Corporate Governance and Ethics: AMP Case Study

This report analyzes the deficiencies in the corporate governance system of AMP and the steps taken to protect the interest of whistleblowers and stakeholders. Strategies to avoid scandals are also discussed.

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Corporate governance
REPORT
10/19/2018

1 | P a g e Corporate governance
Executive Summary
Corporate governance can be defined as the practices and rules of an individual entity
which they use in order to give the directions and have controls on their activities. On the other
hand, the corporate performance can be defined as the indicator to showcase how well an
organization is complying with its short term and long term compliance program for the
sustainable future (Jo, & Harjoto, 2011). The relationship between both the terms is that the
corporate governance can be evaluated while using the performance indicators in the company.
This report has shown that AMP Company has strengthened its compliance program by setting
up effective corporate governance mechanism and also increased its busienss output throughout
the time.

2 | P a g e Corporate governance
Table of Contents
Executive Summary.....................................................................................................................................1
Introduction.................................................................................................................................................3
Deficiencies in the system...........................................................................................................................3
Culture followed in the AMP.......................................................................................................................4
Steps taken to protect the interest of the whistleblowers and stakeholders..............................................5
Strategies.....................................................................................................................................................6
Conclusion...................................................................................................................................................8
References...................................................................................................................................................9

3 | P a g e Corporate governance
Introduction
Corporate performance governance can be used simultaneously in the organization in order to
have the proper accounting of all the records and accounts in the company, all the turnover in the
management occur should be recorded in time and the performance of the company can be
known easily in the environment (AMP, 2018a).
Therefore, this report will highlight corporate governance and ethics system that should be taken
into considered by AMP so that activities can be managed in an ethical way. It has been analyzed
that there various deficiencies in the entire structure of corporate governance of AMP on which
the overall discussion will be made.
The last part of the report, focus on the overall analysis on the breakdown of AMP. In this
context there are various strategies which will be given for AMP so that the scandals which are
taking place can be managed or minimized.
Deficiencies in the system
In the structure of AMP, some deficiency has been finding out which are related to the culture
followed in the organization. These deficiencies are related to maintaining the accounting
standards in the organization. The company fails in keeping their accounting standards and
principles consistent throughout the year which makes their stakeholders dissatisfied. This will
bring the performance and governance on the backward side. The company has also breached
some of the ethical principles which resulted to breakdown in its business process. AMP has also
suffered from the long-term damage of the brand name in the market. In face of an evidence of
ethical and cultural failings at the top of the organization leads to the scandals found in Australia
(The Conversation, 2018). As a result, it has found that the AMP’s domestic franchise will be
permanently harmed by the evidence and proofs presented in front of Haynes inquiry. This
inquiry and its disclosures result in the company’s willingness to use deception and obfuscation
in response to mistakes (Forbes, 2017).
The rules formed in an organization like AMP are such which promotes the high standards of
corporate governance. After analyzing the AMP structure and its corporate governance, it is
found that company has followed the proper code of conduct in the organization for which many
policies have been framed and implemented to strengthen the sustainbitiy of company. These
policies include the market disclosures policy so that each of the party which is investing their
funds in the company can able to analyze whether the company is investing their funds in the
right direction or not (Giroud & Mueller, 2011).

4 | P a g e Corporate governance
One of the deficiencies also relates with the lack of ethical training. It can be evaluated in the
workplace there is no proper training offered to the team. Due to the reason related with lack of
training it can be examined that the team can easily violate the entire policies of the company
which are mentioned under the structure of corporate governance and values. It can be stated that
there is no method considered by the company and due to this it would be complicated for the
organization to emphasize on the overall policies of the corporate governance and ethics.
Other policies which have been used in the organization include the inclusion and diversity
policy and hedging of equity incentives policy. But after following all these policies and
procedures in the organization, several problems have been analyzed in AMP. Scandals have
been identified in the AMP which includes the famous scandals of the loosening the ASX
corporate governance code in the market. This makes the organization to steal the confidential
information in the environment (Culture AMP, 2018).
To fix this issue AMP has used various measures in governing the policies and procedures in the
organization. The company has made changes in the structure of the company and mandate to
have two tired board structure for the corporation. This will help in separating the executive and
non-executive directors of the company. This will make the separate roles for both the groups. In
order to maintain the corporate governance in the organization, corporate principles are used in
entities (Armstrong, Blouin, Jagolinzer, & Larcker, (2015).
Culture followed in the AMP
The principle of corporate governance focuses on giving maximum satisfaction to their
stakeholders. Here stakeholders include the shareholders, employees, government and other
parties which are related to and affected by the decision making of the company. AMP fails to
satisfy their investors as they are not maintaining their accounting standards which hamper the
growth and performance of the company and ultimately affects the earning of the investors. As
the corporate governance and performance go hand in hand in each and every organization which
will help in strengthen the sustainable future of organization (Financial Review, 2018).
Murray plans for AMP recovering the image in the market and involves in restoring the
accountability to the board. By this step of Murray, Shares of AMP got started to increase by 3
percent in the market. From this, it can be said that the institutions that design and oversee the
governance frameworks paid closer attention to the market and its needs (Armstrong, Blouin,
Jagolinzer & Larcker, 2015). The board member or the directors of the company tries to maintain
the healthy relation with their shareholders and other investors as they are the source of funding
to them. The AMP Company has strengthened its business policies and program to keep its
organizational culture more employees oriented.

5 | P a g e Corporate governance
It can also be stated that organizational culture enhances the overall values which related to
professionalism, integrity and also honesty. The company should provide proper advice to the
employees so that they cannot report to any of the acts which are not considered as the ethical
act. By giving advice to the employees it can be seen that proper security can be maintained in
the workplace. Also, it is the duty of the management to focus on encouraging the whistle
blowers so that they can easily report the unethical act of the company to the higher authorities.
Therefore, it can also be stated that all the policies would not be right and they do not emphasize
on securing the interest of the whistle blowers of the organization. There are also many incidents
which are taken into consideration by the higher authorities as it can be analyzed that there are
guilty of not taking into consideration the policies of the overall corporate governance
framework.
There are various instances which relates to the employees unethical behavior. The higher
authorities of the company do not focused on taking into consideration any acts according to the
reports. It can be said that whistle blowers are not secured in the workplace as they are fired from
their job when they give incorrect information to the management. Also, the policies are not
considered right to secure the interest of the stakeholders. The stakeholders in the workplace are
the employees, customers and government. At the time of giving wrong claims to ASIC the
interest of ASIC can be affected. The company also focuses on taking charge from the customers
by focusing on the administrative error as it was considered the top management decision.
Steps taken to protect the interest of the
whistleblowers and stakeholders
Whistleblowers are the person who gives the internal information to the management of the
company. A whistleblower is a person who is working in between the employees and tries to
gulp out the information which can be important for the management to know. This will make
the transparency and transferring of the substantial information to the managers so that the
effective measures can be taken by them. Not only whistleblower are substantial important but
helps in making the desired changes in the company and all are voluntary in nature. From above,
it can be said that a whistleblower is an act by the employee in order to disclose the wrongdoing
in front of the management (Aguilera, Desender, Bednar, & Lee, 2015).
The company like AMP protects and supports whistleblower from personal disadvantage as a
result of making a disclosure. From the policies and disclosures done by the whistleblower are
highly confidential and are given due importance in the organization. To protect the interest of
the whistleblower separate department has been there in the organization with a reporting
relation authority. Maintaining a separate department in the organization for protecting the
interest of the whistleblower helps in making and protecting the interest of the stakeholders. The
interest of the stakeholders can be protected as all the information which can negatively impact

6 | P a g e Corporate governance
the organization is communicated to the top management which helps in restoring the things and
manages function and activities (Financial Review, 2018b).
AMP has focused on the policy related with Whistleblowing and focused on enhancing the
overall behavior of the workplace. By taking into consideration this policy, it can be stated that
company also focused on maintaining the overall work culture which considers the policies with
the basic values.
Strategies
The following are the strategies that should have been implemented so as to avoid the scandal are
as follows:
Create policies and practices
An organization should make policies and practices while making the proper research and
documents in order to report around the ethics violations. These policies should be made in the
manner that the employees should be protected (Mollah & Zaman, 2015). Proper practices
should be implemented as it can help to maintain the overall culture of the workplace and it will
also boost the ethical practices in the workplace.
Leadership must walk the talk
The scandals in the organization can be controlled by having a check on all the activities. This
strategy does not take long for staff at all the levels of an organization to recognize a leader who
talks the talk but does not walk the walk when it comes to ethics. Proper guidance should be
given to the employees so that they can give their best and the activities can take place according
to the overall policies and norms of the company.
Implement the internal controls
The check on internal controls should be done by the management so that the chances of frauds
can be reduced. This implementation of the internal controls can be done by the internal
managers and authorities of the organization. These internal checks are works as the safeguard to
the company assets and ensure the integrity of its accounting records and detect the fraud and
theft (AMP, 2018b).
Live the corporate culture
A positive environment can prevent the chances of the frauds and scandals in the company. AMP
should follow the clear and transparent view on the written plans, procedures and fair
employment practices should be there (Qian & Yeung, 2015).

7 | P a g e Corporate governance
It is also important for the company to focus on corporate social responsibility. In this it has been
seen that it is necessary to focus on the strategy so that transparency in the workplace can be
boosted and also it helps in enhancing the continuous disclosure concerned with the overall
operations of the company. The disclosure should consider ethical as well as unethical acts of
the organization so that assurance can be considered that the people who are on the top level
would not misuse their position. This case also focuses on the overall CSR structure and it is
necessary to resolve this issue. If this case is resolved then it can be simple to maintain the
culture of the company and it will also help the employees to give their best.
Training
It is also one of the strategies that should be considered so that it can be simple to maintain
corporate governance policies which help the employees to deal with the situation in an ethical
way. It can be stated that if proper training is not given to the employees then it can affect the
overall working of the company. Lack of training was also one of the issues of AMP. Therefore,
it can be stated that it should be maintained by giving proper training to the employees so that
they can give their best towards the overall activities of the company. For prevention, it is
necessary to consider proper training so that it can be easy to prevent the need of the whistle
blowers to show the overall ethical behavior of the organization.
It can be stated that there are no measures taken into consideration by the company in the
structure of corporate governance and it will help to give punishment to the people who are not
considering the policies. There are people who are in the higher authorities and are involved in
the operations. It is important to consider that proper there should be proper techniques
considered so that practices can take place in an ethical manner. Also the individuals should be
given punishments who are not considering the ethical practices as it can help to enhance the
ethical practices in the workplace. The punishment should also be given to the people who are
not considering the activities in the ethical manner and as it can lead them to the practices which
are not ethical. Therefore, it can be stated that it is important for the management to stop
promoting the employees who are doing unethical practices in the workplace. So, this can help in
stopping the unethical practices in the workplace and can enhance the activities which are
ethical.

8 | P a g e Corporate governance
Detail the lessons to be learned from this case study
The main lesson from this case study is that the company has found with the issue of not
maintain the accounting practices for a consistent period of time. Non-maintenance leads to the
unethical practices in the business and ultimately approach towards the scandals. The systems in
the AMP are found with some of the deficiencies and try to resolve them by implementing the
new plans and procedures in the company so that the stakeholders remain satisfied. As the
satisfaction of the stakeholders is the main essence of corporate governance. To overcome the
deficiencies and scandals, use of whistleblower has been done by the Amp. This ensures the
protection to the stakeholders by providing the confidential internal information to the
management. This will help in protecting the interest of the shareholders and other investors.
Conclusion
From the above discussion, it can be concluded that the case study is related to the corporate
governance and corporate performance followed in the AMP. The relationship is both of these
terms are found to be interrelated to each other. The corporate performance is the part of the
corporate governance in which the measures have been taken to improve the standards if the
company in order to have more accountability in the business. From the case study, it has been
analyzed that the AMP has faced issues in relation to governing the corporate performance in the
company.

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References
Aguilera, R. V., Desender, K., Bednar, M. K., & Lee, J. H. (2015). Connecting the dots:
Bringing external corporate governance into the corporate governance puzzle. The
Academy of Management Annals, 9(1), 483-573.
AMP. (2018) Corporate governance. Retrieved from:
https://corporate.amp.com.au/about-amp/corporate-governance
AMP. (2018) Whistleblowing. Retrieved from:
https://financialservices.royalcommission.gov.au/public-hearings/Documents/exhibits-
2018/23-april/EXHIBIT-2-171-20.pdf
Armstrong, C. S., Blouin, J. L., Jagolinzer, A. D., & Larcker, D. F. (2015). Corporate
governance, incentives, and tax avoidance. Journal of Accounting and Economics, 60(1),
1-17.
Culture AMP. (2018) What is the Culture First movement? Retrieved from:
https://blog.cultureamp.com/what-is-the-culture-first-movement
Financial Review. (2018) Banking royal commission: AMP could suffer long-term brand
damage. Retrieved from: https://www.afr.com/brand/chanticleer/banking-royal-
commission-amp-could-suffer-longterm-brand-damage-20180417-h0yw9z
Financial Review. (2018) For AMP and CBA, culture, governance take centre stage. Retrieved
from: https://www.afr.com/opinion/columnists/for-amp-and-cba-culture-governance-
take-centre-stage-20180429-h0zep4
Forbes. (2017) Minimizing Corporate Leaks And Managing Scandals. Retrieved from:
https://www.forbes.com/sites/christopherskroupa/2017/11/16/minimizing-corporate-
leaks-and-managing-scandals/#5d 32754870cf
Mollah, S., & Zaman, M. (2015). Shari’ah supervision, corporate governance and performance:
Conventional vs. Islamic banks. Journal of Banking & Finance, 58, 418-435.
Qian, M., & Yeung, B. Y. (2015). Bank financing and corporate governance. Journal of
Corporate Finance, 32, 258-270.
The Conversation. (2018) Solving deep problems with corporate governance requires more than
rearranging deck chairs. Retrieved from: https://theconversation.com/solving-deep-
problems-with-corporate-governance-requires-more-than-rearranging-deck-chairs-99297
Giroud, X., & Mueller, H. M. (2011). Corporate governance, product market competition, and
equity prices. The Journal of Finance, 66(2), 563-600.

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Jo, H., & Harjoto, M. A. (2011). Corporate governance and firm value: The impact of corporate
social responsibility. Journal of business ethics, 103(3), 351-383.