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Code of Ethics and Legal Responsibilities Analysis

Angela Roosa

EHM1 Task 3

Code of Ethics and Legal Responsibilities Analysis

Corporate Social Responsibility

I chose to review and analyze Target's Corporate Social Responsibility (CSR), and its code of ethics. Corporate social responsibility is what a company does beyond their economic responsibilities. This may include ethical, philanthropic, or legal responsibilities. Target provides detailed information in their code of ethics outlining their CSR. They have a whole section dedicated to their CSR efforts.

Target addresses civic activity, community, diversity & inclusion, philanthropy, planet, responsible sourcing, safety & preparedness, team members, goals & reporting, and stakeholder engagement in the corporate responsibility section of their code of ethics. Each section communicates in detail, what they support, and how they will support it. Each topic is also supported by data that provides a more detailed picture of what they are doing. For example, the diversity & inclusion section includes metrics linked to certain goals they have and the results.

Target provides an annual report to its stakeholders. This report gives an update on their CSR efforts for the prior year and what their goals are for the upcoming year. It is a very transparent document. Stakeholders can read the 91-page document and feel confident about what Target has accomplished, has failed to achieve, and what they will be focusing on in the future. This document goes above and beyond to ensure their beliefs and values are being communicated effectively.

Legal Mandate Compliance

Target states multiple times that they will comply will all laws that are applicable in their code of ethics. It also directs employees to follow the law numerous times. These statements are made varies times throughout the document, and not in regards to any specific law but all laws.

Target address many laws in their code of ethics, specifically laws that relate to their industry. The first law they cover is the Truth in Advertising law. They explain what this law means in terminology most people would understand. They also provide examples of what this could look like. They state that they apply this law to all of their advertisements.

The second law they address is the Data Privacy Law. They state that they adhere to this law and give guidance to employees on how to comply. This guidance provides instructions on how to lawfully handle personal information that they may be privy too. They give examples and scenarios to ensure employees understand.

The third law mentioned is the Anti-Money Laundering. Again, they give scenarios to ensure employees understand what the law is and how they should comply. They give specific examples regarding their store credit card and how to ensure the laws are not breached when signing customers up.

The fourth law included is the Anti-Bribery law. Target details what these laws are and provide details on how it could be violated. Their explanation and real-life scenarios make it very easy to understand the law.

Implications of Non-Compliance

If Target or its employees do not comply with these laws there could be severe consequences. At the bare minimum, it could damage their reputation with stakeholders and have economic consequences.

If Target does not comply with the Truth in Advertising law they could face federal and civil consequences. The court could fine Target up to $43,280 for each violation that is found. Also, civil penalties could range from refunding customers their money or penalties of $40,654 per violation.

There are abundant Data Privacy laws in regulations, but there is not one single law dedicated at the federal level. Violations of this law vary and each state is awarded jurisdiction to handle breaches of this law. In Indiana, where I live, if Target breaches this law they would have to notify each data owner and could face civil penalties of up to $5,000 per act, plus pay applicable legal fees. Target would have to be familiar with each state law in which they conduct business to ensure compliance.

Anti-Money Laundering laws can carry penalties of up to 20 years in prison. It can also carry a fine up to $500,000, or twice the value of the property involved, whichever is greater.

U.S. Anti-Bribery laws violations have harsh consequences. If convicted, restitution includes up to 15 years in prison and fines up to $250,000 per violation or three times the bribe’s value. Ensuring they are compliant with these laws is important for Target because it could be costly if they are not.

Legal or Ethical Safeguards

Target has created two ethical safeguards and incorporated them into their code of ethics. The ethical safeguards provide employees’ tools to help make ethical decisions that comply with the company’s code of ethics.

The first ethical safeguard in Target's code of ethics is an "ethical decision-making tool". This safeguard consists of a flow-chart type diagram. It leads the employee through four questions. It instructs the user to "don't do it" or email ethics@target.com if they answer no to any of the questions. This tool is self-explanatory and very simple to use.

The second ethical safeguard in Target’s code of ethics is a question and answer section for each topic in the code. Each ethical topic is explained in detail for 1-2 pages. Each issue has a scenario, question, and includes the correct answer for each issue. Employees can use the scenario to understand how they may encounter the topic in real-life situations.

Development of Ethical Culture

Target’s code of ethics does help build an ethical culture. The document is concise, provides a foundation for their CSR, includes leadership representation, covers applicable laws, provides scenarios for real-life situations, and it also provides resources for employees. This document can be used as a guiding light for stakeholders. Employees can use this document as a reference guide on how to act with integrity while representing Target. Policies, procedures, and rules can be derived from this document, guiding operations.

Raising an Ethical Concern

Target includes a page in their code of ethics encouraging employees to report ethical concerns. Target provides reassurance to employees that retaliation for reporting an ethical concern will not be tolerated. Target also outlines what will happen if you report a concern. Employees that make reports will remain confidential, and an investigation will be completed. If the complaint is substantiated, appropriate action will be taken.

Employees can report an ethical concern to Target in multiple ways. They can speak with their leader or Human Resources partner. They can visit www.TargetIntegrityHotline.com, call the Integrity Hotline, anonymously. For the U.S.: 1-800-541-6838, India: 000-800-100-1657, Other non-U.S. locations: place a collect call to the U.S. at: 1-470-219-7116. Employees can email their concerns or possible violations of the ethics code to ethics@target.com. Finally, Target employees can also send in written concerns to Corporate Compliance & Ethics, Target Corporation, 33 South 6th Street, Minneapolis, MN, 55402. Target makes it very easy to report an ethics concern, ask a question, or report a violation by providing so many options.

Preferred Resources

As a target employee, my preferred method to report an ethical concern would be to call anonymously. This would make me feel the most comfortable. I would feel more confident when reporting the ethical violation that my concerns would remain confidential.

Whistle Blowing Factors

Blowing the whistle is sometimes the right thing to do but always very hard to do. When you start to think that things are serious enough to be reported, there are six things you should consider before blowing the whistle. The first thing you should consider is how strongly do you feel about the wrongdoing? Is this an issue that crosses the line and keeps you up at night? Is it illegal or grossly immoral? The second thing to consider is why are you concerned about the issue? Is it more than just personal for you? Does it do damage to the greater good or whole organization? Thirdly, is there an opportunity to influence leaders or the organization to make a different decision? Is the person making the decision holding absolute power or can you use your influence to change course? The fourth thing to consider is the pros and cons, or risks and benefits. Make a list of what they are and who they impact. Think about your standing in the organization and your professional network, what would be the impact? The fifth thing that should influence your decision is timing. Is this an issue that needs immediate attention, or can you continue to gather facts and review them? Can you build a network of supporters that have the same experience as you? The final consideration would be to brainstorm other solutions. Is there anything else you could do to stop the behavior? Do you have a leader you could trust and confide in? Sometimes people that are not directly experiencing the situation have a different perspective and can offer up viable solutions.

Whistle Blowing Process

If you have thought through the six considerations above and have decided you need to blow the whistle there is a process you should follow. There are seven steps to follow once you have made your decision. The first thing you should do contact your immediate manager. If you do not gain their support or they don't listen, try again. Maybe they need to hear it more than once to understand the importance. Secondly, inform your family of your decision. Whistleblowing can have a far-reaching effect. They need to understand what it means and the potential impact for you and them. Plus they can help support you through the process. If you do not receive a satisfactory response from your manager, the third step is to follow the chain of command and continue to report the issue. This typically would be your manager's manager. Maybe they will understand the severity of your concern. The fourth step is to contact your company's ethics department. You should follow reporting procedures and allow them to respond. Additionally, research to determine what your state legislation outlines for whistle-blowing. The fifth step would be to reach out to departments outside of management that handle complaints. This could include Human Resources or Internal Affairs. They often have processes for handling complaints and can help resolve the issue. The sixth step is determining that even though you still have your job, you have exhausted internal resources, and you have no choice but to go outside the company and report the concern. Before step six, you should follow steps one through five and try in to reach a satisfactory resolution first. The seventh and final step is to leave the company. The behavior or action is so egregious you have no recourse but to remove yourself from the situation.

Advantages and Disadvantages of Paying Whistle-Blowers

The False Claims Act is a US law that allows whistle-blowers that report fraud against the government to be awarded 15-30% of the monies collected. The federal government can recoup up to 3 times the damages as a penalty. Whistle-blowers can receive substantial compensation as a reward for reporting violations of the law.

Compensating whistle-blowers has both advantages and disadvantages. The largest and most obvious advantage is the monetary reward encourages people to come forward. The fiscal incentive could be very enticing if someone is on the fence about reporting an issue. The second advantage of compensating whistle-blowers is that it may end up saving the government money in the long run. Continued fraud could cost the government more in the long term.

The disadvantages of paying whistle-blowers are that false claims could be reported. People may be motivated by money and report things that did not happen. This could result in wasted time and money spent investigating claims. The second disadvantage of paying whistle-blowers is that even though a whistle-blower was doing the right thing, they may lose their job and/or not be able to find another job. Once the investigation is completed the case becomes public and the whistle-blower’s identity does too.

Impact of U.S. Sentencing Guidelines

The U.S. Sentencing Guidelines are a set of rules created to ensure uniform sentencing for individuals or organizations that are found guilty of felony "white-collar crimes". Previously, these crimes were not always viewed the same. Judges had the discretion to impose sentences, and they often did not include incarceration. These crimes now have mandated incarceration as a part of sentencing. Sentencing for these crimes is now more consistent and fair.

The largest impact that the U.S. Sentencing Guidelines had on organizations was it forced them to review their ethical responsibilities. Organizations created ethics codes and programs to ensure compliance with the rules. They also created ethics officer positions to ensure they were meeting the standards outlined in the guidelines. After the guidelines were released, organizations realized they could now be held responsible for the unethical actions of even one employee. Therefore, they are placing more importance on training employees and ethical behavior. This includes checks and balances to ensure no one employee has too much power or influence on a process or procedure.

Culpability Factors

Each defendant is assigned a culpability score of 5. However, based on both aggravating and mitigating factors the culpability score can change significantly. The judge takes pre-established criteria into account when sentencing offenders.

For instance, having a prior history of similar behavior or crimes can result in an aggravating culpability score increase of 2 points. Another factor that can aggravate the culpability score is obstructing or impeding the investigation. If the defended has been found to participate in these behaviors, they could see an increase of 5 points in their culpability score.

On the contrary, mitigating factors could help reduce the culpability score. Self-reporting misconduct has the largest impact on the culpability score, and could reduce it by 5 points. The other mitigating factor that could reduce the culpability score by 3 points is having an established program in place to prevent these behaviors and law violations.

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