The Global Compact is an initiative of the United Nations to protect businesses through various interactive services. The initiative works hand in hand with the local Compact network, whereby businesses reform their activities with an aim of achieving global development. Many organizations have signed up to the initiative since they support the initiative through their operational activities. These companies support the ten principles of the UN Global Compact initiative. Caterpillar (CAT), a company which sells heavy machinery is among the companies that support the initiative. CAT has operations in different parts of the world which are operated by different franchises.
The compliance to the two initiatives has been taken positively by CAT since it is a signatory of the initiatives. CAT intends to operate within the initiative and some of the activities undertaken by the company include respect of human rights and equal employment rights. In its operations, CAT respects the rights of all employees and at the same time it respects and practices internationally recognized laws. The company policy is that it does not operate in regions where governments suppress the rights of its citizens. For instance, the company supports and stands by decisions made by the United Nations when it imposes sanctions on countries. The company in line with new environmental policies have engineered new technologies that ensure the environment is not polluted through the use of its products (Rasche, 2010). CAT’s range of products such as excavators, machines and footwear are produced under environmentally safe conditions. Moreover, the company supports environmental initiatives undertaken by the UN.
One of CAT’s core values is integrity and thus, the company ensures all its staff practice good ethical operations. For instance, the company make use of good accounting practices in its operations. This ensures that corruption is eliminated in the company’s activities. Thus the company works against all forms of corruption and this encourages business growth. CAT also practices prudent labour practices in its operations by ensuring that discrimination is not practice in the hiring of employees (Fussler, 2004). For instance, the company is an equal opportunity employer and thus it maintains a good ratio of both gender and employees all kinds of people. Moreover, the company does not practice child labour and it discourages the used of forced labour in its operations. CAT pays better wages and it allows its employees to participate in trade unions and other schemes that allow employees to be treated equally/humanely (Painter-Morland, 2011).
Several lessons can be learnt from CAT’s operations and support of the UN Global and local compact networks. Most of the lessons learnt from CAT business operations are positive since it helps CAT grow its operations globally. CAT’s policy of supporting human rights ensures that its clients understand the company and thus, it is able to command support from different regions of the world. Another positive lesson learnt from the CAT operations is that the company attracts the best workforce due to its labour operations and policy. CAT’s core value of integrity ensures that the company’s financial resources are not misused and this is a positive lesson. CAT operations that ensure environmental sustainability ensure the company produces better technology to be used in the future (Rendtorff, 2010). CAT’s operations can also contribute to negative impacts in that implementing these activities is costly for CAT. For instance, ensuring good technologies are implemented is costly and this eats up on the company’s bottom line. Moreover, the company could be sidelined from operating in some countries due to the tough stance of human rights it has undertaken and this hurts its business. Implementing environmental sound policies could be challenging and costly thus it will have a small negative impact on CAT’s operations.
Several recommendations could be outlined for CAT to come up with many good business practices that will ensure compliance to the Global Compact imitative. CAT should come up with strategies that ensure the fair employment by franchise holders in different regions. Moreover, the company should blacklist or struck out franchise dealers who participate in corrupt practices to win business (Rendtorff, 2009). A code of ethics to be followed strictly by employees of CAT is another recommendation that would ensure that the company adheres to the Global Compact initiative. CAT should also adopt an environmental stance and strategise on the best business operations in regard to environmental protection. The respect and adherence to human rights is a global right and therefore, CAT should strategize and come up with polices that ensure human rights is protected (Rasche, 2010). This could be implemented within the company’s franchise holders and production units. The implementation of these recommendations will lead to recognition of CAT as a global team player in business.
Benefits & Implications
The implementation of the laid down recommendations will create a business advantage for CAT. This is because CAT will attract the best employees and it will enable CAT to sell their products easily. Moreover, the company will create an environment to do business creatively and making the company to be a world leader. However, CAT will face several challenges in implementing these recommendations. Some of the challenges relate to the huge financial burden these recommendations in line with business practices. Moreover, CAT will have to restructure its business model and operations in order to undertake and implement the Global Compact initiative (Jakobeit, 2011).
This could be difficult and challenging since employee will have to learn on how to adopt these new business models. Labour standards, systems of government and culture are different in the regions where CAT operates in. As a result, implementing uniform policies and changing business practices could be challenging for CAT in a bid to streamline its business operations. There will several implications on companies in the heavy equipment industry as it pertains to CAT’s implementation of the Global Compact initiative (Rendtorff, 2009). Some of the implications are that other companies will sign up to the initiative so as to compete against CAT on level playing ground. While at the same time, signatories to the initiative might grow leading to the evolution of business practices by global companies such as Coca Cola or Exxon Mobil.
Several organizations have come up with strategies and policies that ensure human living standards are appraised. UN has been on the fore front of protecting human rights through various laws and initiatives such as the Global Compact Initiative. CAT signed up to the initiative and it has implemented the goals of the initiative in its business operations. The business operations at CAT have been streamlined to ensure that the Global Compact initiative is implemented at a local level. The company has changed it practices to ensure human rights are protected, labour practices are improved and integrity is maintained by its employees. Moreover, the initiative will improve business relations at CAT and the company will be able to conduct business ethically. However, the implementation of the initiative through its business operations will be challenging and it will impact heavily on other industries and companies.
Fussler, C, Cramer, A & Vegt, S 2004, Raising the bar: Creating value with the United Nations Global Compact, Cengage, London.
Jakobeit, L 2011, Transnational Corporations as Political Actors, Routledge Falmer, Boulder, CO.
Painter-Morland, M & Bos, R 2011, Business Ethics and Continental Philosophy, Edward Elgar Publishing, Chicago.
Rasche, A & Kell, G 2010, The United Nations Global Compact: Achievements, Trends and Challenges, John Wiley and Sons, Boston.
Rendtorff, J 2009, Responsibility, Ethics and Legitimacy of Corporations, London, Cengage.
Rendtorff, J 2010, Power and principle in the market place: on ethics and economics, Jones & Bartlett Learning, New York.