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					MASSMART

Code of Ethical Conduct

UPDATED – OCTOBER 2005

Contents
1. Massmart Code of Ethical Conduct ............................................................... 3
A MESSAGE FROM MASSMART’S CHIEF EXECUTIVE OFFICER ......................................... 4 MARK J. LAMBERTI .................................................................................................................... 4 1.1. Preamble ............................................................................................................................... 5 1.2. Core Values, Associate Qualities, Vision and Strategic Intent ............................................. 5 1.3. Ethical Decision Making Guidelines ...................................................................................... 7 1.4. Primary Principles governing Ethical Conduct at Massmart ................................................. 7 1.5. Enforcement, Monitoring and Reporting ............................................................................... 9

2. Addendums ................................................................................................... 11
Ethics Officers’ Contact Details .................................................................................................. 12 Massmart Ethics Line Contact Details ....................................................................................... 13 Related Policy Areas guiding good Ethical Conduct.................................................................. 14 Relevant Extract from King II ..................................................................................................... 18

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1. Massmart Code of Ethical Conduct

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A MESSAGE FROM MASSMART’S CHIEF EXECUTIVE OFFICER What is Ethics? The dictionary defines an “ethic” as a moral principle. Moral means virtuous, or based not on legal rights and obligations, but on people’s sense of what is right and just. A principle is defined as a basic truth or a general rule used as a guide to behaviour, or a personal code of right conduct. Ethics then are a set of personal rules (above and beyond the laws or policies that govern our country, industry, profession or company) that ensure that we do what is right in all circumstances, with our family, friends, staff, company, shareholders, suppliers, customers, and competitors. Good ethics should enable all of our decisions to stand up to scrutiny over the long term, by a person of the highest integrity, commonsense and humanity. To do what is right is not always easy. Sometimes the right way requires clear thinking and conviction. It requires self-discipline to resist the easy way. It requires character to stand up to pressure from others. It requires courage to take a stand. It requires the humility to learn from your mistakes and to try again. In short, doing what is right requires us to be individuals of true inner strength. In Massmart we value strong individuals who know the difference between right and wrong. And we know that most people in Massmart do the right thing at all times. But when we are uncertain or weak it helps to have a beacon of well-founded personal ethics that guides towards the right way of life where we consistently treat others, under all circumstances, with the fairness and decency that we would like to be treated. We must be strong to always do what is right. Our ethics are the foundation of that strength. Thank you for learning about Massmart’s Code of Ethical Conduct and thank you for behaving in a way that we are all proud to be associated with. When you do the right thing, Massmart becomes the right place for employees to work, the right place for customers to shop, the right place for suppliers to distribute and the right place for shareholders to invest.

MARK J. LAMBERTI

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1.1. Preamble
Massmart is committed to achieving the highest standards of Ethical behaviour in the way that we conduct our business with our associates and stakeholders. This Code of Ethical Conduct is intended to guide the standard of behaviour that we apply in our interactions with all Massmart associates and stakeholders, placing a special emphasis on our interactions with each other, our customers, our shareholders, our suppliers and the communities in which we operate. Central to this code is the idea that we will not break the law or engage in “morally suspect” behaviour in the way that we conduct our business. It is the duty of each Massmart employee to ensure that his/her behaviour is, without exception, guided by socially established principles of honesty, fairness, accountability, non-discrimination and respect for human dignity. We will, by the same token, expect that our stakeholders apply the same principles in the way that they interact with us and with others. Furthermore, it is our collective responsibility to demonstrate the moral courage needed to pro-actively challenge and speak out against unethical behaviour whenever and wherever we encounter it within the Massmart environment. These efforts will be underpinned by our understanding that our commitment to the highest standards of ethical conduct will be demonstrated in the way that we deal with those less obvious ethical choices that sometimes hide behind the convenient respectability of commercial imperative.

1.2. Core Values, Associate Qualities, Vision and Strategic Intent
Massmart is firmly grounded in a set of 6 core values and 5 Associate qualities that we have long embraced and practiced in pursuit of our business objectives. They are: Core Values Dignity and Respect: Focussed on the way that we will treat our associates and stakeholders, regardless of the situations in which we encounter them. Integrity: Focussed on the high moral and ethical principles that we will apply uncompromisingly in the way that we pursue our strategies and operating practices and in the way we deal with all stakeholders. Integrity is more than honesty; it is about behaving at all times in a manner that is never manipulative of the rights and feelings of others. Accountability: Focussed on understanding and accepting the consequences of the individual and collective choices that we will make. Stewardship: Focussed on always taking decisions that will enhance the longterm value of the assets for which we are responsible. Trust: Focussed on nurturing, through example, a powerful belief that this organisation is honest, fair and reliable in its dealings with all stakeholder groups

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Diversity: Focussed on respecting and placing a high value on leveraging individual, cultural, gender and talent differences so that we will consistently unleash the full potential of our work force. Associate Qualities Customer Driven: Focussed on developing a deep and insightful understanding of our customers needs, desires and expectations so that we will consistently surprise and delight them with quality, innovation and service at exceptionally low prices. Leadership: Focussed on constantly seeking a better way in everything we do to achieve excellence in our chosen markets. As formal leaders in Massmart or as informal leaders whose ideas influence others, we recognise our responsibility and obligation to serve those who we lead. Entrepreneurial Flair: Focussed on developing a keen sensitivity to the business environment that will enable us to identify opportunities and enter into transactions that our competitors miss. Simplicity: Focussed on applying our minds to reach the essence of every business challenge, on communicating concisely and precisely and on eliminating any wasted time, effort or bureaucracy so that we will render a more competitive offering for our customers and an environment of excellence for all stakeholders. Vision: Focussed on predicting creative, clear, insightful and inspiring future scenarios that will give us an important edge over our competitors. We firmly believe that the consistent and practical application of these values is integral to our ability to evoke desired strategic responses from our stakeholders. These responses are encapsulated in our vision: Customers will regard Massmart’s wholesale and retail formats as their first choice when buying those categories of merchandise offered by the formats. Suppliers will regard Massmart as a valued partner in accessing and understanding their end consumers. Career Retailers will regard Massmart as the preferred employer in the distribution industry. Investors will regard Massmart as a portfolio rendering superior growth and total returns at relatively lower risk than alternative investments. The community will regard Massmart as a sensitive, caring, trustworthy, South African corporation. This vision provides the benchmark against which we are able to assess the extent to which we have achieved our strategic intent “to be considered a leader by all stakeholders in our chosen markets.”

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1.3. Ethical Decision Making Guidelines
It is an absolute Massmart requirement that the decisions and actions of our associates are governed by a crystal clear understanding of what comprises right or wrong, good or bad behaviour. To achieve this all employees must be able to consistently make the right ethical choices in a variety of work related situations, some of which may be ambiguous. The following are the guidelines that employees must apply if any doubt exists about the ethics associated with a contemplated decision or action: 1. Is this decision/action legal? 2. Does this decision/action comply with our policies and procedures? 3. Is this decision/action consistent with our values and ethical principles? 4. Does this decision/action feel right? 5. Would you be happy if your boss knew about this decision/action? 6. Would you be happy to have this decision/action published on the front page of the newspaper? If the response to each of the above questions is yes then the decision or action that is under consideration is likely to comply with the Massmart Code of Ethical Conduct. If however uncertainty still exists after applying these guidelines, then it is imperative that you seek additional advice from either the Group Ethics Officer or from your Chain Ethics Officer.

1.4. Primary Principles governing Ethical Conduct at Massmart
Massmart’s expected standard of stakeholder conduct is underpinned by our unwavering commitment to uphold the 8 primary principles of ethical conduct described below. These principles are not intended to be exhaustive; they do however offer a “touchstone” against which high-level compliance to our Code of Ethical Conduct can be measured. 1. We will always abide by the spirit and the letter of the law in the way that we conduct our business. We will not tolerate involvement in any illegal acts whatsoever, examples of which include bribery, insider trading and tax evasion. 2. We will always act in the best interests of our customers paying particular regard to their expectations of product quality, product safety, competitive pricing and advertising that is not false or misleading. 3. We will always maintain strictly professional relationships with suppliers of goods and services, we will specifically not engage in any activity or accept gifts, favours or hospitality that may compromise our ability to deal with our suppliers objectively and without special favour. 4. We will always strive to create a stimulating and safe working environment that is underpinned by respect for the rights of individuals and that is free of prejudice in
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all its guises. We will stamp out abusive behaviours such as Sexual Harassment, Gender Discrimination and Racial Discrimination wherever we encounter them. 5. We will always compete fiercely in our chosen markets, but we will not resort to dishonest tactics in order to gain advantage over our competitors. This will include avoiding improper methods to gain access to the confidential information of our competitors. 6. We will always maintain accurate and reliable records that provide a fair representation of all business transactions and that are consistent with General Accepted Accounting Practices [GAAP], as well as our legal and financial reporting obligations. 7. Our employees will always perform their responsibilities professionally, honestly and in a way that serves the legitimate business interests of our stakeholders. This will include avoiding conflicts of interest, not engaging in theft of company property, utilizing company assets for legitimate business purposes only and protecting confidential information. 8. We will always act as a compassionate and responsible Corporate Citizen that is in touch with the issues facing the communities in which we operate. We will be particularly committed to participating effectively in social upliftment initiatives, pro-actively advancing the process of Black Economic Empowerment and demonstrating sensitivity to the impact that our activities and out trading partners activities have on the natural environment. These principles are supplemented by additional Policies and Procedures that prescribe the required standard of conduct governing specific situations. These Policies and Procedures, with which all employees are expected to be familiar, are described in the relevant Chain Policy and Procedure manuals. This being said, it is an inescapable reality that the potential to be involved in situations that may lead to unethical behaviour is vast. We are ultimately reliant on the good judgement and integrity of all our associates and stakeholders if we are to maintain high standards of ethical conduct.

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1.5. Enforcement, Monitoring and Reporting
Compliance with this Code of Ethical Conduct will be tracked utilizing a multi-faceted approach that will include Internal Ethics Audits, External Ethics Audits, Bi-Annual Ethics Surveys and the use of an externally operated Ethics Line. The Ethics Line is intended to provide all Massmart associates and stakeholders with a confidential and safe option for reporting suspected instances of unethical conduct. The Ethics Line provides employees with an option to remain anonymous if they wish. Massmart chains are to appoint Ethics Officers and these Chain Ethics Officers will report to the Group Ethics Officer. Ethics Officers are trusted senior management members who will act as custodians of ethics in Massmart. Their responsibilities, amongst others, will be to facilitate the entrenchment of a culture of Ethical Conduct in Massmart, identify key ethical risks and implement strategies to eliminate these risks and to facilitate investigations into unethical conduct within Massmart. All suspected violations of the Code of Ethical Conduct will be thoroughly investigated, after which appropriate remedial actions will be implemented. In cases where there is good cause to suspect that a breach has occurred then the remedies may include any combination of the following actions: Initiating the Internal Disciplinary procedure; and/or Initiating legal proceedings with the appropriate authorities; and/or Suspending or terminating relationships with stakeholders who don’t “demonstrate the same level of commitment to organizational integrity” [King II]. Instituting appropriate actions and controls to prevent the breach from reoccurring. Those breaches that do occur, as well as, general levels of compliance will be disclosed to our associates and stakeholders fully, fairly, accurately and in a timely manner. We will, in addition, implement rigorous measures to protect those who speak out against unethical practice from retribution. Our overriding objective will be to institutionalize ethical behavior as an essential component of Massmart’s culture. This will only be achieved with the full co-operation of all of our associates and stakeholders, who we expect to: Become familiar with and comply to the issues of ethical conduct described in this code, as well as in related legislation and internal policies. Pro-actively report any suspected or known violation of this code. Protect those who report violations from retribution. If you have any questions about the Massmart Code of Ethical Conduct then please ask your Chain Ethics Officer, alternatively, the Group Ethics Officer who will be in a position to assist you.

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Note that Massmart reserves the right to amend this Code from time to time. The Ethical Code of Conduct should be displayed on notice boards and be available from Human Resources, Line Managers and Union Representatives, giving employees the opportunity to read the Code in their own time and in detail.

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2. Addendums

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Addendum 1

Ethics Officers’ Contact Details
Chain Group Ethics Officer: John Hawksley Massmart Holdings Ltd 011 517 0067 011 517 0000 jhawksl@massmart.co.za Direct Number Switchboard E-mail Address

Ethics Officer: Adelle van Schalkwyk Ethics Officer: Bryan Hacking Massdiscounters: Game & Dion Wired 031 302 8336 031 302 8991 bryanh@mdd.co.za Masscash: Shield & Cell Shack 011 532 3603 011 532 2600 Adelle.VanSchalkwyk@masscash.co.za

Ethics Officer: Garth MaClou Ethics Officer: Thashmi Doorasamy Massbuild: Builders Warehouse & Builders Express 011 797 0445 011 797 0400 thasmi.doorasamy@bwhouse.co.za Masscash: CBW & Jumbo 031 713 4310 031 713 4000 garthm@cbw.co.za

Ethics Officer: Glenn Smith Ethics Officer: Matthew EarleRobertson Massbuild: Builders Trade Depot 031469 1407 031 469 1407 merobertson@btdepot.co.za Masswarehouse: Makro 011 797 0414 011 797 0000 gsmith@makro.co.za

Ethics Officer: Colin Cocking Massmart Holdings Ltd 011797 0582 011 517 0000 ccockin@massmart.co.za

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Addendum 2

Massmart Ethics Line Contact Details
FREECALL 0800 20 32 46 +27 31 508 6488 (Outside South Africa) FREEFAX: 0800 00 77 88 MAIL: Massmart@ethics-line.com FREE POST: Free Post DN 298 Umhlanga Rocks 4320 SMS: “please call me” to 32846 (SMS charged at R 1.00 each. SA only)

Note that only calls within South Africa and from Telkom lines are free.

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Addendum 3

Related Policy Areas guiding good Ethical Conduct.
Preamble: Massmart has identified a number of key areas in the business, which are directly impacted by ethical considerations. These key areas with broad guiding principles are listed below. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. Broad Based Black Economic Empowerment Corporate Social Responsibility Environment Conditions of Employment Remuneration Employment Equity Loss Prevention Absenteeism Recruitment and Selection Harassment Gifts and Donations Discipline Training and Development Record keeping Disclosure (such as conflict of interests) Health & Safety

Individual Chains have a number of Policies and Procedures, which define conduct in respect of each of these areas. Chains should insert all Policies and Procedures that relate to the above areas, and all other additional policies that are deemed important for the Chain, as an annexure to the Code of Ethical Conduct. 1. Broad Based Black Economic Empowerment (BEE): The purpose of the BEE Policy is to outline the principles and processes through which Massmart and its entities intends to improve its BEE status. Although the retail industry does not as yet have a BEE charter in place, Massmart is committed to proactively moving towards an acceptable BEE score based on the DTI Charter recommendations. 2. Corporate Social Responsibility (CSR) The purpose of a Corporate Social Responsibility Policy is to ensure that the business supports the sustainability of the social environment and framework in which it operates. The Corporate Social Responsibility Policy should ensure that the business works in partnership with relevant stakeholders, for the overall benefit of society. Good CSR is underpinned by good ethics. CSR initiatives that are solely used as marketing opportunities are arguably unethical in that they seek to portray an external
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state of affairs that may not match the reality inside the company. Good CSR should add value and not just exist for the sake of good public relations. An important aspect of CSR is Corporate Social Investment (CSI). The Group has a history of dedicated investment into CSI. CSI can be viewed as the organisations external contribution to social responsibility. This investment is based not only on sound principles of reputation management (an organisations public efforts to communicate internal good governance), but in a desire to do what is right. 3. Environment The purpose of an Environmental Policy is to ensure that our objective in providing superior returns to our shareholders is done in an environmentally responsible manner. The Environmental Policy should ensure that inappropriate risks are not taken, which may endanger the environment making it either unsafe or unhealthy or may unreasonably compromise environmental sustainability. We will therefore ensure that our operations comply in all respects with relevant national, provincial and local environmental legislation and regulations. We will specifically ensure that all Massmart entities comply with the relevant provisions of the National Environmental Management Act (NEMA) of 1998, the essential elements of which require that: Development must be socially, environmentally and economically sustainable. Organizations must select best practice environmental options that optimize environmental benefits or that minimize environmental damage, at a cost that is viable for society in the short and long-terms. Organizations should report on the environmental impact of their activities. This objective is not inconsistent with our traditional commercial imperatives, since it challenges us to discover forms of resourcefulness, cost consciousness and resource efficiency that will result in positive outcomes in areas such as lower raw materials consumption, lower energy consumption and less wastage. 4. Conditions of Employment The purpose of a statement on Conditions of Employment is to ensure that both employees and the employers have stated and agreed conditions of employment. This is to ensure that all employees are treated fairly, consistently and openly. It will avoid unnecessary disputes and disagreements between employees and employers. Employees should be made aware of the Code of Ethical Conduct and the implications of contravening the values and principles contained in the Code. 5. Remuneration The purpose of the Remuneration Policy is to ensure that employees receive a motivating remuneration package that is also fair and market and /or demand related. Employees must be fairly rewarded and recognised for their performance. Basis for calculation of remuneration must be transparent and equitable. Recognition strategies should operate regularly for high performers. The remuneration Policy should ensure that remuneration is not used to obtain favours or inappropriate control.
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6. Employment Equity The purpose of an Employment Equity Policy is to ensure that the business is working towards ensuring that the workforce is reflective of the diverse make-up of the South African population. As such the Employment Equity Policy is an over-arching policy that details the specific equity challenges that a particular business is facing, and what the approach is to resolve these challenges. The Employment Equity Policy should include equal opportunity principles and processes. 7. Loss Prevention The purpose of a Loss Prevention Policy is to avoid inappropriate loss or fraud from the business. The Loss Prevention Policy should regulate and control behaviour or action that may lead to the company losing resources inappropriately. This can include fraudulent leave, medical or expense records or obtaining information that is passed onto a third-party for inappropriate use. 8. Absence The purpose of an Absence Policy is to control and monitor authorised and unauthorised absence. The Absence Policy should ensure that employees have correctly allocated leave if required, and to ensure that this leave is appropriately communicated and authorised. 9. Recruitment and Selection The purpose of a Recruitment and Selection procedure is to ensure that the best and most appropriate person is identified and recruited. The Recruitment and Selection Procedure should ensure that the recruitment and selection process is open and fair. Any recruitment of family, friends or close associates must be declared and reviewed through the appropriate procedures. There should be a thorough and reliable search process and the selection process should be valid and free from manipulation or bias. Integrity must be given consideration in recruitment and promotion of staff. 10. Harassment The purpose of a Harassment Policy is to ensure that all workplace behaviour is free of forms of harassment. The Harassment Policy should ensure that people relations are impartial and free of prejudice, discrimination or bias. 11. Gifts The purpose of a Gift Policy is to ensure business decisions are made from a sound and objective basis. The Gift Policy should ensure that employee relations with stakeholders, such as suppliers and customers, are fair, open and unbiased. 12. Discipline The purpose of a Disciplinary Policy is maintain workplace and individual discipline, and hence to avoid deviant performance or conduct, either on the part of employees or line managers. Employees and line managers are expected to behave correctly and to the required performance standards of their job. High levels of trust and confidence should exist amongst employees in relation to the integrity of the process in which grievances; poor performance, misconduct and dismissals relating to operational requirements are
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conducted. Both the Disciplinary Policy and the Grievance Policy should be fair and objective, so there cannot be any accusation of rigging or subjectivity. The Disciplinary Procedure and Grievance Procedure should be consistently implemented, to avoid accusations of favouritism. 13. Training and Development The purpose of a Training and Development Policy is to ensure that employees are appropriately trained and developed, to meet business plans and strategies. The Training and Development Policy should ensure that training and development opportunities are appropriate and open for access by all relevant employees. 14. Record keeping The purpose of a Record keeping Policy is to ensure that relevant business records are kept for planning and evaluation purposes. The Record keeping Policy should ensure that record keeping is accurate, valid and correctly handled. 15. Disclosure The purpose of a Disclosure Policy is to ensure that confidential and sensitive business and employee related information, in it many forms, is not disclosed inappropriately to a third party. 16. Health and Safety The purpose of a Health and Safety Policy is to ensure work related safety and good health. The Health and Safety Policy should ensure that the workplace, and those people in the workplace, are reasonably safe and healthy, and accidents and unsafe situations are avoided, wherever reasonably possible.

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Addendum 4

Relevant Extract from King II
Preamble: The following extract is taken from the King II report which outlines guidelines that companies should follow if they wish to create and sustain an ethical culture within the organisation. Ethics is dealt with under Section 5.2 of the King Report on Corporate Governance for South Africa – 2002 (King II). This section states that: 1.2 Organizational Integrity/Code of Ethics 1.2.1 Every company should engage its stakeholders in determining the company’s standards of ethical behaviour. It should demonstrate its commitment to organisational integrity by codifying its standards in a code of ethics. Each company should demonstrate its commitment to its code of ethics by: creating systems and procedures to introduce, monitor and enforce its ethical code; assigning high level individuals to oversee compliance to the ethical code; assessing the integrity of new appointees in the selection and promotion procedures; exercising due care in delegating discretionary authority; communicating with, and training, all employees regarding enterprise values, standards and compliance procedures; providing, monitoring and auditing safe systems for reporting of unethical or risky behaviour; enforcing appropriate discipline with consistency; and responding to offences and preventing re-occurrence. 1.2.3 Disclosure should be made of adherence to the company’s code of ethics against the above criteria. The disclosure should include a statement as to the extent the directors believe the ethical standards and the above criteria are being met. If this is considered inadequate there should be further disclosure of how the desired end- state will be achieved. Companies should strongly consider their dealings with individuals or entities not demonstrating its same level of commitment to organisational integrity.

1.2.2

1.2.4

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