Review of Caterpillars’ Code of Ethics Caterpillar Incorporated (Caterpillar) is the world’s top in manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. In 2008, Caterpillar reported sales revenue of $51. 3 billion dollars from domestic and worldwide operations (Caterpillar, 2008). As reported in Caterpillar’s 2008 Annual Report, Caterpillar is a worldwide company with 67% of their sales from outside of the United States (Caterpillar, 2008).
With a global reach and influence, Caterpillar has recognized the need to develop and implement a Code of Conduct to guide its management and employees in their daily practices to make Caterpillar the efficient and profitable global leader it is today. Author, Muel Kaptein (2004) analyzes the business code of several multinational firms to ascertain universal structure and meaning. In his study he states “A business code is a policy document that defines the responsibilities of the corporation towards its stakeholder and/or the conduct the corporation expects of employees” (Kaptein, 2004 p. 3). Caterpillar recognized in 1974 a need to develop a Code of Conduct to guide its company and employees to act in an ethical manner. According to Caterpillar, their Code of Conduct establishes “what we stand for and believe in, documenting the uncompromising high ethical standards our company has upheld since its founding in 1925” (Caterpillar, 2005 p. 1). Since 1974, Caterpillar has updated their code of conduct several times to fit the changing world and their diverse workforce.
Caterpillar’s 2005 version of their Code of Conduct, their most current, has four values that they highlight as the foundation of their code of conduct; Integrity, Excellence, Teamwork and Commitment (Caterpillar, 2005). Caterpillar’s first value referenced in its Code of Conduct is Integrity. Caterpillar emphasis their choice of the word of integrity “as the foundation of all we do” (Caterpillar, 2005 p. 5). They use integrity to communicate to their employees the ethics of honesty and how they should guide themselves in their dealings with customers, suppliers, and all those that they come in contact with.
In the post Enron era, a company must have honesty before any customers, suppliers, investors or general public has faith in their credibility as a company. The next pillar of Caterpillars Code of Conduct is Excellence. The excellence credo is further highlighted in the 2005 Code of Conduct as “The Power of Quality” (Caterpillar, 2005 p. 11). Caterpillar is trying to impart to the stakeholders and their employees that they strive for excellence in everything they do.
Caterpillar has built a line of products and has a long standing tradition of high quality products that are in demand around the world. To build the quality they do, they instill the concept of excellence in their employees, suppliers and dealers. An important part of any successful business is the ability to develop and nurture a culture of teamwork. The third principal Caterpillar notates in its Code of Conduct is teamwork, in which they stress that they “know by working together, we can produce better results than any of us can achieve alone” (Caterpillar, 2005 p. 7). Caterpillar also uses the principal of teamwork to emphasis that the global and cultural diversity of their company is a competitive strength. In an enlightening approach to teamwork, Avshalon Adam and Dalia Rachman-Moore (2004), discuss how companies implement their ethical codes. They have identified teamwork as “having the most influence on the behavior” and that “teamwork style discourages deviation and encourages co-operation with the organization” (Adam and Rachman-Moore, 2004 p. 232).
Teamwork can be seen as the binding force that enables a company to successfully implement and communicate it values and ethics across the company. Caterpillar uses the fourth value of “Commitment: The Power of Responsibility” (Caterpillar, 2005 p. 23) to outline its commitment “with whom we work, live and serve” (Caterpillar, 2005 p. 23). An example of Caterpillars commitment to those they live with is exemplified in how they conducted themselves after locating facilities in the Brazilian town of Piracicaba.
Caterpillar partnered with the local government to provide guidance and expertise to develop the city. It did have benefits to Caterpillar, but it also showed the integrity to partner with others for mutual benefit to society. Author, Margaret Griesse (2007) illustrated Caterpillar’s leadership and commitment to an underdeveloped community in which they headquarter the Brazilian operations and how they aided the community to the benefit of all stakeholders. The community-based effort led by Caterpillar to elaborate and carry out a sustainable development plan for the city is notable example how a firm can encourage civil participation and offer strategic planning know-how to civil-society organizations” (Greisse, 2007 p. 39). Caterpillar recognized early an importance of sharing and communicating its ethics across its global company. It has, over the years, adapted and updated their Code of Conduct as it recognizes the social and business changes throughout the world.
The Code of Conduct that Caterpillar publishes truly is the foundation and spirit of how they conduct business and treat all their stakeholders. Caterpillar summarizes this notion best in their introduction to their Code of Conduct, “The Code of Conduct is the most important document we produce at Caterpillar. ” (Caterpillar, 2005 p. 1) References Adam, A. , & Rachman-Moore, D. (2004). The Methods used to implement an ethical code of conduct and employee attitudes. Journal of Business Ethics, 54, 225-244. Caterpillar. (2005). Our values in action: Caterpillar’s worldwide code of conduct.
Retrieved January 2, 2009 from http://www. cat. com/cda/files/853384/7/2005_code_body_EnglishFull. pdf Caterpillar. (2008). Big challenge: 2008 annual report. Retrieved January 2, 2009 from http://www. cat. com/cda/files/1401923/7/Caterpillar%202008%20Annual%20Report%20-%20electronic%20only. pdf Griesse, M. (2007). Caterpillar’s interaction with piracicaba, brazil: a community-based analysis of csr. Journal of Business Ethics, 73, 39-51. Kaptein, M. (2004). Business codes of multinational firms: what do they say?. Journal of Business Ethics, 50, 13-31.