BUSINESS ETHICS AND CORPORATE GOVERNANCE

BY, MEENAL JAIN MBA (IGNOU) IV SEMESTER 112162621

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Q1. Explain why good corporate governance is a question of ethics. ANSWER. What is corporate governance? Corporate governance refers to the set of systems, principles and processes by which a company is governed. They provide the guidelines as to how the company can be directed or controlled such that it can fulfil its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term. Stakeholders in this case would include everyone ranging from the board of directors, management, shareholders to customers, employees and society. The management of the company hence assumes the role of a trustee for all the others. Why is it important? Fundamentally, there is a level of confidence that is associated with a company that is known to have good corporate governance. The presence of an active group of independent directors on the board contributes a great deal towards ensuring confidence in the market. Corporate governance is known to be one of the criteria that foreign institutional investors are increasingly depending on when deciding on which companies to invest in. It is also known to have a positive influence on the share price of the company. Having a clean image on the corporate governance front could also make it easier for companies to source capital at more reasonable costs. Unfortunately, corporate governance often becomes the centre of discussion only after the exposure of a large scam. Why was it in the news recently? Corporate governance has most recently been debated after the corporate fraud by Satyam founder and chairman Ramalinga Raju. In fact, trouble started brewing at Satyam around December 16 when Satyam announced its decision to buy stakes in Maytas Properties and Infrastructure for $1.3 billion. The deal was soon called off owing to major discontentment on the part of shareholders and plummeting share-price. However, in what has been seen as one of the largest corporate frauds in India, Raju confessed that the profits in the Satyam books had been inflated and that the cash reserve with the company was minimal. Ironically, Satyam had received the Golden Peacock Global Award for
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Excellence in Corporate Governance in September 2008 but was stripped of it soon after Raju's confession. Business Ethics Business Ethics is a specialized study of moral right and wrong. It concentrates on moral standards as they apply particularly to business policies, institutions, and behavior. Ethical Issues Relate to all Functional Areas Accounting Finance Management Marketing Role of Ethics in Corporate Governance Corporate governance codes work only where firms believe that working in a legal, ethical and transparent fashion also means good business. It is not in dispute that good corporate governance is all about commitment of a company to run its businesses in a legal, ethical and transparent manner, and that the tone must be set at the top. Corporate Governance: A question of ethics The phrases "Socially Responsible", "Corporate 'Social Responsibility", a "The Social Responsibility of Business" are at times used as though they were synonymous with business ethics. But this can be misleading if it is taken to imply that business ethics deals exclusively with the relationships between business organizations and what have come to be called their" external constituencies such as customers, suppliers, government agency , community groups and even host countries. For while these relationship define a large and very important sub-domain of business ethics, they do not exhaust the field, there remain equally important "internal constituencies" (employees, stockholders, boards of directors and senior executives) as well as ethical issues that do not lend them- selves to "constituency" or stakeholder analysis. Thus, business ethics is a more embracing field of inquiry than corporate social
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responsibility, even though it includes the latter. Questions, like moral responsibilities, obligations and virtues in business decision making also form part of ethics e.g. choices and character of persons, the policies and cultures of organization. The subject of business ethics, therefore, is multi-leveled. At the level of the individual ("the ethics and values of business person"), attention is paid to the values by which self-interest and other motives are balanced by concern for fairness, properness, right / wrong and the common good, both within and outside the company. At the level of the organization ("the ethics of a business enterprise"), the focus is on the spoken or unspoken group consciousness that every company has either by design or by default, as it pursues its economic objectives. Finally, at the level of society itself (" the ethics of business system"), business ethics examines the pattern of cultural, political and economic forces that drive individuals and firm's values that define democratic capitalism in a global environment. The ethics of Corporate Governance is therefore; the determination of what is "right", "fair", "proper" and "just" in decisions and actions that affect other people -goes for beyond simple questions of bribery, theft and collusion. It focus on what our relationships are and ought to be - with our employees, our customers, our stock holders, our creditors, our suppliers, our distributors, our neighbors and other members of the community / society in which we operate. Q2. Describe in detail the interpersonal relationships in organization, taking into account the role of opportunity and conflict. ANSWER. INTERPERSONAL RELATIONSHIPS AT WORK A corporate or workplace culture is a set of behaviors and codes that people use to interact with each other. This includes formal, written company policies and informal rules that we learn with experience. A move to a new job adds to the stress of a new work situation; if we move from a large, formal corporation to a small creative business where everyone dresses casual and uses first names only, we are going to have some adjusting to do. Behaving in an appropriate manner for our previous job could risk your being labeled as distant or unfriendly by our new coworkers. The reverse situation may also happen when we leave an informal training environment
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we may have to adjust to a good deal more formality and hierarchy in a new role. In any new job situation, we should first allow enough time to analyze the workplace culture and change our habits accordingly to reduce undue stress. To evaluate our new workplace culture, we should consider the following: LeadershipWhat is our bosss role? How are evaluations delivered? In regular formal reports or memos, or as casual comments? This will depend on the individual and his or her own management style; it is certainly fair to ask our new boss what can we expect in terms of feedback. HierarchyHow defined is it and how rigidly do coworkers adhere to a hierarchical structure? Where exactly is our position in this system? Are we expected to train or advise others? If so, how formal should our relationship be with those under our supervision? TeamworkAre projects and information shared or are we expected to work entirely on our own? Are ideas shared freely at brainstorming sessions or saved for meetings with the boss? Are our coworkers pleased or offended when we offer suggestions about their work? If this seems unclear, we might consider discussing the level of expected teamwork with them. Ask first. Communication styleIs information conveyed formally, in writing, or at scheduled conferences and meetings? Is word of mouth the preferred system? If we want to communicate our ideas, do we email the group, send out a printed memo, or share them with those colleagues you happen to meet in the corridor? Effective communication is a must for good stress management, and everyone may need to make compromises to achieve an efficient style that works for our group. AppearanceIs there a dress code? Is it a formal written policy? If not, we may want to adopt our coworkers style for a while before trying out a different approach. Although individuality and creativity may be valued in our new job, we have to find out if this applies to personal appearance as well. We will avoid the stress of being the subject of our new coworkers gossip and offhand comments. Our workspaceAre offices, desks, and cubicles filled with family photos, kids drawings, and potted plants? Give yourself some time before changing
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your workspace. Do people snack or lunch at their desks? Can you drop by another coworkers office unannounced to have a chat? Even seemingly trivial details like leaving doors open vs. closed can convey signals to your fellow workers. Office friendshipsIs the group friendly and open? Is it common to know personal details of our coworkers significant others? Is there a high level of openness and disclosure of personal matters among colleagues? INTERPERSONAL CONFLICT When two individuals have different opinions and neither of the two is willing to compromise, conflict arises. A state of disagreement among individuals is called as conflict. Conflict arises at workplace when employees find it difficult to reach to mutually acceptable solutions and fight over petty issues. Differences in attitude, mindsets and perceptions give rise to conflicts at the workplace. No one ever has gained anything out of conflicts. Conflict must be avoided as it leads to negativity and spoils the ambience of the workplace. How to manage conflicts in interpersonal relationship at workplace ? Conflicts play an important role in spoiling relationship among employees at the workplace and must be controlled at the initial stages to expect the best out of individuals.

For individuals, organization should always come first and all other personal interests must take a backseat. Fighting with fellow workers on petty issues is childish. Be professional. Do not take things to heart at the workplace as no one is working for himself or herself. You might not like someone elses style of working but remember ultimately the organization must benefit out of it. An individual ought to respect his colleagues. Treat your fellow workers as members of your extended family. Ignoring minor issues helps in avoiding conflicts in interpersonal relationship. Try to understand your colleagues point of view as well. Avoid lobbying at the workplace. An individual should keep his personal and professional life separate. Do not favour anyone just
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because you like the individual concerned or you know him personally. At work, every employee irrespective of his family background and relation with the management needs to be treated as one. Ignoring or bad mouthing someone just because you do not like him is simply not acceptable. Such things give rise to unnecessary stress and eventually employees fight and spoil relationships amongst themselves. You need people around who can give you suggestions and help you when required. You cant work alone.

Remember there is a difference between being aggressive and rude. A sense of competition is essential among employees but make sure you adopt healthy means to prove yourself. Jealousy, backbiting, criticism, leg pulling give rise to disagreements among individuals and spoil their relationships. Think before you speak. Do not hurt anyone. There are several other ways to express your displeasure at work. Do not overreact at workplace. Stay calm and composed. Avoid being arrogant. Be polite to everyone. Greet people and do enquire about their well being. A simple smile goes a long way in managing conflicts and strengthening interpersonal relationships at workplace. Evaluate issues carefully. Do not jump to conclusions. It is always better to sort out differences amicably rather than fighting and spoiling relationships. Voice your concerns in an open platform and try to reach to a conclusion mutually acceptable to all. Do not always see your own personal interests Learn to control your emotions. Communicating effectively reduces the chances of errors and eventually manages conflicts amongst employees at the workplace.

Interpersonal Relations: An Opportunity Strong positive interpersonal relationships are essential to achieving success whether they be work relationships, family relationships or relationships with others in our communities. Were in almost constant contact with others and we should make every contact an opportunity to strengthen our social skills and reinforce our relationships.
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Your work environment is defined to a great extent by the kind of relationship you share with your colleagues and with the management of your organisation. Having a good interpersonal relationship at your workplace will help you develop a mutual understanding with other employees and the management. Having a good interpersonal relationship at work will help in better teamwork, which will be guided by better understanding among the employees. Good relations among the employees at workplace will lead to better productivity and less conflicts and issues to handle. Good interpersonal relationships at workplace provide a good environment for the employees to work in. Employees will feel like getting to work and attaining goals in such an environment. Better understandings among the employees will also reduce the conflicts between them. A good interpersonal relationship among the employees will create an environment which will be welcoming and which will boost the morale of the employees and will inspire them to deliver quality work.

BIBLIOGRAPHY

Sadri, S. and Jayashree, S. (2006): Business Ethics and Corporate Governance [Towards Organisational Excellence] , Pearson Publication, 12-16 www.nfcgindia.org/ www.ethics.org.au csr-news.net/main/2010/.../corporate-governance-and-ethics www.ethicsworld.org/corporategovernance/corporateethicscodes.php www.managementstudyguide.com/interpersonal-relationship.htm

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