two core principles not only serve as the cornerstone of the company’s ethics policy, but they also help to guide Motorolans in their daily interactions no matter where they are in the world. Moreover, constant respect for people and uncompromising integrity imbue the spirit and letter of the company’s Code of Business Conduct, which takes a stakeholder approach to addressing the issue of corporate ethics responsibility. Similar in tone and content to the Caux Round Table’s Principles for Business, upon which much of Motorola’s ethics policy is based, the Motorola Code of Business Conduct outlines the company’s ethical responsibilities relative to several stakeholder groups:

Employees – Motorola pledges constant respect for all employees, zero tolerance of any form of harassment, and a commitment to a safe and healthy workplace.

Customers and Consumers – The company affirms its commitment to product quality and safety, champions truth in advertising and legal/ethical business practices, pledges to protect confidential customer information, and prohibits conflicts of interest and unethical dealings with all levels of government.

Business Partners – Motorola asserts its refusal to conduct business with unethical partners, outlines the need for ethical relationships with agents/consultants, subcontractors, and joint venture/alliance partners, and states that purchasing practices will be based completely on the company’s best interests.

Shareholders – The company pledges to protect corporate assets, which rightfully belong to shareholders, safeguard proprietary information, prohibit insider trading, maintain accurate company records, and record/retain business communications, whether in printed or electronic form.

Competitors – Motorola promotes free and fair competition and refrains from illegally or unethically obtaining information from competitors.

Communities – The company pledges to be a responsible corporate citizen that supports community service and personal community activities, protects the environment, and communicates to society in a truthful and open manner.

Governments – Motorola maintains that it will always comply with the law, prohibit unapproved political activities, and observe anti-corruption laws. The company will not violate export/import laws.

Figure 1 Motorola Stakeholder Groups

Besides the general stakeholder responsibilities described above and noted in Figure 1, the company’s Code of Business Conduct also contains more specific provisions regarding such issues as conflicts of interest, outside employment, board memberships, family members, investments, gifts, entertainment, and travel. Should employees have questions about these provisions or their responsibilities toward stakeholders, they are to raise them first with their immediate supervisor or manager. If employees are uncomfortable speaking with their immediate supervisor or manager, they are requested to contact another member of management, Human Resources, the legal department, or Motorola’s telephone EthicsLine.

Motorola's Ethics Renewal Process

Motorola’s Ethics Renewal Process (MERP) traces its origins back to 1995, when the firm’s board of directors asked a group of retired senior executives to examine the company’s ethics policy and propose recommendations for strengthening and championing ethics throughout the corporation. Since its inception, the MERP has grown to become an integral component and visible manifestation of Motorola’s ongoing commitment to high ethical ideals in the workplace. Indeed, the MERP is the vehicle for institutionalizing uncompromising integrity and respect for others throughout the organization.

The main features of the MERP are as follows:

	Human Resources, rather than the legal department, has responsibility for implementing the process. A special unit is charged with monitoring compliance and heading off ethical problems before they occur.
	Workshops featuring real-life cases are used to critically examine ethical concerns, foster ethical decision-making, and increase ethical awareness throughout all levels of the company.
	Mundane or less difficult ethical concerns are handled by local ethics committees. More complicated or substantive ethical problems progress to the highest levels of the organization through national, regional, and corporate ethics committees, respectively. Ethical committees also enjoy some discretion in granting waivers to the company’s ethics policy depending on circumstances.
	The human resources, legal, and finance departments have representatives on each of the various ethics committees. The legal department has responsibility for investigating external allegations of ethical misconduct, whereas Human Resources examines internal allegations of ethical impropriety. The finance department monitors financial transactions for evidence of unethical or irregular behavior.

Problems and Challenges

Several problems and challenges confront Motorola in getting its 120,000-plus employees to conduct company business honorably and ethically in nearly 100 countries.

First, the immense number of employees places logistical burdens on Motorola in the sense that literally hundreds of ethics committees have to be formed, organized, and coordinated around the world.

Second, many new employees come from corporate and societal backgrounds that do not share or promote Motorola’s exacting ethical standards. Inculcating a uniform sense of ethics across varying cultures is a daunting task indeed.

Third, as Motorola’s workforce continues to grow, proportionally fewer seasoned company employees are available to serve as ethical role models and positive activists for their less experienced counterparts.

Fourth, Motorola’s push toward decentralized management structures means that decision-making power will essentially devolve to rank-and-file employees, many of whom will be expected to be ethical torchbearers for the company in its relations with its principal stakeholders.

Finally, Motorola’s commitment to absolute ethical principles is often at odds with the relatively lax ethical and business practices that characterize many parts of the world. In some instances, Motorola has had to adjust its ethical standards and interpretations to accommodate the practical realities posed by cultural diversity.

In practice, Motorola has four basic approaches to reconciling ethical dilemmas:

Make no adjustments at all – This is the company’s ideal ethical posture and its preferred approach for resolving most, if not all, ethical dilemmas. As the Code of Business Conduct makes clear, “Our products will change. Our people will change. Our customers will change. What will not change is our commitment to our key beliefs.” Indeed, it is this approach that constitutes the core of Motorola’s ethics program.

Make minor adjustments based on local circumstances – In an imperfect world, reality dictates that some adjustments simply cannot be avoided for practical or cultural reasons. For example, with prior management approval, Motorolans can partake of culturally-sanctioned practices such as giving gifts in Japan or paying agent’s fees in Saudi Arabia. The proviso remains, however, that such practices must not prejudice Motorola’s reputation or violate its core ethical principles.

Make major adjustments based on local circumstances – This approach is primarily used to make procedural, rather than substantive, modifications to ethics policy. For example, Motorola would under no circumstances make an outright bribe. However, providing money to a local institution to fund badly needed services would not be considered an ethical violation (with prior management approval, of course).

Make substantive, global adjustments – This is the least common approach to resolving ethical problems and should be interpreted as a logical extension of the procedural modification approach. For example, Motorola’s decision to codify a group-based incentive reward system at several worksites or locales would constitute a substantive, global adjustment. As such, the policy change would be inclusive and would not require prior management approval in every instance.

Evaluation

An impartial evaluation of Motorola’s ethics policy shows that:

	Uncompromising integrity and respect for people are easily understood, accepted, and practiced by the vast majority of Motorolans.
	The Code of Business Conduct is both an exemplary exposition of corporate ethics as well as a useful tool for approaching ethical dilemmas.
	Motorola’s Ethics Renewal Process (MERP) is a valuable institutional framework for addressing ethical concerns at the most appropriate level, whether local, national, regional, or corporate.
	By making internal ethics compliance a human resources responsibility rather than a legal function, the company sends a clear signal that it does not seek to punish employees, but rather to instruct and orient them.
	The four-pronged approach to resolving multicultural ethical conflicts maintains the company’s commitment to absolute ethical principles while leaving sufficient room for managers to use their judgment in situations requiring cultural sensitivity.
	Commitment to lofty ethical ideals permeates the company and is practiced at all levels of the organization, from the chief executive to the most humble employee. Indeed, examples of Motorolans who refused to sacrifice the firm’s ideals are part and parcel of company lore.
	By refusing to engage in ethical impropriety or transact with those who do, the company has perhaps gained more business in the long run than it has lost, particularly as government officials and business partners feel more confident in doing business with a company known for fair dealing.

Recommendations

Regarding Motorola’s code of ethics and its compliance effort, it is recommended that the company maintain its unyielding commitment to uncompromising integrity and respect for people. Such a commitment has benefited the company, both financially and ethically, and it must remain a lynchpin of the company’s ethics program for many years to come.

More specifically, Motorola should:

	Disseminate the Code of Business Conduct to all employees, adapt it to changing conditions without sacrificing the company’s core principles, and teach it to all Motorolans.
	Establish an ethics tracking and monitoring system to record the content and resolution of ethical concerns as they pass through different levels of the company.
	Develop a tracking and monitoring system to evaluate the ethics compliance of subcontractors and business partners.
	Continue providing sufficient human and financial resources to the MERP and its ethics committees to exercise their appointed tasks.
	Encourage employees to communicate ethical concerns via the EthicsLine or electronic mail.
	Make ethics compliance an integral component of all hiring and promotion decisions.
	Hold monthly or quarterly brainstorming sessions to discuss improvements, modifications, or concerns regarding the company’s ethics policy.
	Publish a monthly or quarterly newsletter highlighting Motorolans who confronted ethical challenges and how they dealt with them.
	Institute an annual rewards program to recognize and honor Motorolans for exemplary ethics-related achievements.