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Monitor Corporate Governance Activities
Monitor Corporate Governance Activities
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Question one: State differences and similarities between corporate governance statements and codes of conduct of the two companies
According to Anonymous (2014), corporate governance represents the framework of rules, relationships, systems and processes that corporations use to exercise authority. The processes of corporate governance describe mechanisms for holding companies and those in control responsible. A company that practices effective corporate governance always succeeds in all its operations and achieves its business goals and objectives. The two selected publically traded companies are American Airlines and General Electric (GE) Company from United States. The corporate governance statements, and codes of conduct of both companies show some similarities and differences. The appendix section shows an attachment of corporate governance statements and code of conducts for both companies.
Similarities
Both companies are committed to strong corporate governance by ensuring all board members undergo intensive scrutiny before being given authority to plan for firm’s operations. In American Airline Company, for example, board members are elected annually through the ballot process and those failing to receive the affirmative vote of majority votes are not considered. Rejected members are required by the company law to tender their resignation because they become unfit to hold leadership positions (American Airlines 2014). Likewise, General Electric Company offers a platform for selecting effective board of directors’ members through laid-down guidelines that determine the independence and qualification of individual directors (GE 2007 Proxy Statement 2007). Additionally, both companies’ corporate governance statements give board of directors’ mandate to review corporate governance practices and offer recommendations where necessary to ensure growth and development of their firms.
The code of conduct represents a mode of communication adopted by the organization to demonstrate its values, ground rules for behaviors and acceptable criteria for decision-making (International Federation of Accountants 2007). Both companies also show similar codes of conducts in the manner of each company’s ethical considerations. Both companies ensure their employees understand the company’s code of conduct and use it to behave ethically and in accordance to the rules and regulations of the organization. GE Corporation requires all directors, employees and officers working in the corporation to act ethically and follow policies that make up the company’s code of conduct. Any director or executive officer not behaving in accordance to the company code of ethics risks losing their jobs according to the Board’s of Governance Principles (GE 2007 Proxy Statement 2007). Similarly, the American Airline Company puts strict regulations towards its employees on the issue of corporate governance. The company trains all its members regardless of the position held through the company’s business ethics (American Airlines 2014).
Differences
Although both companies share similar views on corporate governance systems and codes of conduct, a different exist on how each company operates. Firstly, American Airlines’ corporate governance allows Board of Directors to acquire their position through a majority vote and not any other form. On the contrary, Board of Directors at GE achieve their positions through appointment from the company’s Board of Trustees assisted by company stakeholders. Members undergo intensive interviewing following Board of Governance Principles to establish individual qualifications and suitability for the post. The roles of Board of Directors in both companies differ.
On the issue of the code of conduct, American Airline’s code of conduct addresses many areas compared to GE’s that provide general ethical requirements of employees without necessary mentioning individual groups. Secondly, as seen on appendix II, America Airline’s code of conduct links employees, managers, board of directors and company stakeholders into a single entity covered by the firm’s code of ethics. At GE, the stamen gives only rules and regulations of the board of directors and ignores other company employees who should also be covered.
Question two: Explain the relationship between code of conduct and corporate governance
For a corporation to have effective corporate governance, it must have a working code of conduct. The two concepts go hand-in-hand because lack of one leads to the failure of the other. Corporate governance represents the method used by the company’s board to direct and control business operations. The main issues involved in governance include board composition, structure, and ethical framework as stated in individual corporation’s corporate governance statements. The ethical framework issue represents the ethics that the board should follow while deciding and planning for different operations within and outside the corporation. The lack of a good ethical framework leads to poor governance and failure of the company. On the other hand, the rule of law, transparency, protection, and accountability required of the company board follows the code of conduct of the company (Naonawat and Meena 2013). The above argument proves that the code of conduct relates strongly to the corporate governance of the corporation.
Corporate governance and the code of conduct also relates in terms of firm governance and success. Business experts place special emphasize claiming that good governance occurs in the presence of cardinal ethical values. Good ethical values should be compatible with all aspects of governance and be present in all decisions and actions of the board. On the other hand, some aspects of governance such as risk management, functioning reporting, and board complication are also dependent of cardinal ethical values. According to Rodriuez-Dominguez, Gallego-Alvarez, and Garcia-Sanchez (2009), most corporate scandals experiences by organizations today calls for a need to create internal codes of conduct and ensure top management and members of Boards of Directors follow them strictly. Code of ethics describes the expected behavior of all members of the staff, and the members of the board of directors should understand those ethics in order to react accordingly and maintain expected business ethics.
Additionally, abuse of corporate power and criminal activities practiced by corporate officers has been linked to improper application of corporate governance and code of conduct. The effective corporate governance regime in the current business environment has the responsibility of prosecuting individuals fond of conducting unethical or criminal acts in the organization. Corporate governance codes practiced by most corporations give the organization’s board the freedom of developing code of ethics. Ethics forms one of the most fundamental components in the success of any business. Firstly, employees should practice honest and ethical behaviors while under the guidance of firm boards representing the corporate governance. Secondly, the firm should comply with government laws, rules, and regulations. Government rules combine corporate governance and code of ethics of businesses in different sectors. Finally, the code of conduct and corporate governance encourages improved management and realization of corporate culture (Naonawat and Meena 2013).
Question three: Research and report on current issues and trends in corporate governance reporting
Many firms have reported different cases related to corporate governance. The fall of trade barriers leads to market expansion, improved flow of information, and fewer restrictions on investments making it easier for investors to operate in many countries. Moving to a worldwide capital market has substantial effects on corporate governance. The current business diversity and stiff competition experienced in the global business environment leads to many issues and trends affecting international firms’ corporate governance. Succeeding in business in 2013 seems more challenging because companies experience a climate of uncertainty characterized by huge debt crises. Additionally, unfavorable business conditions found in some parts of the world contributed by insecurity, underdevelopment, and unpredicted economic growth accelerates current issues in corporate governance (Association of Corporate Counsel 2013).
Board composition acts as the major trending issue in corporate governance today. Selecting suitable candidates for board of directors’ positions has become more difficult. Directors should have financial and industrial expertise in addition to extreme knowledge on international and overseas risks. Additionally, the issue of gender brings a lot of debate in the current process of board selection because of diversification (Association of Corporate Counsel 2013). Presence of these new highly demanding characteristics required of board members forms key trending issues in corporate governance that all firms should consider before developing corporate governance statements.
Secondly, succession planning also has become an issue with corporate governance today. Companies discuss the need of coming up with a detailed Chief Executive Officer’s (CEO) succession plan. Developing an effective succession plan that caters for all aspects related to costs, shares, and shareholders’ demands form the most challenging concept for most corporations. The issue keeps trending as organization managers look for ways of developing transparent and effective succession plans that promote active participation of CEOs in the future (Association of Corporate Counsel 2013).
Finally, the issue of board compensation has been trending in corporate governance reporting. Shareholders experience hard moments voting on executive compensation policies. Problem arises when members of Board of Directors offer themselves high compensations because they engage in overall planning of the organization. The problem has created a lot of debates from lower staff members and other stakeholders claiming they also take part in organization’s growth. In order to solve such issues in the future, directors should introduce company policies that communicate all controversies arising from board compensation issues both externally and internally (Association of Corporate Counsel 2013).
References List
AMERICAN AIRLINES. (2014). Corporate Governance. Accessed December 11, 2014 from
http://www.aa.com/i18n/amrcorp/corporateInformation/governance.jsp
ANONYMOUS. (2014). Corporate governance principles and recommendations. (3rd Ed.).
Australia: ASX Corporate Governance Council
ASSOCIATION OF CORPORATE COUNSEL. (January 31, 2013). Corporate governance
Trends in 2013. Accessed December 11, 2014 from http://www.lexology.com/library/detail.aspx?g=0be67d97-4e8d-4936-baf6-3924a779226b
CHEFFINS, B. R. (2010). Current trends in corporate governance: Going from London to Milan
Via Toronto. Duke Journal of Comparative & International Law, 10(5), 5-42.
GE 2007 PROXY STATEMENT. (2007). Corporate Governance. Accessed December 11, 2014
from
http://www.ge.com/ar2006/proxy/governance.htm
INTERNATIONAL FEDERATION OF ACCOUNTANTS. (2007). Defining and developing
Effective code of conduct for organizations. Accessed December 11, 2014 from
http://www.ifac.org/sites/default/files/publications/files/Defining-and-Developing-an-Effective-Code-of-Conduct-for-Orgs_0.pdf
NAINAWAT, R., and MEENA, R. (2013). Corporate governance and business ethics, Global
Journal of Management and Business Studies, 3(10), 1085-1090
RODRIGUEZ-DOMINGUEZ, L., GALLEGO-ALVAREZ, I., and GARCIA-SANCHEZ, I. M.
(2009). Corporate Governance and Code of Ethics, Journal of Business Ethics, 90(2), 187-202
APPENDICES
Appendix II: Corporate governance statement for American Airlines
Appendix II: Code of conduct for American Airlines
Appendix III: General Electric Company’s corporate governance statement
Appendix IV: General Electric Company’s code of conduct
Monika Sosnowskas life and work, the nominees of the Hugo Boss prize
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Monika Sosnowska’s life and work, the nominees of the Hugo Boss prize
The focus of this paper is to provide an analysis on one of the nominees of the Hugo Boss prize. The paper talks about Monika Sosnowska who represents the country of Poland. The paper writes about Sosnowska’s work and life from a personal and professional point of view.
Born in 1972, Monika Sosnowska is a Polish native who has dedicated a substantial amount of her life on art and architecture. Sosnowska represents modern contemporary art which feature new art forms that defy traditional art. Art has transformed from the time of its inception to present day. Traditional art consists of perfect projections that do not break the rules of art. Her work defies all the traditional rules in that she gets her inspiration from the art pieces that are far from perfect. Her work is contrary to the norm due to the use of irregular sizes and structures that display errors (Fer, p. 232).
One of her most successful art pieces is the star shaped installation of illuminations. This art piece is features shapes that are both regular and irregular. Her work is colored in black which brings out a certain type of sophistication seen in modern art. Most of her work is displayed in an upside down manner so as to reflect on the defiant nature of her art. Monika stands to become one of the most instrumental artists in the competition due to her opinioned art pieces. She thus serves as a source of inspiration for future and aspiring artists (Reynolds, p. 154).
Art is a form of expression of an individual’s feelings and thoughts. Art can thus be referred to as a way of life. Most of the artists get their inspiration from the surrounding environment. According to my opinion, Sosnowska represents the modern day artist who forms their own rules and incorporates them into traditional methods. The piece of art captures the attention of the viewer due to its precise nature. The use of different shapes and dimensions shows the artists diversity in terms of experience and talent. The artists work is monumental in that it makes a viewer think outside the box. This is one of the qualities of a good art piece making her qualify as a nominee (Hickman, p. 211).
In conclusion, Sosnowska is thus the one to watch in the ongoing competition. Her work stands out from the crowd due to its simple yet structural features. Art continues to influence the society in all aspects of life. Most of the artist derives their inspiration from their surrounding environment. Sosnowska is one of the artists who continue to inspire the world. Her nomination is thus well received due to the hard work and esteem that her work represents.
Works cited
Fer, Briony. On Abstract Art. New Haven: Yale University Press, 2007. Print.
Hickman, Richard. Critical Studies in Art & Design Education. Bristol [u.a.: Intellect Books, 2005. Internet resource.
Reynolds, Dee. Symbolist Aesthetics and Early Abstract Art: Sites of Imaginary Space. Cambridge: Cambridge Univ. Press, 2005. Print.
Most Human Behavior And Most Of Our Decisions Are Rational
Most Human Behavior And Most Of Our Decisions Are Rational
Options play a vital role in influencing decisions, which human beings make. This is what forms the basis of decisions, which human beings decide upon and they are of a rational nature. Most times, human beings are faced with challenges and they have to make decisions, which will benefit them. Processes of emotions also contribute to rationality and decision making. Often, decision making by individuals, occur when they are accorded with many alternatives and they have to choose. This is normally based upon their beliefs as well as preferences. The behavior, which human beings display, is as a result of the rational choices that they make. The latter is viewed as being a model that is extremely descriptive (Newell & Lagnado & Shanks, 2007. 33). Rational intently, is the word that describes people who engage in decision making. It must be known that at the same time, human beings are adaptive and also goal oriented in all their actions. The factors, which often make them not make decisions that are rational, are emotional architecture and human cognitive. The latter is often experienced when human beings are in a situation whereby, they have to make decisions, which are extremely vital.
Politics is an area where people have to constantly make decisions, which are rational. This is in accordance to a model that is utility classic expected. Evidence that supports this model is of a scientific nature. It has been proven through research, that decisions which are rational are not always possible. A person’s environment plays an essential role in determining whether people make decisions that are rational (Hastie & Dawes, 2001. 42). There is a misconception, which exists between the decision maker responsible for making choices and the environment where decision making occurs. A factor, which may take the form of incentives, can either be negative or positive and it affects decision making. The existence of techniques that are statistical as well as standardized, enable people to distinguish between factors, which are random, and those that are systematic. In turn, it is possible for rationality to be present in making decisions.
According to Jonathan Baron (2008. 65), when people are thinking, as is the norm, it is then referred to as rational. Later on, people will want to achieve their goals based on how it will benefit them most. Furthermore, he claims that goals, beliefs and decisions referred to the process of thinking. There are times when choices, which are subjective, and others that are irrational contribute to decisions making. In arguments that are irrational, an equation such as 1=0 is used as a justification. The equation means that through circular definition, rationality has influenced goal achievement. It is extremely illogical to think that irrational thinking leads to irrational goals.
Quality movement is due to the efforts of Edwards Ward (1954. 385). He also came up with the theory, which is today recognized in matters related to decision making. According to him, decision making is vital in any organization particularly people who are in positions of management. In many organizations, people often want to be identified by the decision, which they make. This means that before decisions are agreed upon, everyone’s opinion must be heard. Judgment is another issue, which is involved in influencing decision making. When goals are being established, judgments are made. The objectivity approach often fails based upon the judgments, which people make. Moral choices also influence rationality in terms of the goals, which people make. People are often influenced when they are thinking and this is based on ideals. Thus the theories by Ward are extremely useful in knowing about rational decision making by human beings.
Herbert Simon (1978. 12) gave his research concerning decision making and well as the process involved. Those in authority such as managers should solve problems and make decisions. Decision making involves designing actions, fixing agendas and setting goals. Later on, there has to be choosing and evaluating of the existing choices (Robbins, 2002. 23). Computers have now taken over the work human beings used to do. They make decisions based on the information they are provided with. The world is believed to be extremely uncertain and this is according to the theory of subjective expected. Human rationality has been experimented through various researches which are empirical. This is because it has the ability of solving problems as well as to make decisions (Mescon & Bovee, 2002. 36). During the beginning of the 21st century, the theory of SEU was extremely significant. It gave meaning to matters that are rational, and consistent. A function of utility was possessed by the person who makes the decisions. A logical order is followed in a process, which is cognitive that takes place in decision making that is rational. Options have to be weighed before a conclusion and result occurs. In conclusion, rationality is determined during decision making by the behavior, which human beings display.
Work Cited
Simon, H. Rationality as process and product of thought. American Economic Review, 68, 2, (1978): 1-16.
Baron, J. Chapter 3, Rationality, in Thinking and deciding (4th edition). Cambridge: Cambridge University Press, 2008. Print. 61 – 76.
Edwards, W. The theory of decision making. Psychological Bulletin, 41, (1954): 380-417.
Hastie, R. & Dawes, R. Chapter 2, what is Decision Making, in Rational Choice in an Uncertain World. Thousand Oaks, CA: Sage. 2001. Print. 25-46.
Mescon, M. & Bovee, C. & Thill, J. Business Today. 10th ed. Upper Saddle River, NJ: Prentice Hall, 2002. Print.
Robbins, Stephen. Essentials of Organizational Behavior. 7th ed. Upper Saddle River, NJ: Prentice Hall, 2002. Print.
Newell, B. & Lagnado, D. & Shanks, D. Chapter 2, Stages of Judgment I: Discovering acquiring and combining information, in Straight choices: the psychology of decision making, New York: Psychology Press, 2007.Print. 25-46