Business Ethics and Corporate Governance Assignment

Added on - 31 Oct 2019

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Running head: CORPORATE GOVERNANCE OF STANDARD BANK GROUPCorporate Governance of Standard Bank GroupName of the StudentName of the UniversityAuthor note
1CORPORATE GOVERNANCE OF STANDARD BANK GROUPIntroductionCorporate governance is a set of rules and principles that the company formulates inorder to control their business processes and business environment. The rules andprinciples that are set by the business are for various departments and employees workingover there. Corporate governance involves various attributes such as code of ethics, value ofprincipal agents, role of management and others. It also helps in managing the interest heldby various stakeholders of the company such as the customers, directors, employees,financers and community. Corporate governance is such a system of practices, rules andprocesses through which a company is controlled and directed. Corporate governanceinvolves balancing the interests of a company and it involves stakeholders, suppliers,customers, fianciers, government, management and the community. It also provides theframework for attaining the objectives of the company and thus it encompasses everysphere of management from controlling the actions to corporate disclosure and performanceof management. The essay will discuss about the corporate governance of Standard BankGroup of South Africa. It will analyze the code of ethics, value of agents and other importantparameters under the company’s corporate governance. The board of members of StandardGroup who are involved in corporate governance and providing leadership are based ondifferent ethical foundations. They are responsible for the success of the bank and alsofulfilling the interest of the stakeholders. The detailed role and responsibilities of the bank areset up by the board members. The board mandate takes special care to incorporate theprinciples of corporate governance and thus comply with the provisions of the companiesact. The board of governance of the Standard Group has certain functions to perform to itscommittee along with the corporate governance framework. The executive of the bankengages them in critical decisions of the bank. The board of members of the Standard Groupconducts monthly meeting and thus various discussions are held for the improvement of thebank (Dermine 2013).DiscussionPrincipal agent theory is one of the parts of corporate governance that shows thestate of affairs in which one principal or the stakeholder takes the decision on behalf of anagent or the management. Standard Bank Group of South Africa follows a high standard inits corporate governance. The bank complies with the regulations that have been put forwardwith the legislation. The bank is also enhancing their corporate governance strength with theexpansion of its ranches to other countries and region. The organization is involved in takingcontinuous initiative to improve their corporate governance hold in order to benefit thestakeholders (Bovens, Goodin, and Schillemans 2014). The board of directors is involved informulating the rules and regulation of the bank that can comply with the needs of theinternational practices. These principles needs to be followed by the every agents of the firmsuch as the subsidiary firms, Stanbic IBTC Holdings, managers, trustees, stockholdersinvestors and others. The subsidiary of the company complies by these rules made by thestakeholders and uses it in their own governance. The corporate governance body alsoadvices the subsidiaries about the maximum risk tolerance limit by the bank. The board ofdirectors and other auditors of the company seek permission from the stakeholders of thebank on certain actions whose rights are particularly reserved with the stakeholders. Thestakeholders or boards of the group take all the governance decision. They are the one thatforms all the governance rule of the bank and offer effective leadership on it after evaluatingthe ethical concern of the organization (Filatotchev, Jackson, and Nakajima 2013).The board comes up with various principles of the corporate governance according tothe Companies Act, which the stakeholders and other bodies of the group need to follow.The board of the organization is of appropriate size consisting of twenty directors of thegroup. The board of the group such as the Chairman and the chief executive follows severalroles. Some of the roles are setting ethical tone, leading the committee, maintaining the trustof the stakeholders, appointing executive team, formulating group’s strategy, establishing an
2CORPORATE GOVERNANCE OF STANDARD BANK GROUPappropriate organizational structure and others. The board is the principal that formulatesthe rules and regulation of the governance and other bodies are the agents that need tofollow the rules in the interest of the organization. In 2016, the group held a total of sixmeeting in which the board decided about various strategies of the bank (Crane, and Matten2016). The member of the board such as the chairman, chief executive and secretary set theagenda of the group. The meeting decided about certain important critical matters aboutadministration and compliance. The meeting also allowed the peers and non-executivedirectors to share their views about the rules and regulation of the company in the absenceof chief executive. The meeting finalized certain governance for the company such as theretirement of the financial director, appointment of five non-executive directors, promoted thepolicy of gender diversity and considered the report put forward by the King Code 4. Theboard also shows diversity in a broadest sense in order to ensure that diversity is maintainedin the workplace as well by other member of the bank. However, it is seen that the directorsof the business does not take part in the business meeting in cases when the board thinks itmight lead to conflicts. At those cases the directors of the bank does not take part in anybusiness matters discussed in the meeting. Further, it is noticed that the directors of thecompany are offered with the governance manual in which all the details about thegovernance is provided. The details contained under the corporate governance report arethe governance structures, mandates, important policies, legislations, and others. Thedirectors are informed about this crucial information along with the regulations, code ofconduct, changes made in the rules. This governance manual helps them to direct andassist other member of the bank residing in different branches. Thus here there are variousstages of principal and agent relationship found in the banking environment. One such pair isthe board and the directors in which the board is the principal and the directors are theagents. On the other hand the another pair is of the directors and the staffs in which thedirectors are the principal that direct the staffs about the governance rule with the help of themanual (García-Sánchez et al. 2015).Code of ethics shows the mission and vision of the organization in relation to thevalues and ethics. It states the ways by which the directors and other bodies of theorganization as well as the employees should approach each other. It also states theprinciples and ethics lying at the core of an organization and the amount of professionalismmaintained by the people. Code of ethics is also known as ethical code in some of theorganization that guides the member of the organization to know the difference betweenright and wrong within the campus. These codes of ethics are adopted by both governmentaland nongovernmental organization to carry out their professional responsibility effectively.For the purpose few organizations carry out code of practice under which they discuss aboutthe issues, decision, rules that the personals of the organization needs to maintain duringtheir course of professional practice (Mason and Simmons 2014). Standard Bank Group alsomaintains a code of ethics that defines their values within the organization throughout itsbranches. The ethical values maintained by the bank ensure that they carry out theirbusiness at a right way in the right direction. For the purpose, the bank has put forward,certain codes that are the laws the personals of the business needs to follow. These codesof ethics are also essential for the organization to get the trust of their shareholders. This isbecause the stakeholders are imperative to the organization and they have trust on theorganization only if follows certain rules and trails of professionalism. The Standard BankGroup decides on the values that need to be followed by every brand of the bank. The codeis mostly related to corruption, corporate governance and harassment within the premises ofthe bank. These ethics are applied at every place wherever the banks are operative. Theglobally recognized code put forward by the group is the King Code (Salvioni and Astori2015). The code of ethics made by the company needs to be followed by each of itsmembers including the board. The ethical values that are put forward by the group are alsomade aligned with the policies and procedures followed by the group. This is done to assistthe employees, boards and others to easily follow the code of conduct. The group hasformulated eight values for the organization to deal effectively with the stakeholders,
3CORPORATE GOVERNANCE OF STANDARD BANK GROUPcustomers and other members of the bank. While making the values the bank keeps in mindthat customers are important and thus they should always be at the front of any policies. Theimportant values of the bank are adequate customer service, growth of company’spersonals, offering the best to our stakeholders, effective teamwork, holding respect for eachother irrespective of the designation one holds and various other values that shows theethics of the bank (Waemustafa and Abdullah 2015). The company also follows certainworking ways that can comply with their values and ethics such as the bank participates inany activity in a careful way and tries to avoid sudden reactions or actions for any situationthat might prove to be wrong in future. The organization beliefs on the benefits of teamworkrather than working individually. These methods are followed across various branches of thebank and across countries. Further, the team works accordingly to maintain the dignity ofeach other as well as of the bank. The bank maintains a sense of respect within itsenvironment and outside of Standard Bank. The organization makes it clear to it people thatintegrity is to be maintained in the environment of the bank.The bank has also formulated certain principles as well, that has been decided by thegroup such as fair relationship with the customers, offering the best service and products tothe customers, keep informing the customers, analyzing the needs f the customersThese are some of the important principle the bank and it is noticed that most of itsprinciples focuses on building strong customer relationship as they are the one that givesbusiness to the bank. The second important parameters of our value giving are thestakeholders that help the business to attract customers and investors for the bank. Theseare some of the code of ethics that the bank follows within its business environment and withthe external partners.The next factor that comes into concern about corporate governance of anorganization is the management that plays a great role in both formulating the governanceas well as following it. The board of the company is responsible in carrying out the day-to-day task of the company regarding business activities and the ethical values. The boardconsists of chief executive officer, the executive board and some of the external boardmembers. The executive committee of the Standard Bank Group is Group chief executives,Group financial director, chief executives, Group chief compliance officer, Group chiefinformation officer and others. Each of these members is responsible of some work or theother contributing to the growth of the organization and maintaining its dignity in the bank.The management is responsible for various activities such as for board meeting,administrative work, maintaining daily data, carrying out remuneration work, auditing andvarious other activities. Each of the responsibility is carried out by various leaders andmembers assigned for it. The bank has formed a committee consisting of all the requiredmembers of management and has divided the responsibilities accordingly. A director affairscommittee includes all the directors of eh bank and are determined to manage the corporategovernance of the organization. The committee also makes sure that the people responsiblefor it properly maintain the laws, regulations and codes. The group of the director committeeis also responsible for further duties such as reviewing the corporate governance report putforward by the board and prove that the report is achievable. The committee also has torecommend various section of the organization about the ways they should conduct their jobresponsibly. Another committee is the group audit committee that carries out all the auditwork (Haan and Vlahu 2016).All the corporate organizations in South Africa are aware of “Kings Report” oncorporate governance. The managers of the standard bank group apply the principles of“King Code IV” which was released in 2009. The managers started using this method from2015 which was released for public comment by the Institute of Directors in South Africa.The King IV approach provides an integrated approach to corporate governance byencompassing the social, economic and environmental spheres. Various effective andquality corporate behaviors also provide different ways to mitigate the social and economic
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