Task 3- Code of Ethics and Legal Responsibility Analysis Duran V2

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XXXX XXXX Task 3- Code of Ethics and Legal Responsibility Analysis Ethical Leadership- C206 Western Governors University

Overview of Target Target is a large retail department store chain based in Minnesota with stores across the United States. Target was founded in 1902 and has gone through several acquisitions to become the company it is today. Target sells a variety of items including grocery, electronics, home goods, apparel, and other general merchandise. Target is the seventh-largest retailer in the United States. Code of Ethics- Corporate Social Responsibility Corporate Social Responsibility (CSR) is a business idea that is put in practice by most companies to not only focus on growing their bottom-line but also focusing on making the world around them a better place. Most companies will publish a document that every stakeholder and employee must adhere to further iterate the company’s commitment. Target calls this document their Code of Ethics, and in this document, there are several instances of Target promoting CSR. Target focuses on the following areas as part of their CSR: Environment, Social, and Governance. The first example is Target’s commitment to appreciate their diversity and demonstrate inclusivity. Target commits to providing an accepting and inclusive environment for their employees and customers. Target tasks their employees to try to understand other viewpoints and respect the viewpoint even if they don’t agree with it. The second example is Target’s commitment to caring for our planet. Target makes clear that they are promoting making decisions that will help reduce their carbon footprint. The code of ethics explains what is expected from their employees and vendors they work with.

The third example is Target’s commitment to promoting a safe environment. This includes following safety rules, Target’s commitment to a tobacco-free workplace, and staying alert to report violence in their stores and warehouses. Code of Ethics- Legal Mandates Target’s code of ethics highlights several legal mandates throughout the code of ethics published by Target. Although the code of ethics does not always directly address the specific legal mandate (i.e., name of laws and regulations), the code does stress the importance of following the rules of the code. One thing Target could do better is including consequences for noncompliance with the mandates. Target Code of Ethics describes the company’s legal mandate to ensure food safety. The company established several investigative and quality assurance teams to assist with making sure that the company is following product safety regulations. If Target was to ignore these mandates there could be several ramifications including customers getting sick, loss of food handling license, and other hefty fines. Target’s code of ethics describes their commitment to work honestly and not accept bribes. The code describes that it is against US Foreign Corrupt Practices Act (FCPA) to accept bribes on behalf of the company. Target has a specific provision for employees that work with government officials. The code describes bribes as cash, gift cards, meals, travel, or an offer of employment. According to a US Securities and Exchange Commission (SEC) website, sanctions for violations of the FCPA could be large. The SEC describes these ramifications as civil enforcement actions against individuals and the company. The FCPA is enforced by both the SEC and Department of Justice.

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Development of an Ethical Culture Target is known and loved by many across the country. Target has a very strong ethical culture. This is demonstrated by the company’s code of ethics. The code provides very clear expectations, and provides a reference to where readers can go to get more information and to report an issue/violation to the company. For example, in the avoid conflicts of interest section, Target lists their commitment, and expectation, gives several scenarios, and references their policies. This is evident throughout their code of ethics and shows that they have a great company ethical culture. Resources for Employees to Report Ethical Concerns Target offers several resources for its employees to discuss ethical concerns. Some of these include talking to the employee’s leader/human resources (HR) partner, sending an email, visiting ethics point to submit a concern via the web, calling the Integrity Hotline, or writing a letter to the Corporate Compliance and Ethics office. The best method to use will depend on the situation and the employee’s comfortability with the method. If the issue is with a co-worker in the same office/team reporting with a leader/HR partner may work better, if the concern is with a leader the email/anonymous options may be better. Factors to Consider before Reporting

There are several factors someone must consider before making a report regarding ethical violations. The first thing that needs to be considered is how good the company culture is. If the company culture is not one of integrity and holding employees accountable, an employee may choose to look the other way. Another consideration would be what type of protection is given to people who make reports. Is the report anonymous, if not, will there be any protection for the reporter against ramifications from others within the company. Lastly, the reporter must consider the ramifications of not reporting the concern. It is important to consider this because not reporting the concern can lead to unethical behavior persisting, and could open the company/employee to liability. Internal Actions to Report a Concern Once an employee has made a decision to report an ethical concern, they can do so by contacting their supervisor, connecting with a local/store level HR representative, or by contacting the company’s integrity hotline. The choice made by the employee will largely depend on what they are comfortable with doing and what type of concern they have. A smaller concern that is handled with discretion, will likely stay at the store level either with the employee’s supervisor or human resources representative, whereas a larger concern or a concern that is ignored will likely make its way to the integrity hotline or an external action. External Actions to Report a Concern If an employee’s concern is not addressed, it is possible that an employee may decide to take their concern to an external source. If the employee is reporting on a legal violation, the employee may make a report with an enforcement body of that legal mandate or law. For example, if an employee is consistently seeing food being left out for longer than the allotted

time and then being served still, the employee may choose to report the violation to a health department. Another action an employee could choose to take would be to go to a news outlet. If an employee is unable to get a response from the company or from the external legal reporting agency, they may choose to take the matter to a news outlet. In the same example from above, a situation like this would likely gather news attention and affect the company in a way that it forces the hand of the organization or external legal agency to take action. Advantage and Disadvantage for Compensating Whistleblowers Several companies find that a pay-for-report program is helpful to incentivize reporting of ethical concerns is important. One advantage of utilizing a whistleblower compensation program is that it encourages employees to report acts that are unethical. A disadvantage is that it could cause false reports in order to get compensation. When creating the policy, the policy should include consequences for false reporting. If the report results in legal action, false claims could be a violation of the False Claims Act (FCA) and could result in civil fines that are three times the damages plus a penalty. Changes to the US Sentencing Guidelines The U.S. Sentencing Guidelines, established by the United States Sentencing Commission, provide a baseline for the judiciary branch to determine penalties for individuals and organizations convicted of crimes. These guidelines have caused changes on how organizations think about compliance, training, and responsibilities for executives.

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These changes include an emphasis on company culture and ethics. The sentencing guidelines emphasize the role culture has in preventing misconduct. Organizations have placed significant resources on fostering company culture and promoting integrity. Other changes include third-party audits, these third-party audits are important because they allow for an unbiased view of things that may not be in compliance. Culpability Factors When Determining Fines There are several factors that can be used when the judiciary branch is levying fines under the U.S. Sentencing Guidelines. The first is under part 8C1.1, which takes into account the history of the organization or person receiving the fine, was it their first offense, how severe was the offense, and other characteristics. The second factor that is determined is how much did the organization benefit from the offense financially. Lastly, the third factor that is determined is how much did the organization lose financially from the offense. Once these factors are considered a culpability score is assigned, which allows the courts to assign a penalty based on a sliding scale. There are several factors that can cause a culpability score to be adjusted further. The first set of factors are aggravating, which cause an increase from the base level and these include the size of the organization, who participated, role with the organization, prior history, and if obstruction was committed. The other set are mitigating factors and can cause the score to decrease. These factors include having an effective program to prevent and identify violations, if the organization self-reported the violation, the company’s corporation status.

References Foreign Corrupt Practices Act (FCPA). US Securities and Exchange Commision. (2023, June 29). https://www.sec.gov/enforcement/foreign-corrupt-practices-act#:~:text=The %20Foreign%20Corrupt%20Practices%20Act,in%20obtaining%20or%20retaining %20business. The false claims act. Civil Division. (2023, April 4). https://www.justice.gov/civil/false- claims-act Target Corporation Code of Ethics. Target Corporation. (n.d.). https://corporate.target.com/_media/TargetCorp/about/Target-Corporation-Code-of- Ethics.pdf Treviño, L. K., & Nelson, K. A. (2017). How Fines Are Determined under the U.S. Sentencing Guidelines. In Managing business ethics: Straight talk about how to do it right (pp. 253–254). essay, Wiley.

Task 3- Code of Ethics and Legal Responsibility Analysis Duran V2

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