Introduction

What is business ethics?

Business Ethics is a relatively new, but increasingly important, part

of Business Studies. The question, or problem, is this:

A business is expected to achieve its objectives, usually to make a

decent profit for the owners/shareholders. In doing so, it may need to
overlook the wishes of others.

For example, it could lie about the benefits of its products in order to
get more revenue. It could skip important safety checks to save costs.
What should the business do?

To some extent, this is an area already covered by Business Law.

When society largely agrees, a law can be passed to stop behaviour
the society disapproves of. For example, discrimination against women
is illegal (it wasn’t always so).

What Business Ethics Covers

Business Ethics looks at areas that are too new, or too controversial,
for society to agree on. For example, the medical business is
increasingly controversial. The pharmaceutical businesses concentrate
their (very expensive) research on illnesses that afflict rich people,
because rich people (or the government of a rich country) can afford
to buy these new treatments when they are launched on the market.
This means too little research is done into illnesses (like malaria) that
primarily affect poor people and poor governments. Is this right?

So, we can have profit-maximising businesses that don’t worry too

much about who gets in their way; or we can have ethical businesses
that are very careful with people get in their way, but which don’t
make very much profit. This is the contrast, the trade-off that we are
faced with.

Or is it? Increasingly, there is thought about a middle way. Consumers

in developed countries are increasingly aware of ethical issues, and
some are prepared to pay for it.

For example, BodyShop was one of the first businesses to build on this
trend, and made their market niche largely out of the fact that their
products are kinder to the world than are competing products. Why
buy from BodyShop? Because their products aren’t tested on animals.
So, the ethical nature of the product becomes part of the unique
selling point ("USP") of the product and central to the Marketing of
that product. In other words, there is no conflict between ethics and
profit, because an ethical stance is part of the profit-making process.

Since then, many businesses in all sorts of markets have followed this
line. Washing powders, for example. BP is trying to portray the oil
business as environmentally friendly. Other businesses have been
pushed in this direction by adverse publicity. Triumph, a Swiss makers
of bras, was forced to abandon an investment in Myanmar (Burma )
because of widespread opposition to a dictatorial and unpleasant
government. And Nike (and others) have been widely criticised for
using cheap labour in developing countries, which is what you would
expect from a profit-maximising business.

One difficult question is ‘what sort of things count as ethical question?’

There is no agreement on this, hence the difficulty. Take the example
above. Some people might say well-done to Nike for creating jobs in a
very poor part of the world where jobs are desperately needed. But
other people have said that it is unethical to exploit very poor people,
and to make them work in poor conditions for low wages, especially
when the business could afford to pay them more.

CODE OF ETHICS
It is believed that the best way of promoting high standards of
business practices is through self-regulation.

Business should be conducted in a manner that it earns the goodwill of

all concerned through quality, efficiency, transparency and good
values. This Code has been designed as a voluntary guideline to
achieve these objectives.

Be truthful and realistic in stating claims.

Be responsive to customer needs and concerns.

Treat all stakeholders fairly and with respect.

Protect and promote the environment, conserve water and power and
community interests.

Be law abiding and do not suppress the truth howsoever unpleasant it

may be in the short run.

SEVEN STEPS FOR IMPLEMENTING THE CODE

Integration and Endorsement

Evolve a strategy for integrating the Code into the running of business
at the time that it is issued. Make sure it is endorsed by the CEO.

Distribution

Send the Code to all employees in a readable form and give it to all
employees joining the company.

Breaches

Include a short section on how an employee can react if he or she is

faced with a potential breach of the Code or is in doubt about a course
of action involving an ethical choice.

Affirmation
Have a procedure for managers and supervisors regularly to confirm
that they and their staff understand and apply the provisions of the
Code and raise matters not covered by it. They should suggest its
updating.

Contracts

Consider making adherence to the Code obligatory by including

reference to it in all the contracts of employment and linking it with
disciplinary procedures.

Training

Ask those responsible for company training programmes at all levels to

include issues raised by the Code in their programmes.

Nurture

Nurture the talent of employees to get the optimum performance,

treat them fairly and with respect.

Why are ethics important?

Recent events in corporate America have demonstrated the destructive

effects that occur when the leadership of a company does not behave
ethically. One might wonder why highly educated, successful, and
business savvy corporate professionals at Enron, Tyco, WorldCom, and
Adelphia got themselves into such a big mess. The answer lies in a
profound lack of ethics.

Running a business ethically is good for business. However, "business

ethics" if properly interpreted means the standards of conduct of
individual business people, not necessarily the standards of business
as a whole.

Business leader are expected to run their business as profitably as

they can. A successful and profitable business in itself can be a
tremendous contributor toward the common good of society. But if
business leaders or department managers spend their time worrying
about “doing good” for society, they will divert attention from their real
objective which is profitability and running an efficient and effective
organization.
Applying ethics in business makes good sense. A business that
behaves ethically induces other business associates to behave ethically
as well. If a company (or a manager) exercises particular care in
meeting all responsibilities to employees, customers and suppliers it
usually is awarded with a high degree of loyalty, honesty, quality and
productivity. For examples, employees who are treated ethically will
more likely behave ethically themselves in dealing with customers and
business associates. A supplier who refuses to exploit its advantage
during a seller's market retains the loyalty and continued business of
its customers when conditions change to those of a buyer's market. A
company that refuses to discriminate against older or handicapped
employees often discovers that they are fiercely loyal, hard working
and productive.

It is my firm belief that a “good man or woman” who steadfastly tries

to be ethical (i.e. to do the “right thing", to make appropriate ethical
decisions, etc.) somehow always overtakes his immoral or amoral
counterpart in the long run. A plausible explanation of this view on
ethical behavior is that when individuals operate with a sense of
confidence regarding the ethical soundness of their position, their mind
and energies are freed for maximum productivity and creativity. On
the other hand, when practicing unethical behavior, the individual finds
it necessary to engage in exhausting subterfuge, resulting in
diminished effectiveness and reduced success.

The best way to promote ethical behavior is by setting a good personal

example. Teaching an employee ethics is not always effective. One can
explain and define ethics to an adult, but understanding ethics does
not necessarily result in behaving ethically. Personal values and ethical
behavior is taught at an early age by parents and educators.

I am quite certain that well-educated business professional like

Kenneth Lay, Martha Stewart, Dennis Kozlowski or the former CEO of
General Motors who received a multi-million dollar salary and bonus
package in 1987 at a time when the company was closing plants and
was laying off thousands of people know and understand ethics. They
either were too far removed from the “nitty gritty” that ethical
standards did not resonate with them or they simply did not care.

People at the top of an organization are expected to share the burden

of cost reductions and belt-tightening during difficult times. Senior
executives of companies who freeze their salaries or take a personal
pay cut in a problematic year rather than lay off employees to cut
costs deserve our utmost respect. However, this does not mean that a
company should lose flexibility in adjusting its cost structure during
bad economical times, replace old factories by new ones, or change
technology in ways that would require fewer people to do the work.
Decisions like that should be made with empathy and support
(financially) to those who will be affected by it.

The Critical Importance of Business Ethics For Effective

Leadership

How important are business ethics to being an effective leader?

According to the American Management Association, it is an important
characteristic of effective leaders today. In a survey of 462 executives
who were asked, “What characteristics are needed to be an effective
leader today?” 56% ranked ethical behavior as an important
characteristic, followed by sound judgment (51%) and being
adaptable/flexible (47%).

However, with all due respect to the AMA survey, I strongly believe it is
much more than “important,” it is a “critical, essential and non-
negotiable” characteristic of an effective leader. Strong business ethics
is a pillar of my strategic planning and strategic thinking business
coaching efforts each and every day. Clients are encouraged to
develop a set of core values and guiding principles and publish them
for their clients and stakeholders to know that this is the way they do
business. And furthermore, the clients are continually reminded to
make sure the core values are demonstrated in all that they do.
Examples of unethical behavior abound in business stories around the
world. And individuals witness some form of unethical behavior in their
workplace every day. Unethical behavior where people deliberately
intend to harm themselves or others, develops from and is reinforced
by, destructive states of mind, including fear, greed, anger and
jealously. In contract, ethical behavior enhances the well-being of
everyone because it ids developed from and reinforced by strong
motives and emotions such as love, joy, generosity and compassion.

We need to ask these questions: “How ethically vulnerable is our

company or organization?” “What are the core values and guiding
principles of our company or organization?” “Are we committed to
living and exhibiting our core values in everything we do?” The
answers to these questions will define the state of ethics in our
business.
Leadership in business must set the standard and “walk the talk” when
it comes time to ethical behavior. There can be no compromise of
ethics. There can be no “waiver of ethics.” A leader must constantly
keep his or her actions above reproach. If leaders are committed to
that high standard, there will be no more Enron, WorldCom, Tyco, and
Adelphia ethical meltdowns.

Knowing what is right is very important to personal and business

ethics. Doing what is right is absolutely critical to personal and
business ethics. A strong unwavering commitment to your core values
and guiding principles of your business or organization will lead to the
right ethical decisions and actions. In the absence of these actions, all
one has is good intentions and that simply is not enough for effective
leadership.

ETHICAL ISSUE: McDonald’s

OVERVIEW: SUCCESS OF Mc Donald’s

McDonald’s celebrated its 50th anniversary on April 15th 2005, and

over those 50 years it has become the world market leader in fast
food, with an annual turnover today of ‘approximately $40 billion
worldwide’ (Smith, 2003). It has maintained a high level of
performance throughout those 50 years and today is as successful as
ever. For example, 2004 was the first year in the past 17 in which
McDonalds tailed positive same store sales every month…while January
2005, total sales increased by 8.5%. Its trademark Golden Arches and
Big Mac burger are today recognized in ‘30,000 outlets, found in 119
countries, serving 47 million customers a day’ (McDonald’s Corporate
Responsibility Report, 2004). Over the 50 years, ‘the McDonald’s
Corporation has traveled from pioneer of a new and uniquely American
eating experience, to icon of the global appeal of American capitalism,
to perhaps one of the most despised corporate symbols in the history
of private enterprise’ (Baker, 2005).
The first McDonald’s restaurant opened on April 15th 1955, in Des
Plaines, Illinois by an entrepreneur called Ray Kroc. Kroc had been
attracted by a limited menu hamburger stand that turned out high-
quality fast food at low prices, run by a pair of brothers, Dick and Mac
McDonald. McDonald’s served more than 100 million hamburgers in
the first three years and ‘the 100th McDonalds restaurant opened in
1959’ (Smith, 2003). Its success was unheralded, and the now famous
marketing strategy was established by Kroc in 1963, with the Ronald
McDonald clown character. McDonald’s television advertising was so
successful that ‘by 1971 the Ronald McDonald clown character was
familiar to 96% of American children’ (Baker, 2005). This exceptional
marketing strategy has remained competitive today, as highlighted in
Morgan Spurlock’s documentary ‘Super Size Me’ (2004), when more
children recognize Ronald McDonald than a picture of Jesus or the
American President George W. Bush.
The success of McDonald’s was not just within the USA, but also
globally, which became important when the US market became
saturated. ‘The first British restaurant opened in 1974’ (Baker, 2005)
and today there are more than 1200 restaurants in the UK, employing
73,000 people’ (Caterer-online.com, 2004). Success has also been
found in a number of other countries, including Japan, Australia and
Germany. In 2002, of McDonald’s annual worldwide sales of £25
billion, ‘35% came from Europe and 15% from Asia, Pacific and Middle
East’.

ETHICAL CRITICSM FACED BY McDonald’s

Despite the obvious global success of McDonald’s, it reported a loss in
2002 for the first time since the 50s and experienced the rare
phenomenon of some outlets closing. For example, in October, ‘pre tax
profits slumped from £83.8 million to £23.6 million’ (Sweeney, 2004).
Since its global expansion efforts in the 70s, McDonald’s has been
shadowed by a wide variety of ethical issues, which ‘has spawned an
entire industry of anti-McDonald’s protesters’ (Baker, 2005). These
people have created events, such as ‘Anti-McDonald’s day’ every year
on October 16th, and are the first to hit McDonald’s stores in London
during the notorious anti-capitalist May Day riots. However, the
incident which has done the most damage to McDonald’s ethical
reputation was the ‘McLibel’ trial, where the company expected a quick
conclusion to its action against activists who had distributed a
pamphlet, What’s Wrong with McDonald’s?’. Instead it ran for two and
a half years and became the longest ever English trial, upon its
completion in June 1997 (McSpotlight.org: The McLibel Trial, 2005).
One of the main ethical criticisms consistently faced by McDonald’s
over the last 30 years relates to the food offered in its stores. Critics
claim that McDonald’s is a major contributing factor to the ever-
increasing levels of obesity in the U.S. and other developed countries.
Medical studies show that ‘waistlines are expanding faster in the UK
than in any other European country…with 1 in 5 adults dangerously
overweight’ (Walsh, 2003), while in 2001 it was reported that 300,000
deaths a year in the U.S. are related to obesity compared to 400,000
through cigarette smoking’ (McMans Depression and Bipolar Weekly,
2004). McDonald’s contribution is a result of the unhealthy nature of
fast food. For example, a meal of a Big Mac and medium fries would
provide you with ‘910 calories, as well as 46g of fat, 13g of which are
saturated’ (McDonald’s.com, 2005). Considering the fact that this is
half the Recommended Daily Allowance for a female adult, it is clear
that McDonald’s does not meet U.S. dietary requirements. Apart from
obesity, ‘diabetes, high blood pressure, heart disease and some forms
of cancer are related to a diet high in fat, saturated fat, salt and sugar’
(Inside the McLibel trial, 1995). The impacts of a McDonald’s diet were
clearly shown in Morgan Spurlock’s controversial film ‘Super Size Me’,
where he ate nothing but McDonald’s for one month. Although this was
an extreme example, the impacts on Spurlock were dramatic.
‘Spurlock gained 25 pounds, raised his cholesterol by 60 points,
dropped his libido and turned his liver into pate’ (McMans Depression
and Bipolar Weekly, 2004). He also experienced headaches and
depression, and actually became addicted to the products.
The impact of a McDonald’s diet on children is also a major ethical
concern, as an increasing number of children are faced with obesity
problems. ‘Every month, 90 percent of the children between 3 and 9 in
America visit a McDonald's’ (Schlosser, 2001). McDonald’s has been
criticised for exploiting children with advertising. They have
traditionally aimed themselves towards children with collectable toys in
‘Happy Meals’, as well as colorful advertising campaigns and
promotions in schools. Most criticized is the use of the Ronald
McDonald clown character, which has been seen as a ‘cynical
exploitation of children to use a clown to drum up business’ (Inside the
McLibel trial, 1995). These marketing tactics contribute to the
increasing unhealthy diet of many children.
Stakeholders in a corporation may not only be human because animals
are also seen as an important part of society and deserve the same
treatment as humans. McDonald’s has been criticized for the way it
treats animals before they are killed and turned into fast food. ‘The
corporation is the world's largest promoter of meat-based products,
the largest user of beef and the second largest user of chicken’
(McSpotlight.org: McDonald’s and Animals, 2005), and thus is faced
with the usual claims aimed at slaughterhouses. It is claimed that
‘chickens were crammed into sheds with less than one square foot of
space per bird and no daylight’ (Inside the McLibel trial, 1995). As a
result, ‘44% had leg abnormalities and other health problems’ (Inside
the McLibel trial, 1995). This treatment was not just reserved for
chicken but also other animals involved in McDonald’s fast food
products. 40% of piglets were held in indoor breeding units, and half
had tails docked for no apparent reason’ (Inside the McLibel trial,
1995). Ethical criticism is also aimed at the methods for killing the
animals. ‘14% of chickens received pre-stun shocks, which caused
undue stress, while 1% (1,350 per day) were decapitated before being
stunned’ (Inside the McLibel trial, 1995).
As well as social ethical issues, corporations must also consider
environmental ethics, which means treating natural resources not just
as commodities, but as part of the ecological whole. It is important
because it affects the image of the company and consumer’s
perceptions. For example, ‘a Wall Street Journal poll in 1991 claimed
that 53% of people avoided purchasing a product because of
environmental concerns about a product or manufacturer’ (Hawken,
2002). The most famous environmental issue is the suggestion that
McDonald’s has destroyed hundreds of acres of Brazilian rainforest to
make way for large-scale cattle ranching. This not only removes a
valuable natural resource, but also has an impact on global warming,
as the rainforest is an essential mechanism for the absorption of
Carbon Dioxide in the atmosphere.
McDonald’s also ‘annually produces over a million tons of packaging
used for just a few minutes before being discarded’ (McSpotlight.org:
Environment, 2005). Traditionally a number of ozone depleting gasses
were used in polystyrene foam packaging. In the 21st century,
McDonald’s uses almost all recycled packaging. However, the company
still faces criticism due to the amount of waste it produces. ‘Each of
McDonald’s US restaurants produces 238 pounds of waste per day and
each of its U.S. regional distribution centres disposes of another 900
pounds of waste per day’ (Svoboda and Hart, 1995). This is not only
expensive to dispose of, but also difficult when considering that similar
quantities of waste are being produced around the world.
McDonald’s also experiences internal ethical issues related to the
working conditions and treatment of employees. ‘McDonald’s employs
over 1 and a half million people worldwide, over half of them under 21
years old’ (McSpotlight.org: McDonald’s and Employment). McDonald’s
has adopted ‘age differentials between adult and younger workers,
meaning that they pay most of their employees less than the normal
adult minimum wage’ (Transport and General Workers Union, 2004).
For example, McDonald’s pays some 16-year olds as little as $6.80 an
hour. McDonald’s employees also experience poor working conditions
with discrimination, illegal working hours, and poor safety conditions.
There is little that can be done about this due to the absence of trade
unions, within McDonald’s, to represent staff. If Milton Freeman’s
theory of stakeholders is adopted, the needs and expectations of staff
are just as important as those of customers.

“SUPERFICIAL” ACTION TAKEN AGAINST CRITICISMS

The range of ethical criticisms leveled at McDonald’s throughout the
world has been well-publicized. However, many of these issues were
first raised in the 1970’s before tighter regulation was imposed and
unethical behavior became a hot topic. After 30 years of criticism, it is
important to look at what measures McDonald’s has taken to improve
its ethical conduct and how far this has been successful.
McDonald’s claims that ‘being a good citizen has been inherent in the
company since its inception’ (Schlosser, 2001). Ray Kroc believed
McDonald’s had an ‘obligation to give back to the community that
gives so much to us’. This was rooted in his founding principles of
Quality, Service, Cleanliness and Value. Since 1955, McDonald’s has
continually made statements about its conduct to try and reassure
shareholders and stakeholders. However, nothing was said or
published about what attempts were actually being made to ‘do the
right thing’. This finally changed in 2002 with the release of McDonald’s
first Social Responsibility Report.
The report was composed of 46 pages, which began with McDonald’s
core values and then looked at the impact of McDonald’s in different
areas, such as community and the environment. It showed that
McDonald’s has invested in the Ronald McDonald housing program to
house families with seriously ill children, and documented the efforts
made to reduce McDonald’s impact on the environment. For example,
there was ‘a commitment to spend $100 million annually on the use of
recycled materials, especially in the building and renovation of its
restaurants’ (Svoboda and Hart, 1995). Overall, the report was ‘a clear
statement of intent about its future works in this area’ (Wood, 2002).
Although it was an attempt at social reporting, the 2002 report was ‘a
low-water mark for the concept of sustainability and the promise of
corporate social responsibility’ (Hawken, 2002), and its generality, as
well as its vague nature meant it was simply a ‘walk around the issues’
(Wood, 2002). It was seen by many as a PR stunt, which was created
to appear like McDonald’s was meeting the requirements of an
increasingly demanding society. The content of the report was
criticized because it focused on issues and areas where McDonald’s
had been successful, but did not mention well-publicized issues, such
as obesity. Similarly, it neglected to mention a number of the
company’s major environmental impacts. For example, the report
‘talked about water use at the outlets, but failed to note that every
quarter-pounder requires 600 gallons of water’ (Schlosser, 2001). This
distinct lack of transparency enabled McDonald’s to cover up any bad
issues and only show what they wanted the public to see.
The key problem with the 2002 Responsibility Report was that ‘due to
its decentralized nature, McDonald’s was unable to provide any of the
data that is looked for as core information in their report’ (Wood,
2002). In its report, McDonald’s stated how much money it had
provided for social improvements, but no figures on what impact these
improvements had. Similarly, there was very little information related
to the measurement of environmental impacts and improvements. This
meant that the report was written as a narrative, rather than a social
report. The effectiveness of the report was also reduced by the fact
that there was ‘no comparative data on past and present performance’
(Strategic Direction, 2002). The final nail in the coffin for the report
was the fact that ‘there was no independent verification’ (Strategic
Direction, 2002), which meant that stakeholders could not even have a
guarantee of the accuracy of the report. These negative factors meant
that the first McDonalds Social Responsibility Report was ‘was an
impressive statement of intent, but it recognised that the company
was not yet ready to report progress’ (Wood, 2002).
Despite the criticisms of the report, McDonald’s was satisfied with the
result, believing it portrayed the company in a good light and showed
stakeholders that McDonald’s met societies needs. However, in the 2
years following the reports release, McDonald’s experienced its worst
financial results in almost 20 years. This was a result of increasing
criticism from publications and documentary’s, such as Super Size Me,
as well as an increase in lawsuits from over weight teenagers in
America, who blamed McDonald’s for health problems. The result was
the second McDonald’s Social Responsibility Report in 2004,
McDonald’s current source of ethical information for stakeholders,
which ‘introduces a new accountability structure’ (Cochran, 1994).
The colorful report is double the size of the 2002 edition, with 88
pages, and is a significant improvement, addressing many of the
ethical issues which have shadowed McDonald’s for the last 30 years.
The report says that ‘being responsible is one of our greatest
competitive advantages’, even though the issues it tackles are growing
ever more complex’ (Allen, 2004). The 2002 report made little mention
of McDonald’s food, and failed to recognize the ethical concerns
associated with it. However, in the current report, ‘food takes top
billing’ (Allen, 2004), with the first 12 pages of the main analysis
allocated to ‘Food’. The company highlighted efforts to offer healthier
options, including salads on its menu, and revealed how they had
brought in a full time nutritionist to alter the menu. Possibly the most
poignant move was to phase out the ‘Super Size option’ in all
restaurants. McDonald’s have also ‘added new options to Happy Meals
for children, so fries can be substituted for healthy alternatives like
apple slices’ (Allen, 2004), and offers milk, fresh orange and water
instead of soda. McDonald’s new stance also involved ‘promoting the
importance of exercise’ (Allen, 2004). On page 8 of the report there is
a picture and statement by a professor of exercise at Leeds
Metropolitan University, who reinforces McDonald’s stance, aimed at
helping children lead healthier lives.
The section on the environment is also more substantial, with a variety
of figures on packaging and waste. For example, ‘McDonald’s achieved
a 3.2% reduction in packaging during 2003’ (McDonalds Corporate
Responsibility Report, 2004). This is combined with a section, which
shows McDonald’s commitment to improving the environmental
performance of suppliers. This includes a statement that ‘McDonald’s
will not purchase beef from rainforests or recently deforested
rainforest land’ (McDonalds Corporate Responsibility Report, 2004),
acknowledging one of the specific ethical criticisms aimed at
McDonald’s. McDonald’s also shows its commitment to reducing animal
cruelty from suppliers by increasing supplier accountability and
‘conducting nearly 500 audits at beef, pork and chicken processing
facilities around the world’ (McDonalds Corporate Responsibility
Report, 2004). The content of this report shows that the company is
beginning to acknowledge and account for the unethical stories
recounted by critics. A key example of this is the website ‘Super Size
Me: The Debate’, which was set up by McDonald’s to show how they
have made improvements in their menu and give advice to customers
on products.
The Corporate Responsibility Report is written by McDonald’s Corporate
Responsibility Committee, who ensure that all the political and social
requirements are met by the corporation. This is supported by a code
of business conduct, which has been in place and updated regularly
over the last 35 years. This is the main framework for employee ethics
and it is used to ensure that the internal ethical requirements are met,
such as a safe working environment, equal opportunities and employee
rights. There is also a code of conduct for the board of directors, which
shows ‘their commitment to ethical practices’ (McDonalds Corporate
Responsibility Report, 2004).
The 2004 Corporate Responsibility Report, and codes of business
conduct are all written in a similar style, with emphasis throughout on
‘Responsibility’. This word is used numerous times to show that
McDonald’s doesn’t feel it is an obligation, but that it is their
responsibility given to them by virtue of being in a powerful position.
This word can be applied not only to show external shareholders that
the company appreciates it is responsible for their well being, but also
to reinforce the notion to staff internally that they must be responsible
for ethical conduct in all aspects of their work.]
Despite the marked improvements in ethical conduct, there are still
criticisms that can be leveled at McDonald’s. The 2004 Corporate
Responsibility Report is still limited by the fact that it is qualitative,
rather than quantitative. It does have some statistics, but there is a
need for more, particularly when looking at improved performance.
The employee section is dominated by claims of diversity, but little is
said about how conditions have been improved or pay structure and
age breakdown of staff. ‘As noted in the Lampe-Finn model, it is little
more than a means to maintain the status quo while creating images
of ethical behaviour’ (Lampe and Finn, 1992).
The report uses bright colors and external partners to emphasize its
importance, but really it is merely another piece of corporate
propaganda designed to satisfy the majority of stakeholders with
minor concerns. It attempts to portray itself as being a corporate
citizen, but without the transparency that is necessary to achieve this
view. The only parts of the company which society gets to see are
those chosen by executives to support their opinion of how the
company should be portrayed. There is still an absence of evidence to
prove to strong opposition that change is really occurring. This is
probably a result of the fact that McDonald’s does not have an ethics
department or ethics officer. It simply has codes of conduct, which are
produced at the top level by directors. The result of this is that
because the directors are not experts in ethical conduct, many of the
ethical issues are simply covered over by well-publicized, but
unsuccessful schemes, and many of the needs of stakeholders are not
met.
Over the last 10 years, McDonald’s appears to have successfully met
its social responsibilities. Its vibrant 2004 Corporate Responsibility
Report shows that the menu has been enhanced with healthy options,
which reinforce McDonald’s public aim to increase the healthiness of its
customers. The company has increased recycling and reduced waste in
stores across the world, while attempts have been made to improve
the standards of its suppliers. This has led to McDonald’s taking top
position in marketing firm GolinHarris’s second annual citizenship
survey. The most amazing fact is that this has been done in a way that
also meets Friedman’s requirement of meeting needs of shareholders
by increasing profits.

CONCLUSION
However, when looking deeper into McDonald’s attempts to improve its
ethical conduct, it becomes clear that McDonald’s has ‘offered
progressive rhetoric but not changed its internal practices or impact on
society and the environment’ (Hawken, 2002). Much of its attempts
are descriptive and based around meeting future goals. This has a lot
of potential, but very little is said about what has been achieved at the
moment. The absence of statistical figures means that most of
McDonald’s attempts at ethical behavior can and will be questioned by
numerous books, documentaries and websites. It is important to
remember that ‘McDonald's publicly embraces "sustainability" as long
as it can make money’ and many of its ethical attempts are aimed at
persuading the public that the business is ethical, rather than ensuring
that it is.
McDonald’s success looks set to continue into the future. This has been
achieved despite facing constant pressure from critics about its
operating practices. As a result, it seems very unlikely that McDonald’s
methods of publicizing ethical attempts will change, especially
considering the money which would be required. If there was a shift
towards full corporate social responsibility, there is a need for an
ethical officer and ethics department, comprised of experts who can
subjectively analyze the performance of the company and set accurate
objectives. There is also a need for full transparency so that the public
can be assured that the company is ethical. It would need to reveal
‘the externalities born by other people, places and generations’. Until
any radical internal changes are made, the poet Henry Thoreau best
describes McDonald’s corporate initiative: “Improved means to an
unimproved end”.