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Intisar Sulaiyam AL Shekaili Discussion Case 5 Alcoa's Core Values in Practice

ID# 0103-61764

Summary: Alcoa (Aluminum Company of America) was founded in 1888 under the name of Pittsburgh Reduction Company. In 1907 its name was changed to Alcoa. The company had a very strong values-based culture. Its employees learnt from the begging of their career that everything they do must align the company's values. In 1985, the company documented its values and they were: Integrity; Environment, Health, and Safety; Customer; Accountability; Excellence; People; and Profitability. In 1990s the company was stressing on the importance of the health and safety through its ethics and compliance program. Alcoa had an ethics and compliance officer to ensure that all employees understand the program's tools and support the employees. The company started to work hard on its safety programs and make sure that all Alcoa's business, corporate headquarters and units meets the overall goal that is: zero work-related injuries and illness. But some managers felt to achieve that goal. In 2009 the company was doing well. There were 44.2% of its 242 locations worldwide had zero recordable injuries, 67% zero lost workdays, and 99.9% of Alcoa's employees with zero lost workday. Alcoa was rabidly closing the gap between its safety record and that of DuPont (benchmark for safety). The company believed that employees should work in any condition except if that condition was worse than their arrival condition. Alcoa's vision was "Alcoa Aspires to Be the Best Company in the World". In 1996 activist shareholders raised allegations against the working conditions at one of Alcoa's Mexican facilities. O'Neill conducted an investigation and visited the plant. He found out the managers were not reported to headquarters as required by the company policy. After successive and adequate investigations O'Neill said there was "a breach of the letter and spirit of our communication practices with respect to major indicates". O'Neill discovered some other issues too, so he decided that a change of the leadership at the facility was necessary, and fired the manager. After this event everything went good; the facility revenues and sales increased.

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Intisar Sulaiyam AL Shekaili

ID# 0103-61764

1. How would you classify Alcoa's ethical work climate? Which ethical criterion, as shown in figure 5.1, was used by the company: egoism (selfcentered), benevolence (concerns of others), or principles (integrity approach)? Or using Professor Paine's two distinct ethics approaches, as discussed in this chapter, was Alcoa's approach more compliance or integrity? In my opinion, the ethical climate of Alcoa is a combination of the three criterions egoism where the company thinks about its interests but that will lead to society economic efficiency. It could be benevolence that is focusing on team interests and social responsibility. I think the most criteria that describes Alcoa's ethical climate is principles criteria because in the company is all about personal morality, company's rules and procedures in compliance with the laws and professional codes such as U.S Federal Sentencing Guidelines, and Sarbanes-Oxley Act. Another thing is Alcoa documented its safety and health laws because they are important and the company wanted all its employees to understand and apply them in the workplace without any violation. On the other hand if we wanted to choose the best approach that describes the ethical climate of Alcoa according to Professor Paine, I would say both would work because with integrity People of integrity are guided by a set of core principles that empowers them to behave consistently to high standards. The core principles of integrity are virtues, such as: compassion, dependability, generosity, honesty, kindness, loyalty, maturity, objectivity, respect, trust and wisdom. Virtues are the valuable personal and professional assets employees develop and bring to work each day. However, in case of Alcoa the compliance approach would be the best and that is because of what is exhibited in this case about how every decision made any employees must not be against the values or the rules and the codes of the company. 2. What role did top management commitment play in developing the ethical work climate and organizational performance seen at Alcoa? What other ethical safeguards are mentioned in the case to support the company's effort at developing a strong ethical culture? In my opinion, the management of Alcoa (O'Neill) is played a great and crucial role as it is obvious in the case. From the beginning the company sat their values and documented what they thought is important that is the health and the safety of their employees. They obligated their employees to follow the codes of health and safety so the company can achieve its goals with taking care of its stakeholders (employees). As I said in the previous answer, the company took in consideration the U.S Federal Sentencing Guidelines, and Sarbanes-Oxley Act to make sure that everything is in
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Intisar Sulaiyam AL Shekaili

ID# 0103-61764

compliance with the law. The company had an ethical and compliance officer, a global code of conduct, continuous ethics and compliance training for its employees, and a global helpline reporting system. Besides that, Alcoa was rabidly closing the gap between its safety record and that of DuPont (benchmark for safety). 3. Was O'Neill justified in terminating the manager for his lack of reporting the work-place accidents, even though no serious harm resulted from the workplace incident? As far as I am concerned, from the beginning the company sat their values and documented what they thought is important that is the health and the safety of their employees. They obligated their employees to follow the codes of health and safety so the company can achieve its goals with taking care of its stakeholders (employees). All of this cannot excuse the leadership of the Mexican facility from not following them. O'Neill declared from the beginning that managers should report to the corporate headquarters and what the management did in Mexico is considered "a breach of the letter and spirit of our communication practices with respect to major indicates". I think O'Neill did the right thing even though there were no injuries because nobody can predict what will happen in the future this time there were no serious injuries but next time they maybe there. 4. Can Alcoa's "values in practice" be adopted by other organizations as a universal set of ethical standards leading to ethical employee behavior? I guess so. What the company did is really especially its ethics and compliance program. Alcoas reputation is underpinned by a strong ethics and compliance program to ensure all employees around the world understand and are committed to complying with all applicable laws, living our values, and adhering to our policies and procedures. Elements of ethics and compliance program include: Publishing the Guide to Business Conduct and other directional documents; Deploying global business conduct training and communications to all employees; Managing the global Ethics and Compliance Line; Administering the annual Business Conduct and Conflict of Interest Survey Certification that focuses on violations of the business conduct, insider trading, and anti-corruption compliance policies; Managing investigations of fraud and other significant non-compliances; Monitoring effectiveness metrics and non-compliance risk assessments; Administering a records retention program; and Serving as a resource to business and resource units in addressing ethics and compliance matters.
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