Respect, Trust, Fairness, Honesty, and Purpose: What are the impacts of this company's Global Code of Conduct?

Tuesday: Return Driven Strategy FROM THE DESK OF MILES EVERSON: The Return Driven Strategy is one of the most effective business frameworks I’ve encountered in my many years of working in the industry. This pyramid-shaped framework has 11 tenets and 3 foundations, which, if implemented properly in your business operations and strategies, will lead you towards wealth and value creation for your firm. In today’s article, let’s talk about one company’s ethical business practices that enabled it to ethically maximize wealth. We believe it’s important that we look at Return Driven Strategy’s Tenet One―Ethically Maximize Wealth―in the context of other companies’ strategies so we know how to apply this concept in our own businesses. Read the article to know why ethics is a critical part of wealth creation and how this concept applies in our case study below. CEO, MBO Partners Chairman of the Advisory Board, The I Institute

Respect, Trust, Fairness, Honesty, and Purpose: What are the impacts of this company's Global Code of Conduct? “Ethically maximize wealth.” In the book, “Driven,” authors Professor Joel Litman and Dr. Mark L. Frigo said that when the needs of the various constituents of a business are met in voluntary exchange, the communities generally see the firm’s activities functioning within ethical parameters. In fact, corporate concern about ethics has grown in prominence nowadays as lots of business entities strive to incorporate moral values and principles into their operations. Now, companies focus not only on expansion of business but also on ways to morally treat consumers, employees, and the environment. Did you know that operating ethically has positive impacts on a brand’s profitability and performance? Let’s take a look at how this is true in one food and beverage company’s operations… PepsiCo is a multinational food, snack, and beverage corporation headquartered in Harrison, New York. It is the second largest food and beverage corporation in the world based on net revenue, profit, and market capitalization. The company manages 23 brands that have over USD 1 billion in sales per year. These include: Ruffles Cheetos Tropicana Lay’s Doritos Pepsi Gatorade … and more. As of 2021, PepsiCo has operations around the world and its products are distributed in over 200 countries. PepsiCo as One of the World’s Most Ethical Companies For 15 years, PepsiCo has been part of data company Ethisphere’s “World’s Most Ethical Companies” list. According to David Flavell, PepsiCo’s General Counsel, a huge factor that contributed to that longevity is the company’s ethics and compliance program. He said, “It’s really a testament to the way our ethics and compliance program supports who we are. It’s fundamentally a part of how everyone conducts themselves across PepsiCo.” Here are some of the areas where the company’s “morally responsible actions” take place: Environment, Health, and Safety Management PepsiCo has an elaborate policy on the environment, health, and safety management. This policy has 8 critical points that tackle ownership culture, business integration, regulation compliance, and resource allocation. Another important aspect of this management policy is stakeholder collaboration. PepsiCo works with its partners, local communities, and customers to regulate the environmental, health, and safety outcomes related to its operations. Ethical Consumer Treatment PepsiCo makes sure it treats customers in morally acceptable ways without allowing inhumane activities to penetrate its human resource and other business practices. The company has also put in place a Global Code of Conduct that focuses on: Respect in the workplace Trust in the marketplace Fairness in business relationships Honesty in business conducts Purpose in the world Employees are expected to adhere to this Code to ensure the company sustains and achieves its objectives in the long run. Moral Actions towards Employees PepsiCo supports and expresses a commitment to help unleash its entire workforce’s potential. The company not only strives to serve its customers but also encourages a diverse corporate culture where anyone from whatever race, tribe, nationality, or gender can apply for a job in the firm and be considered for employment without discrimination. One of the reasons why the company values its employees as much as its customers? PepsiCo knows workers play a significant role in achieving its objectives. Its corporate philosophy identifies the importance of maintaining mutual respect, workplace safety, and integrity. A good example of this is encouraging employees to speak out whenever they have concerns related to their work or the company in general. Aside from that, an Organizational Health Survey is conducted every 2 years to gather workers’ thoughts, opinions, and recommendations concerning the organization. Effects of PepsiCo’s Morally Conscious Decisions According to Flavell, PepsiCo’s ethical practices enabled the company to experience improvements in sales, business operations, employee satisfaction, and camaraderie. For him, these outcomes just show how important integrity, respect, and honesty are in the success of the company. Below are other results of PepsiCo’s ethical policies: Customer Trust Showing greater dedication in ethically and genuinely serving customers helps PepsiCo enhance consumers’ trust and confidence towards the brand. … and as this trust is developed in the minds of many consumers, the company boosts its profit margins because of high sales that translate into higher revenues! Employee Motivation and Satisfaction The moral actions done towards PepsiCo’s workers boost their motivation level. Because of that, they feel highly valued and are willing to increase and improve the work they do for the company. What’s more? PepsiCo maintains a workforce that is highly satisfied with the benefits they receive. With motivation and satisfaction, employees contribute to a more satisfactory service to consumers. This then leads to customers’ trust and an improvement in PepsiCo’s performance. Community Collaboration Thanks to its ethical business practices, PepsiCo receives greater support and collaboration from the communities where it operates. Foreign governments are willing to issue the firm with licenses to operate in their respective territories because they realize the benefits that all parties involved will experience in the long run. This kind of goodwill from the communities and governments allows PepsiCo to further expand its market and improve its revenue capabilities! Flavell states that reaching everyone across PepsiCo, which has operations in over 200 countries in the world, is attainable because of the company’s fundamental principles and values. Its ethical practices and Code of Conduct not only benefit the local communities, employees, and customers but also direct the actions and activities of the entire firm. These ethics-related principles prove Professor Litman and Dr. Frigo’s statement that while ethics doesn’t necessarily ensure success, it does help reduce the risk of failures and losses. … and the lesser the risk is, the higher the chance that the business will flourish and achieve its goals. Take note of these ethical business strategies from PepsiCo! By putting in place various ethical standards for your firm, you’ll foster a healthy working environment and open more opportunities to expand your brand’s reach, establish positive connections with customers, and boost your brand’s overall performance. Hope you found this week’s insights interesting and helpful. Follow us on LinkedIn. Stay tuned for next Tuesday’s Return Driven Strategy! No verbal or nonverbal communication can be made in one part of a business without impacting every other part. Learn more about the “Mad Men” series and the “Killer Copy” in next week’s article!