Motorola: Ethical Challenges in a Multicultural Environment

1. Is Motorola an Ethical company? Is the company’s top management genuinely

sincere about the importance of conducting business in an ethical and
honorable manner? How can you tell?

Yes, Motorola is an ethical company and the top management has been instrumental in
creating and maintaining an environment the breathes ethics and good values. Motorola
believes that a strong corporate culture founded on ethical business principles and moral
values is a vital driving force behind continued strategic success. One of the primary
attributes to the success of enforcing ethical behaviour of the employees is the support
and dedication that is given by top management. Top management at Motorola has
established a strong corporate culture that is founded on ethical business principles and
moral values as describe in the code of business conduct and the establishment of the
Motorola Ethics Renewal process. At Motorola management believes in and practices the
ethics standards and values. They lead by example when it comes to ethics and take
ownership of ethics development throughout the company. Motorola’s corporate culture
is grounded in its two key beliefs, which is constant respect for people and
uncompromising integrity. Motorola’s ethics culture was started by the founder Paul
Galvin and have been the key focus on how the business is run ever since. The history of
events and circumstances around ethics in the Motorola is strong and there are
numerous scenarios of where the company had clearly made business decisions based
on ethics even thought it may have had negative effects on its profits.

Motorola beliefs and culture strives to highlight the importance of individual employees
and have created a work environment that strikes a balance between work and family.
Since the history of Motorola is strong and rich with positive events attributed to the
management style they have been ingrained in the culture of the people. These are
evident in the folklore and stories that Motorolans remember and convey.

Motorola makes it a point to effectively communicate the values and ethics code to all
employees clearly explaining compliance procedures and have ensured that ethical
behaviour has been made a fundamental component of their corporate culture. They
explicitly state what the company intends and expects. Value statements and codes of
ethical conduct are used as benchmarks for judging both company policies and individual
conduct. Value statements serve as a cornerstone for culture building and a code of
ethics serves as a cornerstone for developing a corporate conscience. Respect for and
appreciation of the company’s high ethical standard were widely shared among
employees and managers.

Motorola effectively conveys the values and code of ethics to stakeholders and interested
parties in the way it practices its business, annual reports, web sites, and documents
provided to all employees. The conviction that maintaining high ethical standards was not
only the right thing to do but also good business was extended to both countries where
business was conducted in a manner that matched Motorola’s standards and countries
where it was not. The trend of making stakeholders aware of the company’s commitment
to ethical business is high. The case study also reveals evidence that the company’s long
standing commitment to ethical behaviour set a good example for other firms to follow in
those foreign country markets where corruption and questionable ethical behaviour were
still common.
The executive management has however identified that to operate globally the cultural
diversity of the markets and countries must be taken into account wen applying ethics
and values. The application however must still ensure that the highest ethics and values
are followed. They have established three criteria to be followed, which are making minor
adjustments to respond to local standards, making substantive adjustments to respond to
local standards and making global adjustments.
Motorola in creating the Ethics Renewal Process established a positive step in helping to
educate the employees and management of the requirements and possible solutions to
scenarios. Motorola has also created an ethics committee who are responsible for
promoting a culture that embodied Motorola’s key beliefs and for proving a forum for
open discussion surround the ethics and code of business conduct.

2. Do you believe that Motorola’s management is correct asserting that the

company’s ethical approaches have a positive effect on the company’s
performance? Would the company be better off if management relaxed the
ethical standards and ethics compliance effort a bit?

Yes, Motorola’s ethical approaches do have a positive affect on the company’s

performance.

Motorola identifies the benefits of ethical behaviour to be long term and permanent as
opposed to unethical behaviour, which may only result in short term benefits. They
believe that the company’s reputation and brand name is one of the key driving
successes of the business and this makes Motorola a desirable business partner. It is
also believed that there are other more positive benefits that can be derived from being
an ethical company which are higher morale, a higher level of mutual trust among
Motorolans and greater trust between Motorola and its customers and vendors. Although
Motorola’s strong ethics beliefs have resulted in lost business opportunities it is believed
that in the long run it has attained more business, even in countries of varying levels of
corruption. The reason for this is that buyers were aware of Motorola’s high standards
and that they will get what they paid for because that price did not include allowances for
bribes or kickbacks. Also it is easier for other organisations to do business with Motorola
since they have the assurance that their partnership will be just, fair and ethical.

Another external factor to consider is that as the world is now moving towards
globalisation there is greater focus on ethics in the operations of a company. By Motorola
already having a reputation as an ethical company it definitely has a competitive
advantage over other companies that still have to reach this level of ethical acceptance.
For Motorola to relax on its ethical standards now would be a step backward. All
indications in the International markets are towards practices of ethics and good values.
At present it may be difficult for Motorola to effectively implement its ethics code of
practice globally due to the cultural diversity but it must bear in mind that it is a leader
with respect to International ethics. Motorola is breaking new grounds in educating and
making the world more aware of good business practices. This is hard work and will need
resources and time but the important thing is that Motorola have begun the process. All it
needs now is to fine tune its processes and have proper control so that undesirable
conditions can be eradicated. This will eventually put Motorola in at strong economic
global position ahead of its competitors.
3. What do you see as the key components of Motorola’s corporate culture?

Motorola’s culture was instilled by the founder Paul Galvin and was institutionalised as
the key belief of uncompromising integrity and constant respect for people. The corporate
culture is now grounded on the two beliefs that of constant respect for people and
uncompromising integrity. Thus Motorola places great emphasis on its people and how it
can incorporate the highest ethics in the operation of company. Motorola’s management
feels so strongly about these beliefs that it has aligned the organisation polices, practices
and ways of doing things to create this distinctive culture in the company and more
specifically in the business approaches. This is further articulated in its stakeholder
relationships and global markets.

Ethics is the key component of the Motorola culture and the company’s ethical standards
were deeply ingrained in the Motorola culture. The need to maintain high ethical
standards were also driven and followed by the top executives of Motorola and these
principles were applied globally in all Motorola subsidiaries.

Another component of Motorola’s culture is that of a decentralised structure and

management style. This has been instilled by the founder and has successfully
implemented autonomy between business units even though this had sometimes lead to
some undesirable inefficient company practices. Motorola made a practice of giving
managers cross-functional tasks and assignments outside their formal job descriptions so
as to promote interaction between departments where trust and co-operation could be
strengthened thus improving overall communication.

Motorola considers it engineering base to form an important part of the company. Due to
the dynamic market that Motorola competes in the requirement for innovation and
responsiveness are key elements for success. Motorola tries to incorporate these
aspects into its culture. The decentralised way of doing things with openness to creative
ideas and the need to take calculated risks are all characteristics that Motorola have over
the years incorporated into its employee and work practices. However there are some
critics that concur that Motorola’s top executives are narrow minded and traditional
bound. This to some extent becomes evident in the business product choices that were
made in the recent years that have led to Motorola taking second stage to its own
creative market (cellular technology).
4. What problems and challenges confront Motorola in getting the company’s 120
000 plus employees to conduct company business honourably and ethically in
nearly 100 different countries

Before the globalisation of Motorola, the code of ethics standards was followed very
closely and rigidly. When Motorola expanded into international markets management
demanded the same dedication towards the ethics standards that Motorola exhibited
locally. However this was a short sighted approach by management which soon became
evident in the number of discrepancies and tough situations that arose due to the
multicultural diversity that Motorola was now competing in.

The problem of most significance was that different countries followed different ethical
standards and principles that resulted in conflicts with respect to the Motorola’s code of
ethics. These problems were increasing in numbers and employees were not able to
effectively apply the traditional standards to these situations without causing business-
related problems. This meant that the Motorola standards were not flexible enough to
apply ethical principles and yet at the same time ensure good business practice.

The multicultural challenge was not only an external problem but it also posed an internal
challenge to Motorola. The internal challenge was due to majority of Motorola’s
employees in the international subsidiaries being part of the native country who were also
from other companies and with that bringing their own diversity into the company.
Another factor was that half of the workforce was in locations outside the US. Also within
the last 10 years Motorola employed 50000 new employees of diverse backgrounds.
Although Motorola’s policies and training was aligned to the core beliefs and code of
ethics it was still ineffective in addressing all issues that arose due to the number of the
new employees. The influx of new employees meant that at least half the workforce was
new without the experience of the Motorola beliefs and code of ethics. Another
secondary problem was that many of the experienced older employees were retiring and
with that taking their positive influence out of Motorola. Motorola’s efforts to flatten its
organisation structure also caused some pressure on employees as they now were
expected to have more input and responsibilities and had to quickly learn and support the
values of corporate culture.
5. How well is Motorola doing in gaining employee acceptance of and compliance
with the company’s code of ethics? Is Motorola’s ethics compliance program
working? What things does it do well? Where are improvements needed?

According to Motorola’s senior managers most employees are complying with the
company’s code of conduct in good faith. It is also stressed that violations were usually
unintentional and occurred in grey areas. It was also made clear that top management
embraced the Motorola ethics standards and was ensuring that employees follow it.

Interviews conducted on Motorola’s suppliers and customer’s revealed that in general

Motorola employees tried to abide by the code of business conduct and to serve as
ethical role models but they have questioned some of the decisions that Motorola had
implemented to uphold the ethical standards. It is believed that Motorola is not consistent
in applying the ethics standards and only applies them so that they can achieve the
maximum benefit.

A consultant also mentioned that Motorola’s employees in different countries held

different interpretations as to what constituted ethical behaviour and was allowable under
the code. From an outsiders perspective together with imitate knowledge of Motorola the
consultant felt that the behaviour exhibited by the employees was in violation to the
Motorola code of conduct. This scenario in one sense highlights the drive by Motorola to
have some flexibility in the application of the ethics code (application of MERP) but due
to insufficient information presented by the consultant on the specific scenario, comment
as to whether the employee truly violated the code cannot be established. This however
draws an important point that although the ethics code does give some guideline and if
these are modified but are still acceptable there will be people who still see the action as
being unethical.

In general most employees are aware of the cultural drive towards ethics. There are
some problems but programs such as MERP are slowly addressing these.
6. What recommendations would you make to Chris Galvin concerning Motorola’s
code of ethics and ethics compliance effort?

− Motorola’s management must concentrate on improving the channels of

communication between all parties especially between new employees and mentors
or managers.
− Management must get all the staff involved in the strategic planning process. This will
most certainly increase ownership and commitment of the employees to the strategy
that Motorola wants to implement. The employees must be able to see and
understand the effects of the global strategy.
− Motorola must concentrate on creating a workforce that understands the competitive
pressures that the company is faced with and how their actions can directly affect the
company.
− The company must provide a link of their rewards system to that of achieving the
company’s goals and strategy. If these are meaningful and are properly aligned,
Motorola will find it much easy to control the outputs and culture of the employees, no
matter how diverse they are.
− Management must create a culture that keeps the organisation responsive to
changing conditions.
− To further enforce the ethical behaviour of its employees the company can conduct an
annual audit of each manager’s efforts to uphold ethical standards on the actions
taken by managers to remedy deficient conduct. It could also require all employees to
sign a statement annually certifying that they have complied with the company’ code
of ethics.
− Effective company managers must try to anticipate changes in customer market
requirements and proactively build new competencies and capabilities accordingly.
− Should incorporate the following management education methods:
− Coaching
− Understudy assignments
− On-the-job methods
− Off-the-job methods
− Sensitivity training
− Team building
− Behavioural-modelling training
− Simulation methods