Center for the Study of Ethics in the Professions at IIT

SUBJECT ETHICAL STANDARDS

There is much discussion in many circles today about ethical standards in U.S. corporations. The following discussion and policies elaborate on our traditional policy in order to provide personal guidance and to establish procedures for problem resolution. This practice is corporate in scope.

PRACTICE

1. For Cummins, ethics rests on a fundamental belief in people's dignity and decency. Our most basic ethical standard is to show respect for those whose lives we affect and to treat them as we would expect them to treat us if our positions were reversed. This kind of respect implies that we must:
   1. obey the law.
   2. Be honest - present the facts fairly and accurately.
   3. Be fair - give everyone appropriate consideration.
   4. Be concerned - care about how Cummins' actions affect others and try to make those effects as beneficial as possible.
   5. Be courageous - treat others with respect even when it means losing business. (It seldom does. Over the long haul, people trust and respect this kind of behavior and wish more of our institutions embodied it.)
2. The reason for such behavior is that, in the long run, nothing else works. If economies and societies do not operate in this way, the whole machinery begins to collapse. No Corporation can long survive in situations where employees, creditors and communities don't trust each other. Since a corporation lives by society's consent, it must plan on earning and keeping that consent, for the duration. Successes we have today - in securing sales, completing negotiations, obtaining credit, enlisting employee loyalties - are in major part made possible by the fact that others have learned to expect that Cummins will deal with them fairly. What we do today will maintain or undermine that legacy.
3. Our aim is that Cummins - its individual members, each of its distributors and their people - all be known worldwide as trustworthy in all respects. "In all respects" is important. We can't operate by one set of standards internally and by another set externally. We can't say one thing and do another. Our ethical standards shouldn't tolerate split behavior.
4. On numerous occasions the Company has reiterated its commitment to fundamental ethical standards. There are, however, reasons for more specific statements:
   1. As we grow larger, we have to set down in writing those standards that have informally guided our action in the past.
   2. Not only do we have to make these statements formal and written, but they must be expressed in policy statements to ensure that all management employees have easy access to them.
   3. Finally, general statements are important for setting the tone and character of a company, but specific policies are required in addition to make the intent of the general principles clear to each person.
5. Accordingly, all employees are expected to understand and subscribe to the following general standards of corporate behavior.
   1. Cummins Engine Company, Inc. competes on a straight commercial basis; if something more is required, the Company is not interested.
   2. Cummins employees do nothing in search of business that they should not reveal willingly and publicly to any other member of the Cummins family or to any government official in any land.
   3. Cummins neither practices nor condones any activity that will not stand the most rigorous public ethical examination.
   4. If an employee has any doubt about the appropriateness or morality of any act, it should not be done. If an employee believes that there is a conflict between what his or her supervisors expect and what corporate ethical standards require, the employee should raise the issue with the Corporate Responsibility Department. The Company is prepared to help any employee resolve a moral dilemma and to ensure that no employee is put at a career disadvantage because of his or her willingness to raise a question about a corporate practice or unwillingness to pursue a course of action which seems inappropriate or morally dubious.
   
   RESPONSIBILITY

1. In order to administer these general standards the following corporate-wide processes have been developed and agreed upon by the various Groups of the Company. Ethical practices adopted will be published in the Cummins Practice Manual, circulated annually to all exempt employees, and updated as needed. During the second quarter of each year each Group, Division, and Department head should review these practices with his or her staff and should consider whether revisions or additions are appropriate. Revisions and/or additions to these practices will take effect when approved by each Group head and the President, and signed by the Chairman. Corporate Responsibility will continue to coordinate this process. Corporate Auditing will be responsible for auditing compliance with these practices and will keep such records and make such reports as are required by the various practices.
2. Each Group, Division, and Department head is responsible for ensuring that employees within his or her area, including new employees, fully understand and comply with these practices. Each Group, Division, and Department head is also responsible for dealing with cases of non-compliance. North American Divisional Vice Presidents should review these practices with all Distributor Principals in their territories during the second quarter of each year to make sure that Cummins Distributors understand the standards under which Cummins operates. Heads of International Areas or Regional Managers should review these practices with all Distributor Principals in their territories at contract review time.
3. All employees of the company are responsible for following the provisions of this practice.
   
   COUNSEL
   The Chairman should be consulted for any advice needed concerning this practice.