Lawrence Kohlberg's stages of Ethical Reasoning (Development)
The Home Depot could most easily be put into Kohlberg's stage 6 of ethical reasoning. This stage is titled Universal ethical principle orientation. In this stage the company is focused on self-chosen ethical principles that are found to be comprehensive and consistent. Whatever Home Depot does it incorporates it's ethical principles of community consistently. Their value of community go with everything they do whether its the products theychoose to sell or the volunteer work they choose to do its all done with community in mind.
Home Depot does volunteering in neighborhoods that need help. It also helps individuals with special circumstances such as war veterans. They also give employees extensive training that can be used for
projects at home. Home Depot just wants to help communities of people in any way possible. All of these
things are relevant to stage 6 because Kohlberg says in stage 6 that something is right or wrong because it reflects that person's individual value system and the conscious choices he or she makes in life. All the above examples reflect on Home Depots' individual value of community.
Code of Ethics
Home Depot has a page called corporate governance overview. This page has a subcategory called business code of conduct and ethics. It is a fairly extensive online report complete with a table of contents. It starts with an introduction defining their core values that are excellent customer service, strong relationships, entrepreneurial spirit, respect, creating shareholder value and most important of all doing the right thing. The next section is called doing the right thing for our associates. This section covers safety regulations, drug policies, fair employment, sexual harassment, violence, and how to handle conflicts like this in the work place. Moving down the line of sections is doing the right thing for the customer which covers basic confidentiality, privacy and information protection that most companies offer. It is basically just a promotion to enforce trust in the company. Another section is doing the right thing for the shareholder. This sections most important content is about the importance of accuracy when it comes to business records. This one is extremely important because the companies credibility rides on that. The aforementioned business records include financial statements as well as time sheets, bills, invoices, expense reports, payroll and benefits records. The last, most important, and most obvious section of Home Depots' business code of conduct and ethics is titled doing the right thing for our communities. This section
includes their environmental responsibility, political involvement and the Foreign Corrupt Practices Act that was mentioned in the book. Home Depot is committed to recycling and using renewable energy sources for the environment. Their political involvement consists of community called The Home Depot Political Action Committee which supports public officials and candidates who understand the issues affecting The Home Depot and promote a favorable business climate for the Company. The last section just touches on how the Company is in compliance with the FCPA and is against taking bribes in any form.
Levels of Functions
The Home Depot does not specifically mention any of the functions. From my research I would say the auditing function is the most prevalent function of all. The company prides itself on its honesty and integrity. They mention how their reports are always updated and their information is very public. This is why I believe the auditing function would be an extremely important function for them. Home Depot has a very organized accounting function as well. They donate millions of dollars a year so they must keep everything organized in order to make sure profits are still soaring. Home Depot is a multibillion dollar company. This is another reason why organization is key.
Human Resources
Human Resources is the lead role at Home Depot and is in the third level of post conventional. Home Depot praises the relationship between the company and the employee as one of the most important relationships. They stress the importance of fair employment practices and discourage discrimination in any form. Home Depot makes a clear effort to better itself for the sake of everyone affected by them which puts them in the post
conventional level.
Safety is the next biggest item in the human resources function. Since Home Depot deals with heavy machinery and dangerous equipment extensive training is of the utmost importance. Training is extremely in depth and you can not move on until all safety procedures are known. The Home Depot is very strict on not letting an employee start until they are confident he or she knows all the safety regulations explained in training.
Employees must go through a fairly rigorous testing process to ensure the knowledge is retained and used everyday.
Conflict of Interest
Conflict of interest: A situation in which on relationship or obligation places you in direct conflict with an existing relationship or obligation. I donot
see any conflicts of interest with home depot. Home depot actually makes an effort to reduce any conflicts of interest that may arise.
Home Depot does have a section on conflict of interest. Basically all they say is to avoid conflicts of interest. They tell you to try to avoid mixing
self interests with the interests of the company which is a hard thing to do. If you have a conflict of interest they say to tell your supervisor who can help you to fix it.
Triple Bottom Line
Triple Bottom Line: The triple bottom line recognizes the economic, environmental, and social aspects of a
company's activities.
Home Depot never mentions anything about their triple bottom line. They do have environmental programs, economic programs and social programs in place however. The one Home Depot focuses on the most out of the triple bottom line is the social aspect. They have something called The Home Depot Foundation thatfocuses on product donations to charitiesand families in need. They also do hours upon hours of volunteer work to better the communities around them.
Corporate Social Responsibility
I would definitely categorize the company as ethical more than altruistic or strategic. The Home Depot has a page labeled CSR at the Home Depot Foundation. In this article it lists the most important of its values which are do what you know, be true to your culture, know your constituents, listen commit, and communicate.
In September 2005, Home Depot gave a cash donation of $1.5 million to support the relief and rebuilding efforts in areas hit by Katrina. Also, the
company announced a corporate month of service, donating 300,000 volunteer hours to communities across the country and over $200,000 in materials to support the activities of 90 stores in recovery, cleanup, and rebuilding efforts in their local communities.
Evolution/Revolution of Company
Home Depot started on level 3 which is post conventional. I say this because the whole foundation the company is built on is based on helping other and providing the best customer service possible. There was no point in the company's history where it only cared about profits and itself. The founders Bernie Marcus and Arthur Blank started the company in 1978 with the customer in mind.
The home depot foundation is halfway to their goal of $50 million for the veterans housing needs. Its a fundraiser to ensure that every veteran has a place to come home to. Another example of Home Depots' generosity is when super storm Sandy devastated the north eastern states. The Foundation almost immediately responded to the immediate needs, providing $1 million in financial support, truckloads of relief supplies andvolunteer support.
Corporate Governance
The Home Depot “incorporates a climate of trust, fosters a culture of open dissent, and assures individual accountability”(Home Depot).
For these reasons it is inevitable that the company uses effective corporate governance.
At least two Walter Salmon's 22questions:
-Are there 3 or more outside director for every insider?-Yes
-Are the insiders limited to the CEO, COO, and the CFO? -No
-Is your board the right size (8 to 15 members)? -Yes there are 11members
-Does your audit committee, not management, have the authority to approve the partner incharge of auditing the company? -Yes
There are no possible dangers to the answers I had on the checklist.Home Depot makes a real effort to keep their company in the structure of corporate governance shown in the book. There is no merging of the CEO and Chairman at this company. Furthermore, Home Depot is fairly public with the way their company is run. They do not keep much of their business conduct confidential which to me shows they have nothing to hide. I would almost say that Home Depot is the exact opposite of Enron and all the other multibillion dollar companies like it. Home Depot shows that there is no need to be shady to make massive amount of money. In addition, they show that its good to share those profits with the less fortunate such as natural disaster victims and charities.