British Petroleum: Ethical Compliance Program - Case Study Example

5th March British Petroleum – Ethical Compliance Program British Petroleum is a renowned oil exploration company. It provides its customers with retail services, petrochemical products, energy for heat, and fuel for transportation. BP claims to be Beyond Petroleum which means that it offers services and products which are not related to Petroleum only. BP has generated millions of revenue from its operations and also has been ranked at number 4 for Global 500 companies’ list in 2009. In the refining and petroleum sector, it has been ranked at number 3 in 2009. It has posed serious competition to its major competitors that include Exxon Mobil and Royal Dutch Shell. Lately, British Petroleum encountered a serious issue when the accident of oil spill occurred in the Gulf of Mexico on April 20, 2010. The accident of the Gulf of Mexico led to the loss of lives of several marine species, and tonnes of gallons of oil that was spilled in the sea water contaminated the sea water drastically. This issue was more towards the Ethical Compliance of British Petroleum; therefore, it raised serious questions for the Corporate Social Responsibility of British Petroleum. Ethical Compliance Audit There are certain steps which are required for the process of Ethical Compliance Audit. At first, it needs to be determined whether the company has Ethical Code of Conduct which prevents it from performing any unethical task. BP does possess such Code of Conduct. According to the official website of the company, the top management of the company does participate in evaluating the programs related to ethics. Despite the top management participating in the ethical issues of the company, the company does not possess any professional expert who can look after the ethics programs. British Petroleum hardly sets up programs for teaching and providing training about ethics to its employees. British Petroleum does provide a notion of communicating ethics with its customers by delivering to them the best quality service and products and also making them aware about the hazards and dangers that might be caused by using the products in an inappropriate manner. The guideline of ethics or Ethical Code of Conduct of BP has mentioned several ways of handling ethical situations. It has provided immense emphasis on Human Rights, which incorporates its customer, suppliers, management, employees, etc. BP has established a system where its employees can report about unethical behaviour. This system is managed and monitored by the internal ethics committee of BP. There are no such things as such enforcement of punishments and standards of the organization. BP does possess a committee named as BP Ethics and Environmental Assurance Committee which monitors and manages the issues related to ethics and environmental concerns. BP does not conduct annual ethics programs but it does conduct Ethics Audit for the major ethical issues including the oil spill of the Gulf of Mexico for which it conducted an ethics audit. Evaluation of the Outcome The evaluation of the outcomes of British Petroleum’s current ethical arrangements is carried out in the following: Relevant Ethical Standards British Petroleum has formulated a Code of Conduct which provides a guideline to the management and employees of the company in relation to ethics. The code of conduct demonstrates a mechanism of how employees and management can behave in an ethical manner as well as tackle the ethical dilemmas that they might encounter in the course of their professional duties as part of British Petroleum’s key internal stakeholders. The code of conduct also assists the stakeholders of the company in detecting as well as preventing the likelihood of potential misconduct while maintaining a professional approach in their assigned dealings. Ethical Personnel Although British Petroleum has established an ethical committee which has the liability to ensure that all the organizational dealings are managed and maintained in a true professional and ethical manner, yet the company has not appointed any special department for this task. The ethics and compliance department comes under the internal control department and officers perform their duties under a proper delegation of their senior manager, designated as Chief Compliance Officer or in a similar position, but in British Petroleum, as such, there is no ethics and compliance department; as a result, no senior manager is employed in any capacity pertaining to compliance or ethics. Prohibition of Discretionary Authority There is evidence which proves that some of the key personnel of British Petroleum were involved in exercising the discretionary authority in the capacity of their seniority. Having a senior and superior position in the company, those key personnel misused their authority which caused a serious loss to the company and the reputation of the company was impaired a lot. Effective Communication through Training British Petroleum discloses the ethical matters and issues with the products that it offers to its customers; however, there is no evidence found as such, which reveals the fact that the company is making effective communication of its ethical policies to its employees. In this regard, the other organizations conduct training programs for the employees to make them aware regarding the reinforcement of ethical behaviour in the overall organizational context. Establishment of Internal Control British Petroleum lacks in establishing a proper internal control mechanism in the organization which has the potential to combat against the misconduct. The internal control mechanism assists the organization in monitoring, examining and reporting the evidence of misconduct to the appropriate authorities within the organization. Enforcement of Standards Although British Petroleum has effectively developed its ethical standards in the form of code of conduct, the organization is missing an effective enforcement of those standards. At times, the employees and managers are convicted of displaying unethical behaviour and found guilty of misconduct, yet the issues are resolved by just giving the oral warnings and no punitive actions are taken against the culprits. Continuous Improvement in Ethical Standards and Compliance Program Apparently it seems as if British Petroleum remained stagnant in improving its ethical standard. The standard that was developed years ago is still effective in its original content, and there seems to be no improvement in the content of that standard. Compliance programs are not conducted in the organization; therefore, the improvement in this regard is not possible. Recommended Actions British Petroleum needs to take some serious actions in order to reinforce an ethical atmosphere in its organizational dynamics. These actions are summarized as under: 1. The organization needs to amend its ethical standard, especially Code of Conduct, so that effective reinforcement can be convenient for the organization. 2. Dedicated training programs are needed to be conducted, which make the employees and management of the organization aware of the ethical policies of the organization. 3. The organization should ensure that discretionary authority to the senior management to override the ethical policies of the organization must be prohibited. 4. Placement of key ethical personnel entrusted with appropriate authority as well as establishment of ethics department in the organization is indispensible for the organization. British Petroleum should ensure the earliest establishment of an ethics department. 5. The organization also needs to establish a proper internal control mechanism which must ensure that the occurrence of misconducts should be monitored, evaluated, examined and reported to the appropriate authority in the organization. 6. As the code of conduct is enforced in the organization, British Petroleum needs to ensure that effective punitive actions should be taken against those managers and employees which are found in breaching of this code of conduct, so that the culture of oral warnings can be discouraged. 7. The existing code of ethics needs to be amended so that new clauses pertaining to current ethical issues and dilemmas can be included in the content of the improved Code of Conduct. Works Cited Ethical Conduct Policy: Guidelines on Business Conduct. July 2002. Web 5th March 2012. Read More