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.
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).
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).
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.
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.
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 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.
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).
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.
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.
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.
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.
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