SAUDI FOOD GIANT PIONEERS ISLAMIC BUSINESS ETHICS

C O N F I D E N T I A L SECTION 01 OF 03 JEDDAH 000199

SIPDIS

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RIYADH, PLEASE PASS TO DHAHRAN; PARIS FOR ZEYA; LONDON FOR
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SIPDIS

E.O. 12958: DECL: 03/07/2016
TAGS: ECON ELAB SA SCUL SOCI
SUBJECT: SAUDI FOOD GIANT PIONEERS ISLAMIC BUSINESS ETHICS

REF: 05 JEDDAH 03712

Classified By: Consul General Tatiana C. Gfoeller for reasons 1.4 (b) a
nd (d).


1. (C) SUMMARY. Savola Group, Saudi Arabia's leading foods
supplier and the country's second largest industrial
enterprise, has developed a code of professional ethics and
values that blend Western business standards with indigenous
Islamic traditions. In a time when the country's work force
is shifting from one comprised significantly of third-country
nationals to one with a Saudi majority, the forward-thinking
program promotes transparency and efficiency, serving as a
potential model both for the effective implementation of the
SAG's ongoing Saudization campaign and for the development of
broader consumer protection. END SUMMARY

PIONEERING AN ETHICS AND VALUES-DRIVEN MODEL


2. (U) Savola Group, Saudi Arabia's leading food supply
company, the country's second largest industrial enterprise,
and the owner of the Middle East's largest retail food chain
reported 2005 assets of more than $2.2 billion (see reftel).
In a climate of Saudization, when companies are obligated to
hire increasing numbers of Saudi workers to re-align the
previously foreign-dominated labor force, businesses have
sought methods for motivating employees, promoting efficiency
and transparency, and developing professional skills.
According to Mazen Redwan, a Savola representative who
outlined the company's practices in a March 5 meeting with
Poloff, this can best be done through an ethics and
values-driven approach to business.


3. (U) Beginning with the creation of a task force on ethics
and values in 2002, Savola has fused Western business ideals
with indigenous Islamic ethical traditions to appeal to and
to motivate a Saudi work force that, like the society, is
largely religious. Working with both Western consulting
firms and eminent Islamic scholars, the company released a
code of conduct in 2003 and began company-wide ethics and
values training the following year. The code of conduct is
divided into two sections, one on ethical principles and one
on values.

ISLAMIC ETHICS, PRACTICAL IMPLICATIONS


4. (U) According to precepts detailed in Savola's ethical
code of conduct, "individuals in an organization function
more efficiently, and, consequently, the organization
functions in a more coordinated manner in the presence of a
guiding set of ethical principles...It is our belief that
despite all efforts, success in business needs a blessing
from Allah. The blessing comes only if our intentions are
moral and free from hypocrisy." Savola's approach to ethics
focuses on four principles: amanah("honesty"),
taqwa("conscientiousness"),birr ("caring justice),and
mujahadah ("striving"),all of which have both religious and
practical connotations. In his presentation of these tenets,
Redwan referenced "The Quran" and "The Hadith" (sayings of
the Prophet Muhammad) in addition to detailing the
professional implications of each term.


5. (U) Savola uses amanah (best translated as "honesty") to
underscore the importance of dealing with customers, vendors,
suppliers, and the community at large in a transparent
manner. Redwan explained that the term requires the
fulfillment of business pledges to clients and investors as
well as a commitment to resolve any professional disputes
between stakeholders with objectivity. Similarly, Savola
views taqwa (translated as "conscientiousness" but indicating
religious sincerity) as providing a "moral constraint" to
avoid ambiguity. Redwan quoted Muhammad as saying, "That
which is lawful is plain and that which is unlawful is plain
and between the two of them are doubtful matters about which
not many people know. Thus, he who avoids doubtful matters
clears himself in regard to his religion and his honor, but
he who falls into doubtful matters falls into that which is
unlawful." Taqwa encourages employees to carefully examine
issues that present any moral or legal question. For
example, should the company possess proprietary knowledge of
the adverse impact of a product that is not yet known to
regulators, such information should be disclosed. The
implication is that there is a moral obligation, even in the
absence of a legal requirement, to protect Savola's ethical

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foundation, and ultimately its public reputation.


6. (U) Birr (translated by Savola as "caring justice" and
traditionally indicating the fair treatment of others, i.e.
parents toward their children) commits Savola employees to
safeguarding their colleagues, welfare. According to "The
Hadith," "None of you (truly) believe until he wishes for his
brother what he wishes for himself." Redwan said that this
concept is implemented in business through such activities as
paying employees on time and ensuring that no work conditions
are hazardous, thus raising morale. The fourth ethical
concept, mujahadah ("personal control" or "striving") is
rooted in the spiritual goal of realizing one's potential
through self-discipline and devotion to God. Savola uses it
to inspire its employees to challenge themselves and to
resist complacency.

"THE SAVOLA 8"


7. (U) In addition to its ethical standards, Savola's
approach to corporate conduct comprises a set of eight
values, dubbed "The Savola 8." The first is tawado, meaning
"confident humility" in the company's parlance. This
encompasses the confidence to accept guidance and
constructive criticism while not being encumbered by either
arrogance or self-doubt. Its external counterpart is iqbal
("advancing"),which in a traditional context would indicate
modesty and the willingness to explore others' ideas. Savola
interprets this as promoting good communication skills among
its employees and encouraging them to think in a
non-adversarial manner--"the ability to blur the distinction
between ours, and theirs.," Tied to this is the
concept of iqtida ("apprenticeship") in reference to
following righteous men, such as Muhammad. In the business
context, this means selecting role models and working with
mentors to develop professional skills, particularly in the
area of leadership.


8. (U) Ihsan al dhan ("trusting") is an Islamic concept
exhorting believers to maintain faith and optimism in
others, motives and not to pre-judge their intentions.
Ihsan al dhan is nonetheless tempered by caution as,
according to Redwan, "only God can be trusted 100 percent."
This principle combines with qabool ("acceptance") to
encourage open-mindedness, tolerance, and experience-sharing
in the workplace. Similarly, mu,azarah (caring or
supporting) emphasizes one's common link to humanity as well
as a sense of brotherhood and mutual respect, a key component
of Islamic teachings. Savola utilizes this concept to
highlight the importance of teamwrk and cooperation among
colleagues. The final wo principles of azm ("resolve" or
"will") and iqan ("perfection" in the pursuit of religious
pity) translate two basic Islamic concepts into a
pofessional commitment to act decisively and effectvely
(i.e. to "deliver") and to maintain hig standards of quality.

"DOING YOUR HOMEWORK"


9. (U) Redwan emphasized that Savola's efforts to promote
corporate ethics and values were part of an equation
understood by any devout Muslim. "We tell our employees that
results are not entirely determined by their own effort and
commitment," he said. "You must rely on God for these efforts
to translate into success. However, everyone must do their
homework, and seek knowledge. Only then can God help you
finish the task." To ensure that employees are in fact doing
their "homework," every new hire at Savola is required to
attend a two-day workshop on ethics and values, followed by a
six-week period in which they must document examples of the
application of these values in their daily work. Men and
women are equal participants in the workshops and must follow
identical guidelines on ethics and values. (Note: Savola has
shown itself to be relatively progressive in the hiring of
women and currently has women employed in the financial,
programming and consulting divisions).


10. (U) For its part, Redwan proudly claimed that Savola's
management abides by its stated values in practice. He gave
concrete examples of birr, whereby each employee is eligible
for an interest-free home loan from the company after working
for three years, and of mu,azarah, where employees can elect
to allocate a portion of each month's salary to a common fund
that is then used by other employees in times of need.


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COMMENT


11. (C) Savola's program to synthesize Islamic traditions
with the ideals of Western business practices anticipates a
forward-thinking approach to Saudization initiatives and
promotes stronger ideals of consumer protection. As more
Saudis join the ranks of the country's work force, similar
programs could help to motivate professionals whose
educational background is largely focused on religious
instruction at the expense of practical skills and who often
lack a strong work ethic. By promoting best practices within
an Islamic context, Savola's model has potential implications
for other companies operating in a society with few
mechanisms of consumer protection and a poorly developed tort
system. END COMMENT
Gfoeller