Term paper on 3M Codes of Ethics

Most of the 70,000 people worldwide who work for 3M are fiercely proud of the company’s reputation, which has been built up steadily over the last century. So employees were understandably perturbed by a rise in media jibes in the late ’90s, describing 3M as a “stumbling giant” and announcing it was “venerable but stodgy.” But the truth was that over the previous 10 years, they had seen productivity fall and growth stagnate. 3M’s diversity, with a list of 50,000 products from Scotch tape to fiber optics, previously viewed as a strength, was now described by some critics as “hodgepodge” and indeed was contributing to increased costs and complexity, and becoming a barrier to progress. ( Studt, 2003)

3M built a strong reputation as a great innovator, with thousands of breakthroughs over the last century ranging from Wetordry sandpaper to magnetic audio tape. There had been a steady stream of new products – almost one-third of sales in 2000 came from products that didn’t exist four years earlier. What they lacked was the blockbuster breakthrough last delivered in 1980 with Post-it Notes. Part of 3M’s formula for success had been to invest heavily in research and development (R&D) – typically seven percent of revenue – and hire top-notch scientists, giving them the flexibility and freedom to “do their own thing.” ( Mullin, 2001)

For example, there was an unwritten rule that encouraged technical employees to use 15 percent of their time to explore their own projects. By 2000, this unique culture of innovation and an almost “anything goes” approach had built an

With clear, measurable outcomes in place, these performance initiatives are ensuring that the company is working towards shared goals. But defining a strategy for a new way forward is only part of the story. Encouraging employees to run with the baton is much more difficult – particularly in a company like 3M where people have been used to doing things their own way. ( Murtagh, 2000)

This was a classic case of it’s not what you tell people, but how you tell them that counts. McNerney chose his words carefully. By focusing on the future and putting the company’s success in the hands of the people who worked there, McNerney won his employees’ respect. People recognized the truth in his words and welcomed his informal but engaging style of leadership. Like most corporations, they had seen numerous impressive near US$16 billion global business, with 3M products on sale in more than 200 countries. However, it was clear that the company needed to change to become much nimbler and quicker. And it needed to change fast, given the pace of technology, globalization, volatile world economy and increasing competition. ( Studt, 2003)

Their new chairman and CEO was announced towards the end of 2000, ending months of speculation. James McNerney was the first outsider chosen to lead 3M in almost a century’s history. Previously, chief executives had risen from within the company, and as such were always steeped in the company’s philosophy, traditions and culture. McNerney was not just an outsider; he came from General Electric, a company with a very different, profit-centered, decisive management style. Within days of McNerney arriving in 2001, it became clear that 3M had begun a new chapter in its history. Our strong legacy, which could have been a burden, would now be used as a springboard.

In the 18 months since McNerney arrived, a real sense of the company being re-energized with a stronger vision and unmistakable goals has emerged. For many companies, the events of that last September were major setbacks, but at 3M there is real confidence as they head into their second century in business.

However, it’s a fine balancing act to boost growth, improve productivity, cut costs and generate more cash – without denting 3M’s hallmark creativity. Six Sigma is providing the glue across these initiatives. ( Mullin, 2001)

For the first time ever, Six Sigma improvement methodology is being used to drive growth, in addition to the usual productivity and working capital improvements. This methodology is being applied consistently throughout the company, with training and development at its core. Breakthrough change, rather than incremental change, is facilitated in line with 3M thinking and the tools are being applied to the innovation process itself. Project objectives are clearly linked to business objectives and the bottom line.

Leadership is encouraged and they have introduced clear leadership attributes that place the emphasis on stretching and delivery. To involve all their people in this, they are running half-day awareness sessions for everyone in the company. After some initial cynicism, they are starting to see people commit to the new culture as a fundamental way to transform the business. They are seeing real results, for example, in the US where it was first introduced, the 3M ESPE division nearly tripled the manufacturing yield of a differentiated new dental product, and reduced unit costs significantly. In addition to becoming more data-focused, they are also seeing the emergence of a new transparency and openness which is reflected in the communication tools they are now deploying. Partly because of the previous organizational structure, people had tended to work in silos. Now they are seeing better sharing of information and more immediate access as a result of using better technology. The new clear direction has provided a solid framework for all their corporate communicators, ensuring that they focus their time and resources on the right messages. It also provides a reference for checking back to ensure their efforts are aligned with corporate requirements and expectations. ( Murtagh, 2000)

Will the 15 percent “own time” rule still apply in this new culture? The truth is people never actually stuck to the 15 percent part of the rule. Some used less, some used more. What was important – and still will be – is the principle of allowing people to explore ideas. Some of their best products came this way. McNerney recognizes the importance of this creative spirit. Innovation provides a constant stream of new products and is a supreme motivator and source of challenge and excitement.

The communication team is working with HR partners to ensure their work is also aligned with the cultural shift. For example, a new reward and recognition scheme will focus on the new leadership attributes and performance initiatives, in some cases incorporating Six Sigma goals. They are also reviewing other communication channels. In line with the indirect cost and e-productivity initiatives, they are shifting to electronic communication and moving away from print. Wherever possible, they are moving news and information resources onto “the Source,” they UK intranet, and encouraging people to pull off the information they need. Cumbersome attachments to e-mails are discouraged by providing a direct link to the reference document on the intranet. For those people who do not have PC access, such as factory employees, they are installing kiosks. They are also trying to make the intranet more interactive with the introduction of areas such as “Ask Bob,” where individuals can anonymously direct questions to the UK & Ireland Managing Director, Bob Brullo, and an answer will be posted on the site within five working days. ( Shaw et al, 1998)

New channels designed to get immediate, simple messages out to people, are being utilized. For example, they recently used broadcast text and voice messaging for the first time. In areas where they want to see a higher level of understanding, they have also used simple poster sessions to encourage people to explore and question to get as much detail as they need.

3M has a well defined Code of Business Conduct and Ethics. All the directors have to follow the Code. (3M Company Code of Business….) The Code serves as a source of guiding principles for the Directors. 3M is well known worldwide for its uncompromising integrity and honesty in all the aspects of their operations. All 3M employees are bound to obey the competition and antitrust laws of the countries in which the business of 3M is conducted. The employees are asked to maintain the complete and accurate records and financial books of the company.

These records and financial books must be in accordance with the United States accounting principles. All the employees are responsible to protect the confidential information of the company and its unauthorized disclosure to the people that are outside the company and to those people too that do not need to know the confidential information within the company. ( Hodgkinson , 2001) All the people that are acting on 3M’s behalf have to follow the confidential information policy of the company. The environment of the company is maintained in such a way that the conflicts among the employees do not occur. All the activities that could give rise to the conflicts are strictly prohibited. A harassment-free environment is provided to all that are doing business for 3M or with 3M. All the people are respected in the company and thus the people with diverse capabilities and backgrounds found it very easy to work satisfactorily within 3M with excellence. Efforts that give rise to the address of any inappropriate behavior in the 3M environment are strongly supported by 3M management. (3M Company Code of Business….)

If personal interest of a director is occurred which may be adverse to the company interests, then a conflict of interest occurs. This conflict also occurs when a director or his or her family members try to get improper benefits due to the position of his or her as a director. ( Birchfield , 2001) 3M has strong insisted on the avoidance of such kind of conflict and all the directors are asked not to get involved in any thing that goes against the company ethics and that can lead to conflict of interests in the company. Directors are not allowed to accept any compensation from sources other than the company for the work that has been done for the company. Directors are not allowed to accept any kind of gifts from entities or persons that are dealing with the company if the gift is presented to them in order to change their decision regarding their position as a member of the board. There is a chance for the occurrence of a conflict of interests. Employees are also not allowed to use labor, company assets or information for their personal use unless those facilities are given to them by the company. ( Hodgkinson , 2001) Employees are strongly encouraged by their managers, supervisors and some other authorities for the promotion of ethical behavior. Highly ethical standard are adhered. Employees are encouraged for the reporting of any unethical behavior or activity that they see happening in the company. (3M Company Code of Business….)