Upload
darshil-khadkhad
View
246
Download
4
Embed Size (px)
Citation preview
8/2/2019 Chapter-11 Becg Ppt
1/21
P R E P A R E D B Y :
H I R A L S H A H
M A Y A N K P A N C H A L
D A R S H I L K H A D K H A D
Chapter-11Ethics and Corporate Governance
8/2/2019 Chapter-11 Becg Ppt
2/21
Ethics and corporate governance
Ethics :
'moral values and principals'.It is a decision of choosingright among wrong and right.
Corporate governance :
An lnternal system encompassing policies,process andpeople,which serves the needs of shareholders,and otherstakeholders,by directing and controlling managementactivities.
8/2/2019 Chapter-11 Becg Ppt
3/21
SIGNIFICANCE OF ETHICS IN CORPORATEGOVERNANCE
Ideally,corporate governance should aim to integrate and directthe resources and efforts of a company in a manner that enablesit to accomplish its vision,mission and goals.
However,attaining vision and mission needs the support of
appropriate company strategy and policy which should beethically correct-for sustainibility.
Businesses fails because of:- lack of transperancy in operations.
- closed-loop opeartions to benefit fewprincipal stakeholders.
- cutting corners of regulatory provisions.- lack of care for investing public.
8/2/2019 Chapter-11 Becg Ppt
4/21
Ethics equally applicable to all business
Finance
Manufacturing
Service
IT-industries
Any other institutions or orgs.
System
Through which these businesses produce &distribute goods and services in a society andserve its customers,employees,suppliers and allother stakeholders.
8/2/2019 Chapter-11 Becg Ppt
5/21
Business goals with Ethics and CG
Ethics and corporate governance should be reflected incompanys business goal.
It is not enough for a company to create environmental &socialvaluesthrough in CSR programme;it is necessaryto build and implement these concepts into thecompanys corporate governance strategy.
Business practice for good governance must show deepconcern and respect-expressed through dailybnessprocesse for the welfare of employees,associates,its socialenvironment,for the needs of its customers,and for the
environment and ecology.
8/2/2019 Chapter-11 Becg Ppt
6/21
Contd
It should also be commited to ethical practises forpricing and supplies,for regulations which haveevolved with a view to take care of potential risks anddamages to investors,society,other stakeholders.
8/2/2019 Chapter-11 Becg Ppt
7/21
VALUE CREATION
BRAND VALUE
SOCIAL VALUE
ECONOMIC VALUE
ETHICS GOVERNANCE
8/2/2019 Chapter-11 Becg Ppt
8/21
ADDING VALUE TO THE ORGANISATION IN ETHICALSUSTAINABLE MANNER
In a competitive,free market environment,a company muststand the test of BRAND IMAGEfor success in the marketplace.
Brand image is mostly the result of SOCIAL VALUEcreations which in turns attractscustomers,clients,employees,vendors alike.
If social value is the force that drives the company in theexternal market,ECONOMIC VALUE is important for its
stakeholders.
8/2/2019 Chapter-11 Becg Ppt
9/21
CORPORATE GOVERNANCESTRUCTURING
The basic purpose of corporate governance structuringis..
To motivate and control executive and employees torespect and retain fair business practices.
Effectively utilise various resourses.
To maximise efficiency of a business foreconomic,moral,social and environmental benefits ofthe stake holders.
WITH CHANGING BUSINESSENVIRONMENT,THE TASK OF CORPORATEGOVERNANCE MUST ALSO CHANGE.
8/2/2019 Chapter-11 Becg Ppt
10/21
Contd..
- Without ethical guidance,governance would loose its directionand purpose.
- Companies would fail to create value themselves without holdingonto moral principles and ethical standards for decisions andactions.
- In fact,CG is the journey towards creating sustainable growththrough continuous value edition to the organisation-creating anenvironment beyond the self; creating faith in the collectiveentity and creating a sense of spiritualism whilst doing things.
8/2/2019 Chapter-11 Becg Ppt
11/21
Ethically a business must:
Adopt a transperant policy of management and governance abiding byrules & regulations and laws,codes of best practices and the principle ofholistic approach.
Adopt a principle approach to product/service design for customers andconsumption by the society.
Be fair inbness goals,and transparent in market dealings.
Listen to and communicate with people and customers with honesty andintegrity.
Make efforts to reach out to all in the community and the society.
Protect and promote health and safety,enironment in the society becausethey are the base support on which businee stands and grows.
8/2/2019 Chapter-11 Becg Ppt
12/21
Components of Japanese CG
Leadership charged with moral responsibility
Deep concern&care for employees
Respect for customers
Commitment for fair bness practice Exellence through creativity
Discipline in thoughts,deeds&actions
Consciousness for social responsibility
8/2/2019 Chapter-11 Becg Ppt
13/21
8/2/2019 Chapter-11 Becg Ppt
14/21
Improving ethics in corporate
In improving the corporate governance via ethical means it is importantto first understand the important features of modern features such as:
Not confined to one locationContinuously changing environment and economical conditions
A business is greatly affected by the global financial and business
environmentThus model of corporate governance should that which is robust enough toadapt to situational variations with assured sustainability of businessA good corporate governance need to ensure that business process are:
Fair and Transparent
Respectful to customs and culture of the countryFollowing government regulations, trade agreements, tariffs, labourlaws etcConcerned about interest of minoritiesConcerned about well being of society
8/2/2019 Chapter-11 Becg Ppt
15/21
The aim of good corporate governance is to create not only economic
value but also social value for the sustainability of the business.This dual aim could be achieved only through the means of ethics andethical conductThe companies may try to achieve the short term economic advantageby overlooking ethical responsibility but it cannot be sustained to long
term. Many companies such as Enron, Lehman brothers have faced this.In indian, many organisations still do not fully apreciate the sinificanceof ethics in corporate governance and this is evident from the reportsabout violation of tax, pension fund etcSuch behavior affects the interest of shareholders,society,suppliers,employes etcThe good governance is the proper mixture of ethics and managementto achieve the companiys mission and vission
8/2/2019 Chapter-11 Becg Ppt
16/21
Holistic nature of corporate governance
Governance
Big S Big S
Regulators/society
Enviroment
8/2/2019 Chapter-11 Becg Ppt
17/21
The three essential component of the corporate governance are:SocietyEnvironmentStakeholders
The aim of corporate governance should be to:To promote culture of ethics in corporate decision and actionsEnsure fairness. Justice and equity to all connected with the
businessCorporate governance must also go beyond the law because loopholes of the laws are sometimes used for unethical practicesCorporate governance should be empathic to the interest ofemployees and society along with enhancing the earnings of the
shareholders and promoters
8/2/2019 Chapter-11 Becg Ppt
18/21
Along with improving internal enviroment companies shouldalso focus on improving external factors such as:governmentrules and regulations, trade pacts, labour laws etcMost of companies rely on feedback control system of ethics togovern the internal factors however instead companies should
use feed-forward which tend to rely on prevention of causes andpromotion of ethical cultureThe governance of internal controls is largely focused oncontrolling financial irregularities to control the damages tostakeholdersThe governance of external controls is largely focused onethical compliance to laws, agreements , social cultures, interestof those who affect the business etcCSR are also considered by many companies to achieve socialvalue
8/2/2019 Chapter-11 Becg Ppt
19/21
Total ethical practice(TEP)
It s a new strategy introduced to promote ethical practices
The aim of TEP is to prevent the occurrence of misconduct,ensure just and equitable protection,promote fairnessfocus on the vision and mission of the company
8/2/2019 Chapter-11 Becg Ppt
20/21
Steps in TEP
Identify moralguidelines for
governance andoperations
Monitor measurecontrol and preventwrongdoings
Manage the executionand operation byethics driven policydeployment
Understand ethicalimplications anddirections of theseexecutive process
Identify executiveprocesses that arecritical for success
8/2/2019 Chapter-11 Becg Ppt
21/21
Another important aspect of corporate governance is leadership.
leadership refers to the top managementThe task of leadership does not only include controlling the acts in theorganization but also to contribute to policy framing that ensure fairnessand justice in the organizationLeaders should believe that the value of organization is not only indistributing dividends or carrying out expansion but to create sustainable
value for self and societyLeaders are expected to establish and maintain equilibrium of objectivesthat are beneficial for not only shareholders but also other stakeholderslike employees, customer, society etc.Thus good corporate governance means the companies should carry out
their business in ethical way by controlling internal and external factors toobtain proper balance between its vision mission and benefit of society