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THE RULE OF GOVERNANCE

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.


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Code of Conduct

EXEMPLARY CODE

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: 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

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Rationale of Codes
As a road-map: To be sure about ones role and goal in an organization

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4
Debate

CODE OF CONDUCT HAMPERS


ORGANIZATIONS GROWTH

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The rats and the cat

WHO WILL BELL THE CAT?

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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
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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

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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

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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

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10
Loss of purpose

THE FAILED CORPORATION

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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.

Source: http://www.multinationalmonitor.org/mm2008/112008/weissman.html

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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

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13
THANK YOU

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