CHAPTER FOURTEEN INSTITUTIONALIZATION OF ETHICAL GOVERNANCE FOR CORPORATIOTIONS
Why corporate code?
How can managers implement the code? Have corporations failed the people?
Oxford University Press 2009. All rights reserved.
1 Code of Conduct
EXEMPLARY CODE
Oxford University Press 2009. All rights reserved.
2 : A Code to Emulate 25 Clauses of the Code of Conduct For details visit: http://www.tata.com/default.aspx 1. National Interest 14. Use of the Tata brand 2. Financial reporting and records 15. Group policies 3. Competition 16. Shareholders 4. Equal opportunities employer 17. Ethical conduct 5. Gifts and donations 18. Regulatory compliance 6. Government agencies 19. Concurrent employment 7. Political non-alignment 20. Conflict of interest 8. Health, safety and environment 21. Securities transactions and 9. Quality of products and services confidential information 10. Corporate citizenship 22. Protecting company assets 11. Cooperation of Tata companies 23. Citizenship 12. Public representation of the company 24. Integrity of data furnished and group 25 Reporting concerns 13. Third party representation
Oxford University Press 2009. All rights reserved.
3 Rationale of Codes As a road-map: To be sure about ones role and goal in an organization
Oxford University Press 2009. All rights reserved.
4 Debate
CODE OF CONDUCT HAMPERS
ORGANIZATIONS GROWTH
Oxford University Press 2009. All rights reserved.
5 The rats and the cat
WHO WILL BELL THE CAT?
Oxford University Press 2009. All rights reserved.
6 Implementation woes No one doubts the rationale of code of conduct No one doubts its validity and benefits But WHO will implement effectively the code? MANAGER Unless a teacher instructs the pupil will not learn Unless a doctor administers medicine the patient will not be healed Unless the manager manages organization will not run Oxford University Press 2009. All rights reserved. 7 Best Manager Case Steven Reinemund (2004) CEO, PepsiCo Inc. Greatest achievement: Developing people more than products Business Philosophy: To be a leader in consumer products, it's critical to have leaders who represent the population we serve. Implementation of programme: A) Every member of the top management was involved in mentoring employees and B) monitoring response of the customers by being right there where the customers are, thus creating what is known as deepest executive bench and C) every member of the senior rank was part of the exercise Practice what you preach brought resulted in abundant achievement Consistent double digit growth, even in lean times; outperformance of the nearest competitor Coca Cola; and the shareholders are extremely happy and expect the management to take bold steps to diversify Source: http://www.businessweek.com (Jan. 2005 Best and Worst Mana)ngers
Oxford University Press 2009. All rights reserved.
8 Worst Manager Case Sanjay Kumar (2005), CEO, Computer Associates International (US) Began on good note of customer friendly service Financial management went out of hand Indicted for securities fraud and obstruction of justice All managers confessed irregularities They lost their jobs CEO still awaits trial
Source: http://www.businessweek.com (Jan. 2005 Best and Worst
Managers
Oxford University Press 2009. All rights reserved.
9 Discuss Importance of the code for managers Implementation of the code of conduct Exercising firmness Everyone to be involved in implementation Transparency in implementation of the code
Oxford University Press 2009. All rights reserved.
10 Loss of purpose
THE FAILED CORPORATION
Oxford University Press 2009. All rights reserved.
11 Roche: No more life saver Roche is worlds premier pharmaceutical Swiss company Fuzeon is the lifesaving drug for AIDS patients Roche holds monopoly over Fuzeon USD 25,000 is the price tag for the years course There is no discount for even developing countries Even developed countries such as S.Korea with a per capita income close to USD 20,000 are not able to buy the drug The head of Roche Korea bluntly said: We are not in business to save lives, but to make money.
Epilogue: Roches market share has been declining rapidly.
Oxford University Press 2009. All rights reserved.
12 Exercise Make a list of the failed corporations Find reasons for their failure As a manager what would you have done to save them As a manager what would you do to revive them
Oxford University Press 2009. All rights reserved.
13 THANK YOU
Oxford University Press 2009. All rights reserved.