Corporate Governance Principles and Their Association with Business Ethics - Essay Example

CORPORATE GOVERNANCE By Name Course Instructor Institution Location Date Corporate Governance Corporate governance is currently a significant concept in the business world and has been fueled by the failures of large companies whose scandals caused investors billions of money (Crane and Matten, 2016). The ASX Corporate Governance Council (2014) defines corporate governance as a framework that encompasses rules, processes, systems and relationships; which are used to exercise authority and control in relationships. It consists of the instrument through which organizations and individuals who are in control are deemed accountable. The presence of good corporate governance is therefore imperative in the promotion of investor confidence and the prevention of corporate scandals; and civil and criminal liability on the organization (McCahery and Vermeulen, 2014). Corporate governance has been implemented in different countries in the globe and in Australia the practice is governed by the Australian Stock Exchange. The stock exchange body gives eight principles and subsequent recommendations that companies are supposed to abide and should the companies fail to fulfill these guidelines; then they are required to give reasons why. This retro respect paper thus seeks to discuss corporate culture and its principles using ANCOR as a case study. The paper will apply the use two corporate governance principles and relate them against ANCOR to determine how the corporate governance statement of this organization is associated with the selected principles. Corporate Governance and Business Ethics Schwarz (2013) discusses the need and importance of developing an ethical culture for an organization and the need to sustain this culture using ethical values, ethic programs and ethical leadership. The term corporate governance is presently used to imply ethical responsibility in the sense that individuals in an organization have to use moral sense in the making of decisions, allocation of resources and planning strategically among other managerial functions. Corporate governance is thus imperative in creating a business climate that is decent in the organization. As discussed by Scwarz (2013), ethical values are easily mimicked especially when they come from the top management. The culture of top management speaking and acting on their decisions is encouraging to the rest of the organization which proceeds to create an ethical culture. To make the ethical corporate culture solid, the corporation needs to implement programs that advise and implement on ethical practices such as code of ethics, training on ethics and a control systems in case of the failure on ethical requirements (Schwarz, 2013). Felo (2011) emphasizes the importance of corporate governance in avoiding unethical practices in an organization. The presence of corporate governance might not, however, be the ultimate solution to organizations in having its directors and board members account for the operations of the business. The creation and implementation of business ethics is dependent on directors of the board and as such there is still potential conflict in the ethical standards and programs that they decide for the organization (Felo, 2011). The information that a board of directors shares with investors may be limited despite having business ethical practices in place. This causes issues of transparency which could still result to epic failures in the organization. The question of the effectiveness of corporate governance in organizations particularly with regards to business ethics is thus imperative and would help organizations come up with workable solutions to prevent conflict and increase transparency. Corporate Governance Principles and their association with Business Ethics a. Solid Foundations for Management and Oversight The principle of laying solid foundations for management and oversight requires that a listed entity determine and reveal the particular roles and responsibilities of the board members of the organization as well as the management; and additionally disclose how the performance of these parties is controlled and assessed. The principle recommends clear separation of the responsibilities assigned to the board and those assigned to the management. The main responsibilities of the board of a listed entity include; provision of leadership, appointment of senior personnel, replacement of senior personnel, overseeing implementations in the entity, approval of budgets, creation of strategic plans and monitoring the efficacy of the practices of the entity. Management on the other hand is usually relegated with the responsibility of implementing the strategic goals that have been set and operating within the risk boundaries set by the board. The principle further recommends carrying out comprehensive checks on candidates before appointments to ensure that they are well equipped to handle the responsibilities given. Written agreements are imperative for the directors and seniors in the corporation as well as a diversity policy that allows for fair and just appointments. The diversity policy needs to be disclosed to encourage its implementation and transparency as well. Moreover, there needs to be a process for disclosure of the performance of the executives of an organization so as to evaluate and address any issues arising from the performances. The integration of ethics into the foundations for management is essential but corporations need to realize that ethics do not guarantee perfection and that ethics go beyond governance (Liautaud, 2013). The best practice would thus be to encourage ethical business among the members of the entity through implementing ethical programs. b. Ethical and Responsible Actions The principle requires that corporations and organizations act ethically and responsibly and to encourage decisions that are ethical and responsible. The directors, managers and employees of an organization are required to have supreme integrity and objectivity while enhancing the image and the performance of the group. Employees need to report any ethical incidents to their superiors while the board has the responsibility of reviewing the policies on ethics to ensure that they favor all the parties in the business operation. In the case of potential conflict, the board needs to be advised so that it can carry out relevant procedures that will be helpful in managing the conflict. The principle further requires that members of a listed entity comply with the set code of conduct including reporting unethical conduct and assessing the conduct of the members. The listed entity is moreover required to disclose its code or a summary of the code. As emphasized by Liautaud (2013), there is no perfection in the implementation of ethical requirements as an ethical decision stems from an individual. The thought of doing something ethical supersedes the real action which might be compelled by requirements as opposed to the moral thought. Ethics therefore need to be eased into governance and considerations should be put in place with the knowledge that ethics surpass the law and responsibility thus requiring individual motivation. ANCOR: An Overview The American Network of Community Options and Resources is a nonprofit trade organization that services individuals with disabilities. The association represents private community providers of services to persons with disabilities. The policy of the association includes offering leadership representation of the needs and the interests of private providers before different agencies and the Congress. The association thus emphasized the important role that I splayed by private providers in ensuring the wellbeing of persons living with disabilities. The mission of the trade association is to enhance the ability of its members as they support people living with different kinds of disability in the community so that they can integrate well with the society. The ANCOR Foundation thus encourages the development of powerful leaders in the industry and sees that is empowers persons living with disability to gain independence and sustain themselves in their community. Corporate governance in ANCOR a. Solid Foundations for Management and Oversight in ANCOR The board of directors of ANCOR Foundation has the authority and responsibility over the operations of the corporation. The board is required to adopt resolutions and statements of policies that represent the position of ANCOR Foundation. The board equally manages the financial affairs of the corporation and employs the services of an executive to manage the business operations of the organization. The board of directors additionally appoints and replaces officers when needed in the organization. The finance committee is in charge of the financial issues and is required to report to the board. Based on the principle of laying of solid foundations for management and oversight, the foundation fulfills all except the clear disclosure of operations by the organization. b. Ethical and Responsible Actions in ANCOR The members of ANCOR have high expectations of themselves as well other people and consistently carry out the responsibilities expected of them comprehensively and with punctuality. The values of the organization are strongly adhered to through actions and examples that communicate the ethical standards of the organization. The employees are highly committed to the vision and the mission of the organization. The employees of ANCOR Foundation are required to treat each other with utmost respect through respecting the privacy of one another and being sensitive to the strengths and drawbacks that individuals around them have. The group strives to work as a team, maintain a positive outlook and always strives to improve on their performance. The code of conduct protects the members of the foundation from harassment and exploitation of different natures including sexual, underpayment and overworking incidents. The foundation additionally has a strong feedback system where ethical misdemeanors can be reported. The foundation therefore fulfills the requirements of the principle of acting ethically and responsibly. Reference List Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press. Council, A.C.G., 2014. Corporate Governance Principles and Recommendations, 3rd edn (ASX, Sydney). Felo, A.J., 2011. Corporate governance and business ethics. In Corporate governance and business ethics (pp. 281-296). Springer Netherlands. Liautaud, S., 2013. Untangling the confusion over organizational ethics. McCahery, J.A. and Vermeulen, E.P., 2014. Six components of corporate governance that cannot be ignored. Schwartz, M.S., 2013. Developing and sustaining an ethical corporate culture: The core elements. Business Horizons, 56(1), pp.39-50. www.ancor.org Read More