ANALYSIS OF SHELL OIL COMPANYS CODE OF ETHICS

Discuss   your organization’s code of ethics of  a big international company such as Shell Oil Company’s  in detail…………….
 
Shell Oil Company is one of the earliest firms in the energy sector. It was established in 1907 and its headquarters are in The Netherlands. It has a wide branch network of over 44,000 service stations spread over ninety countries and serving more than ten million customers world wide. Its gross turnover as at June 2011 was 176 billon pounds per annum. (Investors Handbook P.6)  It is involved in all operations dealing with oil and gas. These include exploration of new mining sites, production, refining, distribution and marketing of oil and gas products. It invests a lot in seeking alternative energy sources. In this area the company invests in renewable energy sources like wind power, solar energy and bio fuels. In enhancing continuous supply of gas and oil, the company leases many wells in oil producing countries all over the world.  It markets more than 3 million barrels of oil daily. It controls approximately 3% of the market and makes every effort to safeguard its market share .In line with this the company invests in quality assurance laboratories of the latest standards.
In its mission statement the firm resolves to engage profitably in oil, oil products and related businesses and to also seek other energy sources to meet the growing global demand. (Shell Oil Company Code of Ethics, P.8). For the company to achieve these objectives it has a clear ethical system that acts as a guide to all operations carried out in the firm.  It clearly states what is to be done at what time and provides an elaborate channel of command to guide decision making for the company.  It clearly stipulates the company’s best practices to ensure it achieves set goals and targets. This is very important to the stakeholders like businesses that
ANALYSIS OF SHELL OIL COMPANYS CODE OF ETHICS
trade in their products and the share holders who rely entirely on the achievement of set targets; mainly profitability and divided incomes to make their investment decisions. A look into the firm’s consecutive financial reports indicates a continuous growth in the company’s assets as shown in the figure below.
KEY PERFORMANCE INDICATORS (in thousands of dollars)

Figure 1.
The company is listed in major stock exchanges like the New York Stock Exchange, London Stock Exchange and its market capitalization as at 2011 was in the range of 150 billion pounds. (Investor Handbook P.33).
ANALYSIS OF SHELL OIL COMPANYS CODE OF ETHICS
The firm ensures there is strict compliance with the law and reporting procedures. This is important to avoid the usual pitfalls. In 2004 the company overstated its oil reserves and was fined 17 million pounds by the financial authorities. It also compensated non American shareholders 450 million dollars (www. Shell plc.com.) Any non compliance can heavily dent the firm’s image and harm the business in matters of achieving set targets, investor confidence and customer loyalty. This is in recognition of the hefty fines and penalties like the ones above that may be slapped on them and in some countries it can include withdrawal of their licenses. “Don’t proceed with an import if there is any doubt about legality or propriety.”(Shell Oil Company Business Ethics, P.23)The zeal with which the company enforces these ethics is seen where any employee who errs willingly is reprimanded severely including being sued in a court of law. The company has also been blamed for poor system maintenance. Old pipelines that are corroded have been responsible for oil spills especially in the Niger Delta. This has led to pollution of drinkable water and greatly disrupts marine life and vegetation.  The company has faced a lot of lawsuits lodged by environmentalists and has paid very hefty fines.
These ethics are put in place to ensure the company protects and increases its market share.  The earnings per share have been consistent and have not had major variations in the last five years as indicated in the figure. The company would like to make it even higher. This is
ANALYSIS OF SHELL OIL COMPANYS CODE OF ETHICS
enhanced by good customer care procedures and production of quality products that are competitive in the market in matters of pricing models and efficiency. The company has an established whistle blowers site. Constant feedback from the customers ensure efficiency, transparency, honesty and integrity are enhanced. They also remunerate their employees well. The amounts have increased over the years as seen in the figure. They appreciate their role of disseminating the company’s mission and vision.  The management frequently appraises its workers in line with globally acceptable standards. This enhances enthusiasm among the labourforce and retention of acquired skills.
The company does not suffer from brain drain where all its trained personnel would leave for greener pastures. This ensures that newly recruited staff gain adequately from the wealth of experience provided by their seniors. Continuity is thus enhanced and this demonstrates why the company rarely experiences acts of industrial strikes and legal suits from employees demanding better services. There are clear employee retirement benefit schemes where the company is a major contributor. Health and indemnity covers for the company employees and their dependants are well and clearly structured. The company also incorporates good social corporate responsibility. In most societies where the company operates, it provides scholarships to the underprivileged children to ensure they get good quality education. This is done through construction of well equipped schools and the respective government provides quality teachers. They also construct hospitals and donate medicine among other medical requirements. The company also aids various authorities in the
ANALYSIS OF SHELL OIL COMPANYS CODE OF ETHICS
provision of social amenities like water, toilets, roads and dustbins. The code of ethics also ensures that there are ample security measures on the operations of the firm. The mode and methods of production adopted guarantee the security of the worker, the product itself and the consumer.
The availability of this code of ethics to the employees ensures that there is no ambiguity on what to do when faced with any scenario. This enhances efficiency and optimizes the firm’s production processes. There is no window for blame games among employees since the guide is very clear on reporting structures. Therefore the company meets its targets and the members of staff benefit immensely from tidy bonuses, job upgrades and other unspecified gains like fully sponsored tours to destinations of choice. The standing of such employees of a reputable company in the society greatly improves and they are rated very highly. Financial institutions like banks, insurance companies and other service providers are more willing to prepare custom made products for workers of such companies since security and reliability is guaranteed.
The management of the company relies heavily on the code of ethics when carrying out their supervisory role. In most instances they are normally the creators of this document and when its implementation bears fruit, they take credit. They therefore refer to it when making disciplinary decisions on any errant officers. The members of staff also inform the management on areas that need review and in so doing it enhances communication within the ranks of the………………………………..
 

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