Download - Corporate Governance & Ethics; CSR, values
DEFINITION
CG is defined as holding the balance between economic and social goals & also between individual and communal goals
By Sir Adrian Cadbury
Corporate Governance is stated as course of conduct that is managed by various ethical approach.
EFFECT OF CG
1. Right of shareholder2. Equitable treatment of shareholder3. Role of stakeholder in CG4. Disclosure and transparency5. Responsibilities of the board
PRINCIPLES OF CORPORATE GOVERNANCE
1. Ensuring the Basis for an effective Corporate Governance Framework
2. The Rights of Shareholders and Key Ownership Functions
3. The Equitable Treatment of Shareholders4. The Role of Stakeholders in Corporate
Governance5. Disclosure and Transparency6. The Responsibilities of the Board
BENEFITS OF GOOD CG
1. Congruence of interest of boards, management
2. Stability and growth to company3. Confidence in investors4. Reduce risk and cost of capital5. Motivate employees to acquire and develop
skills6. Competitive advantage in financial market7. Relationship with enterprise
It deals with problems that results from the separation of ownership & control
Shareholders
Boards
Management
Employees
ROLE OF BOARD OF DIRECTORS
Definition of DirectorA Director may be defined as a
person having control over the direction, conduct, management or superintendence of the affairs of a company
Definition of BODThe Board of Directors of a
company includes all directors elected by shareholders to represent that their interest is vested with the power of management
STRUCTURE OF BOARD OF DIRECTOR IN INDIA
BOD
Executive Director Non-Executive Director
Independent Director Nominee Director
ROLE
1. Commitment2. Clear their stand3. Efficient CEO4. Anticipate business events5. Meet demand of market place6. Earn profit for shareholder, ethical and
social obligation to society throughi. Transparencyii. Pay for performanceiii. Process for determinationiv. Severance paymentsv. Pension for non-executive Directors
CONTD…….
7. Steer discussions8. Long term focus and shareholder interests9. Promoting overall interests of the company
RIGHTS OF SHAREHOLDERS
1. Voting power2. Right to increased share values3. Right to transfer ownership4. Dividend Entitlement5. Right to inspect corporate books & records6. Suing for wrongful Acts
RESPONSIBILITIES OF SHAREHOLDERS
1. To remain informed2. To be vigilant3. To participate and vote in general meetings4. To exercise one’s right on one’s own or as a
group
ISSUES/PROBLEMS IN CG1. Distinguishing the roles of Board and
Management2. Composition of the board3. Separation of the roles of CEO and chairperson4. Board have committees5. Appointments to the board and director’s re-
election6. Director’s and executives remuneration7. Disclosure and audit8. Protection of shareholder’s rights and
expectations9. Dialogue with institutional shareholders
SECURITY EXCHANGE BOARD OF INDIA (SEBI)
History of SEBI
Members
1. Chairman
2. 2 members for finance and administration
3. 1 member from Reserve Bank
4. 5 members appointed by Central Govt.
Collective Investment Scheme
Finance, Accounts & Audit of SEBI
OBJECTIVES OF SEBI
1. Protection
2. Promotion
3. Regulation
4. Incidental
Functions
Powers
SEBI’s Role in promoting CG5. Disclosure Standards
6. Efficient and Effective market system
7. Reliable & Effective Enforcement
8. Highest Standard of Governance
ETHICS
Business ethics is the art & discipline of applying ethical principles to examine & solve complex moral dilemmas.
Why should business act ethically?
Unethical Issues
Benefits due to ethics
CORPORATE SOCIAL RESPONSIBILITY
To create positive impact with business.
Practical Steps to CSR
Scope of Social Responsibility1. Protecting & promoting shareholder’s interest
2. Social concern & promotion of common welfare programmes
3. Art of philanthropy
4. Good CG itself is SR
5. Corporate in the vanguard of rendering social service
6. Sponsoring social & charitable causes
7. Corporations should supplement state efforts
8. Ensuring ecological balance
CHAMBER OF COMMERCE REFERS 9 STEPS TO CSR
1. Confirm CEO
2. State company purpose
3. Identify key stakeholders
4. Define business principles and policies
5. Establish implementation, procedures and management system
6. Benchmark
7. Setup internal monitoring
8. Language that everyone can understand
9. Set objectives
Social through process
ETHICS
Ethics are some standardized form of conduct or behavior of individuals understand & accept in a particular field of activity.
Performance levels of ethics1. Societal level
2. Stakeholder level
3. Internal policy level
4. Personal policy level
BUSINESS ETHICSMoral principles that define right or wrong
behavior in the world of business.
7 Principles1. Be trustful
2. Keep an open mind
3. Meet obligations
4. Have clear documents
5. Become community involved
6. Maintain accounting control
7. Be respectful
3 C8. Compliance
9. Contribution
10. Consequence
ETHICAL DILEMMAS
1. Truth Vs Loyalty
2. Individual Vs Community
3. Short term Vs Long term
4. Justice Vs Mercy
Values for Managers5. Establish boundaries
6. Establish presence of fairness
7. Establish trust
8. Establish honesty
9. Establish the expectation & commitment
OBJECTIVES OF ETHICS1. Study human behavior
2. Establishes moral standards of behavior
3. Judgments
4. Moral behavior
5. Human conduct in general
Deals with Concept of
Human conduct Ethics
Nature of Ethics
Science of Study of Ethics
Ethics
MODEL OF ETHICS IN MANAGEMENT
Consumers shareholders Unions
Marketplace Work place
Environment Community
NGO/Govt Local
community
Impact on society
Quality of manageme
nt
DIFFERENT TYPES OF ETHICS
1. Transactional Ethics Principle of honesty Principle of reciprocity
2. Participatory Ethics
3. Recognition Ethics
Need for Business Ethics
Society Busines
s
INDIAN ETHOS
Principles
1. Potential and talent
2. Work as worship
3. TQM
4. Achieve highest human welfare
5. Character is power and wealth
6. Business is sacred
7. Self-introspection
8. Brain-stilling
9. Sound & prompt decisions
WORK ETHICS
4 P’s
1. Pay
2. Prospects
3. Promotion
4. Performance
Improving Work Ethics5. Man-making education
6. Sympathy for employees Attitude of sport towards work Taking to giving modes Master and not slave Renunciation & Service
3. Rewards and penalties
4. Discipline
5. Result of pride
6. Employee involvement
7. Developing attitude in work
GOOD WORK CULTURE
Values which get manifested in behavior of employees at work place as hard work, loyalty to organization, quality of work life, job satisfaction, etc
1. Productivity and Quality
2. Utilizing resources effectively
3. Worker development
4. Develops work culture
FACTORS HINDERING WORK CULTURE
1. Lack of sense of discipline & min work ethos
2. Lack of hard work & commitment
3. Too many holidays
4. Wasting resources, energy
5. Absence of spirit of nationalism
6. Poor quality of service & working condition
7. Absenteeism
8. Accidents/injuries
FEATURES OF INDIAN ETHOS AND INSIGHTS
Balance, harmony You are good, world is good Rights and privileges of individuals Knowledge of creation and creator.
Insights into Indian Ethos1. Management attitude
2. Humanizing organization
3. Interiorizing management
4. Self-introspection
5. Brain-stilling
6. Stepping Back
7. Self-dynamic Meditation
8. Role of Intuition in management
VALUES Relevance of values in management
Values shape Beliefs Perceptions Attitude
Behavior
Features1. Force affecting behavior
2. Content
3. Intensity
4. Change over time
5. Stable and enduring
6. Values differ
Importance of values
TYPES OF VALUES1. Instrumental
2. Terminal
3. Personal
Formulating values
Family influence
Peer influences Situational factors
Individual Ethics
Experiences Values and morals
ETHICS IN GLOBAL BUSINESS
Differences Foundation
Between in variance
each human in their personal
on earth value structure
people accept
these differences as
valuable than threatening
if peoplebecome more
familiar with this
HOLISTIC APPROACH FOR DECISION MAKING
Steps in decision making
1. Identify the problem
2. Generate alternative solution
3. Evaluate alternatives
4. Selection of solutions
5. Implement the chosen solution