Ethics Codes and Corporate Culture

This assignment examines the crucial role of ethics codes in shaping a strong ethical culture within companies. It analyzes how well-designed ethics codes can contribute to long-term success by aligning incentives, promoting transparency, and enhancing stakeholder trust. The discussion also explores the importance of international standards for ethics codes and their potential to drive positive economic and social impacts on a global scale.

Running head: CORPORATE GOVERNANCE AND ETHICS
Corporate governance and ethics
Name of the university
Name of the student
Authors note

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CORPORATE GOVERNANCE AND ETHICS
Table of Contents
Part A:..............................................................................................................................................2
Introduction:....................................................................................................................................3
Discussion:.......................................................................................................................................3
Identifying relationship between gender diversity and business performances:.............................3
Recommendations on initiating gender diversity policy for board of Woolworths:.......................5
Conclusion:......................................................................................................................................6
Introduction:....................................................................................................................................8
Discussion:.......................................................................................................................................8
Benefits of adopting corporate code of ethics:................................................................................8
Explanation of examples of corporate governance failure and malpractices in relation to their
benefits:............................................................................................................................................9
Recommendations:........................................................................................................................11
Conclusion:....................................................................................................................................11
References list:...............................................................................................................................13

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Part A:
Executive summary:
The report demonstrates the importance of employing gender diversity policy in the corporate
programs of organization. It deals with the explanation of issues concerning gender diversity and
increased requirement of women presenting the boards. It provides with the assessment and
analysis of evidence of association between performance of business and gender diversity.
Company that has been selected for the facilitation of their corporate governance programs is
Woolworths. Later part of report deals with recommendations that are provided to board of
Woolworths for incorporating policy of gender diversity.

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Introduction:
The report is prepared to assess the gender diversity evidence on the board of company
and its association with improved business performance. Corporate governance professional is
entitled to frame the gender diversity policy and how it helps organization in improving their
performance. Woolworths being listed on Australians stock exchange is one of the companies
seeking to address the issues related to gender diversity. According to organizational level, there
is a variation in gender diversity and identification of information relating to gender balance in
the entity is essential. Gender diversity at board is the key to successful and better corporate
governance (Crane and Matten 2016). It has been ascertained that in recent years, performance of
firms and share of women on board of directors has received attention. This report intends to
provide Woolworth with views on importance of gender diversity on business performances and
recommendations on initiating gender diversity policy.
Discussion:
Identifying relationship between gender diversity and business performances:
The association of gender diversity with improved business performances is explained by
the theoretical reasons. There could be better understanding of markets with gender diversity as
market is itself regarded as diverse in gender terms, and could increase innovativeness and
creativity. Since there will be availability of more alternatives along with evaluation of their
consequences, it will lead to improved process of decision-making. It would influence the
company in positive way and thereby helps in improving performance. Gender diversity on
company board provided company with benefits of better utilization of talent pool, more
effective decision making and enhancement of investor relations and corporate relations by

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establishment of company as a responsible corporate citizen. The diversified board members
come with different personal characteristics that create dissimilarity in thinking, leadership,
behavior, emotional styles and risk preferences (García et al. 2015). A balanced board in terms
of gender will have more representatives of customers of its products and users in the boardroom
for making more inform judgment. Woolworths operates in customer facing industries and
incorporating female directors in the board will especially important as it helps in addressing
stakeholder’s claim in more responsive manner. Directors are required to have better
understanding of claims of diverse stakeholders in relation to customer needs.
Understanding of customer preferences will be enhanced by adopting corporate board
with female presentation. More representation of women will lead to creation of balanced board
and thereby enabling making more informed judgment. An assortment of skills and knowledge is
offered by gender diversity and there will be better engagement and higher engagement of
diverse workforce (Soltani and Maupetit 2015). Evidence suggests that average performance of
company will improve by greater team diversity and response to minority involvement.
Furthermore, there exist differences between men and women leadership style and women are
ascertained to be better at defining responsibilities, coaching and mentoring employees.
Therefore, a better balance concerning leadership skills within company will be fostered by the
gender diversity degree at the board level.
80% of purchasing decision is made and influenced by women and in light of this aspect,
it is recommended to board of company to include the concept of gender diversity. It is so
because it will provide company with opportunity of tapping into crucial buying group. Value of
involving into women into business operations and business implementation plan is recognized
in terms of customer relationship management, services and products and buying power of

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women in branding. Incorporating women in the board will lead to creation of divergent views
that promotes greater diligence in risk management and decision-making (Mason and Simmons
2014). It has been established from academic research that divergence groups in business
environment outperform homogenous groups. Analysis of Mckinsey study depicts that the
financial performance of company with two or more women in the functions of senior
management is better than companies with no women in the board membership. Companies with
women inclusion in board have outperformed in their sectors such as operating results, return on
equity and growth of stock price (Rugman and Verbeke 2017).
Recommendations on initiating gender diversity policy for board of Woolworths:
 For the implementation of gender diversity policy at the board, nomination committee
and chairman plays a significant role. In order to create a well functioning team, it is
required by chairman to support and commit mentoring, providing adequate training and
networking to member of board.
 Moreover, consideration should be given by nomination committee of Woolworths to
make establishment of formal recruitment policy with reference gender diversity required
for board, nature of business as well as business strategies.
 The overall equality gender performance at Woolworths will improve resulting from
increasing female representation across all functions and at all levels of management. It
will help in increasing attraction, providing inspirational role models and retaining high
performance women. Health of successful pipelines of business of Woolworths can be
built by increasing women presentation at board by retention and sourcing of key female
talent (Jain and Jamali 2016).

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 It is recommended to Woolworths to explicitly incorporate measurable objectives of
gender diversity in their policy of gender diversity. Managers at different organizational
levels should be assigned to specific gender equality key performance indicators. Such
indicators would be related to increasing gender diversity on project team and recruitment
shortlist. Corporate governance programs of company should imbibe female friendly
policies and flexible working policies targeting women (Mason and Simmons 2014).
 The guidance pertaining to gender diversity policy of Woolworths should recognize ways
of promoting corporate culture that embraces gender diversity. It should take into
consideration factors in process of selection and appropriate candidate identification.
Policies leading to equal pay for women with equal work should be incorporated in the
principles of corporate governance of company (Martin et al. 2016).
 Gender bias should be removed from pipeline development, recruitment and successful
planning. Woolworths should take efforts to eradicate biased recruitment practices,
unearned advantages of majority groups and mate ship in the culture of business code of
conduct (Crane and Matten 2016). In an attempt to bringing gender diversity on
company’s board, company should enhance the availability of options of quality
childcare and flexible practices of workplace.
Conclusion:
From the above discussion, it can be inferred that exist positive correlation between the
gender diversity policy and over performance of firms. For the organization such as Woolworths
operating in consumer facing industries, inclusion of women on board will help in contributing
to business development. Therefore, it would be preferable to incorporate gender diversity policy
in their corporate governance program.

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Part B:
Executive summary:
The report is prepared on behalf of board of directors of Woolworth group that deals with the
advocating of benefits of code of ethics to the shareholders of company. Shareholders are
explained the importance of code of ethics by incorporating examples and evidence from the
cases of failure and malpractices of corporate governance. The two cases that have led to
downfall of business due to improper corporate governance practices include HIH Insurance and
National Australian bank. These two cases provide the unethical practices on part of
management that had led to their profit erosion. Later part of report depicts recommendations on
adaption of code of ethics.

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Introduction:
The report is prepared to advocate the benefits of adopting code of ethics by company
and is intended to make shareholders acquaint with the same. Activities of any particular
profession are defined by its code of ethics and that requires practice and behavior to go beyond
personal moral obligations. High behavior standard is demanded by such codes in regard to
products or services that are provided to the public. It is believed that there are two prominent
roles played by code of ethics that it leads to professional behavior promotion by society
members and promoting value of employing people to the business sectors and government (Tai
and Chuang 2014). The concepts of code of ethics are explained in this report by taking evidence
from cases of malpractice and corporate governance failure that require companies to adopt code
of ethics.
Discussion:
Benefits of adopting corporate code of ethics:
Evaluation of degree of commitment concerning responsible and ethical behavior
requires individual and stakeholders to view their code of ethics. It is reasonable to make the
assumptions that values that code of ethics development for superficial reasons such as image of
company and public image leads to internal commitment and values are deeply internalized such
as moral considerations beyond code of ethics lead to high commitment.
 Adopting code of ethics by companies is done basically for protecting their public
interest. Code of ethics can be regarded as an effective tool against the corporate
corruption by keeping employees behaviors under control so that wrongdoing having
social and economic adverse effects can be prevented.

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 Business conduct policy helps in responding to social and consumer pressure concerns,
protecting and improving reputation of corporate by involvement of community and
emphasizing on corporate social responsibility and creating limitations on negative
externalities. It helps companies to avoid negative social media and actually providing for
public goods.
 The importance of corporate code of ethics is realized by stakeholders, corporation and
community that bear the impact of corporation activities (Tricker and Tricker 2015).
Moreover, another benefits received by company through code of ethics is its capability
of adjusting in accordance with the needs of company. For the sanctioning and prevention
of immoral and illegal behavior of employees, companies enforcing such rules help in
prevention of such acts.
 Companies can use code of ethics as an evidence to explain the fact that employee had
knowledge and acquaintance with the prohibited action or activities and it has taken pro-
active efforts in their prevention. There can be increased profitability and higher financial
gains for company adopting code of ethics.
 A clean marketing image is generated for companies adhering to their code of conducts
and helps in serving public and private interests.
Explanation of examples of corporate governance failure and malpractices in relation to
their benefits:
The cases are about failure of two Australian organizations resulting from their inefficient
corporate governance structure and not adhering to their code of ethics and conduct.
Case of National Australian bank (NAB) provides a major corporate lesson that
demonstrates the need for sustainable and proper code of ethics and culture within the

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organization. NAB in year 2004 made an announcement about losing its foreign trade currency.
Organization focused exclusively on documentation rather than taking trader’s responsibility and
addressing substance of issues (Cheng et al. 2014). There was a major gap in cultural fabrics of
organization that led to low level of employee engagement and losses generation. Although there
was agreed set of values and values did not reflect in assessment of people and there was
voluntary change in culture programs. This made the bank focus only on short-term profit
generation and ultimately loss (Cummings and Durrani 2016).
In this particular case, it can be seen that behaviors of employees can be kept under
control and this had led to adverse impact on finance of business. NAB could not prevent illegal
and immoral behavior of employees because of lack of proper code of ethics and their practicing.
Another case to be presented here is the failure of large insurance company that is HIH
insurance due to their corporate governance structure. Failure of this company is considered as
biggest corporate governance failure in Australia. Management of HIH failed to effectively
monitor and enforce the due diligence practices. It has been ascertained that some of the
independent directors at the company board were misled about the true financial position of HIH
Insurance. High risk practices in an extremely competitive market were employed by
management of organization along with its dominating and charismatic CEO who did not adhere
to the principles of corporate governance. Public and investors of company were duped about the
financial position and there was lack in their code of conduct that made employees to involved
themselves in conducting immoral activities (Damiani et al. 2015). The failure of HIH Insurance
is attributable to conflict between adherence and implementation of code of ethics and profit
maximization.

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Failure of HIH Insurance has been due to incompliance with the adopted code of ethics
that did not prevent occurrence of wrongdoing of companies. The explanations should make very
clear to shareholders about the importance of companies adhering to code of ethics.
Recommendations:
From the above discussion of the cases of corporate governance failures, it seems that
companies develop code of ethics as pressure from government on corporate social responsibility
as a mere response.
 The code of conduct and ethics are insufficient when company performs such failure and
malpractices. It is believed by public that corporations adopt code of ethics as marketing
tool for attracting investor’s sympathy and customers and thereby promoting them on
ground of ethics. Therefore, it is required by organizations to frame their code of ethics
so that it can tackle immoral and illegal activities of management and taking actions
promptly.
 Companies such as Woolworth should continually engage in scrutiny of their code of
ethics efficiency. The current dimensions of corporate social responsibility such as
integrity, accountability, transparency, efficiency and professionalism in terms of legal,
social and economic requirements should be focused and helps in serving needs of
corporate and public as a whole.
Conclusion:
The above discussion provides shareholders with the elaboration of importance of
companies adopting code of ethics. Adoption of code of ethics is of utmost importance for
companies, as it will help them in addressing situations that might bring their demise. However,

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it can be ascertained that it is challenging companies to create a culture where ethics rule.
Nevertheless, code of conduct has the likelihood of becoming long-term, investment on part of
companies if they are drafted in accordance with common international standards and making
their existence mandatory all around the world. This will assist companies in brining economic
and social benefits as well.

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Cheng, B., Ioannou, I. and Serafeim, G., 2014. Corporate social responsibility and access to
finance. Strategic Management Journal, 35(1), pp.1-23.
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sustainability in the age of globalization. Oxford University Press.
Cummings, J.R. and Durrani, K.J., 2016. Effect of the Basel Accord capital requirements on the
loan-loss provisioning practices of Australian banks. Journal of Banking & Finance, 67, pp.23-
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Damiani, C., Bourne, N. and Foo, M., 2015. The HIH claims support scheme. Economic Round-
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sustainability. European Management Journal, 34(1), pp.22-35.

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Mason, C. and Simmons, J., 2014. Embedding corporate social responsibility in corporate
governance: A stakeholder systems approach. Journal of Business Ethics, 119(1), pp.77-86.
Rugman, A.M. and Verbeke, A., 2017. Global corporate strategy and trade policy (Vol. 12).
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