People Risk: Corporate Ethics

People Risk and Corporate Ethics

People Risk ?

Good Quality of Board A weak board  serious problem because:

• Company move aimlessly • Missing opportunities • Creating inertia • Stifling initiative • Causing good staff to leave

Get Strong Board Boardroom seats occupied by

Right person weLL behAve sHow iNtegRity

Characteristic •Have smooth transitions •Able to identify the right developmental assignments •Provide meaningful appraisals and feedback •Use appropriate selection criteria •Have a range of good choices for each position

Succession Lack of corporate management of succession  strategic risk

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reduce risk create a proven leadership model smooth business continuity improve staff morale

Design a Succession Plan  Obtain a management buy-in for succession planning  Identify the future leadership needs of the organization  Conduct staff reviews to acquire feedback, identify problems and opportunities, and identify competencies  Identify high-potential talent  Recruit external future leader, where appropriate  Give staff experience of different department and roles  Create opportunities for people to grow within company  Implement training, mentoring and coaching programs, both formal and informal.

Key Worker Risk

Lost of key workers.. Lost of company generator Disclosure of confidential information

Manage the Risk of Losing Key Workers

Defensive solution Contract  stopping ex-employees from working with the agency’s clients for a period of time Aggressive solution

Rewards:

• Financial incentives • Managerial responsibility • Lifestyle benefits

Managing People

Excellent worker hard to get Company should adopts good working conditions, include: • A more open and equitable management style, good condition, and rewards for employee. • A culture that values teamwork and excellence, condition that assist female. • Training and re-training to develop capability of workforce accepting rapid change.

Companies that care for its workforce: • Willingness to listen and learn • Implement changes which improve workplace conditions • Share corporate information with the workforce • Involve workforce in decision-making will

Effective Recruitment  key to organizations retaining

competitive edge

Having the right processes helps select the best potential candidates

Managed by… • Preparing a job specification • Creating a personal specification, outlining the required experience, abilities and qualifications • Undertaking the right method of recruitment • Training managers to be effective interviewers • Checking CVs and taking up preferences

Ensuring that as many of their

meet their customers.

staff as possible

Risks of being Sued by Employees Actions to obtain risk management coverage: Employee Actions – notify – cooperate in investigation Agency Actions • • • •

Immediately notify Risk Management Assist in the investigation and defense Establish internal procedures Train staff in the requirements of the policy

Risk Management Actions Risk Management will investigate the claim or complaint to determine: a) whether coverage will be extended b) whether to settle or defend the case, and c) whether to defend under a reservation of rights.

Workplace Bullying

Forms • Sexual harassment • Demeaning comments about the victim’s race, gender, disability or age • Verbal assault • Shouting and offensive language • Constant criticism • Overwork • Isolation • Jokes about the victim’s appearance.

Prevented by... • • • • • •

Anti-bullying policy Training Systems for investigating Informing staff Investigating complaints quickly Appointing a discrimination and bullying advisor

• InDustrial DiSpute Hazards…  Lost output  Bitter industrial relation  Lost of reputation

best solution

ensure that the company is seen to act fairly and honestly.

• LAboR DiSputE Respond… Union Be consistent Require staff to obey the law. Have nothing to hide. Give regular briefing to the media Communicate directly to staff.

If the dispute seems inevitable… • Build buffer stocks • Move production to other plants • Sub-contract work to competitors

Conflict in the business Minimize the price + maximize the profits = providing the cheapest product/services for the highest price

Changing the Corporate Culture Companies often profess to act honorably but behave unethically So good manager is needed to change the corporate culture

Damaged cause by ethical failure Unethical activity can do irreparable activity to the company Its difficult to keep unethically activity secret because of existence of force like

• Whistleblowers • Media

Ethical failings Companies are often doing unethical activities and since it does not constitute a criminal offence, it more difficult to manage or stand up to.

Relations with the Government Example of corruptions relations with governments include: • tax evasion; operating false transfer pricing • excessive payments to political parties • failure to obey the law • selling to tyrannical overseas regimes

In Indonesia Direktorat Intelijen dan Penyidikan (DitIntelDik) Ditjen Pajak reveal hundreds companies that fake the tax form and causes more than 20 billion rupiah lost to the state

Attacks on competitors Example: • Illegally obtaining information bout competitor. For example by luring away or bribing their staff • Making false allegations about competitors. For example through the sales force

Unethical Alliances with Competitors

products Ethical products failures include the following: • Producing product which are environmentally unsound. For example cutting down the rainforest. • Testing non-medical products on animals • Selling product or services which are poor value for money, or which could harm people

In Indonesia In Indonesia selling cigarettes is such an ethical product failure but its still sold since the manufactures reserve lot of people for being employee. And the government just put suggestion in every pack of cigarettes

staff  Company must pay attention in workers health and safety. Low pay and bad working place are seen as exploitations and the cost of any resulting public relations crisis can be damaged the brand image.

suppliers •The problem party lies with the drive for the lower prices, which resulting in cheaper supplies •Using child labor in the developing world •Entering into illegal agreements with the suppliers’ staff to dishonestly obtain goods

• ethical failure include failing to take precautions against damaging the environment; or knowingly causing damage companies are in dilemma because their products are both essential to modern living and cause environmental damage

customers Ethical failings toward customer include:

• Giving bribes to customers in return for business • Doing business with criminals

Giving Misleading Informations Giving misleading information can inflict financial lost to the customer or other parties. Mostly happen in insurance company or bank. The company can be accused of doing deception and forced to pay fine to the customer.

Withholding information

“not giving the whole information to customer or other party in order to get advantage”

bribery “giving some money in order to make the business goes on” In some countries bribery are seen as an essential prerequisite to doing business

Dealing with Unethical Competitor “everyone

else in the market does it. Well lose out if don’t”

that statements just like legalize company unethical activities

Undertaking an Ethics audit

Issuing an ethics policy The company should issue a code of practice that will clarify individual responsibility and alert people of malpractice.

Communicating the policy After the policy issued, it’s important to top manager to communicate the policy well so it’s known by all members and staffs.

Karoshi Death caused by overwork

Nearly 1000 victims death from overwork each year

illness  Death Overworking  Stress

suicide

Sign Of Stress • • • • • • • • • • • •

Headache Tiredness Muscle tics Stomach problems, diarrhea, constipation Anger, frustration, violence, aggression Anxiety Increased use of alcohol, tobacco, drugs, or sleeping pills Depression Feeling powerless Irritability with customers and co-workers Problems at work, such as forgetfulness Absenteeism

In Long Term…. • Ulcer • Heart Attack • Cancer • Stroke • Death

Karoshi Cases in Japan •

Mr.kanameda, worked at a major snack food processing company as long as 110 hours a week (not a month) and died from heart attack at the age of 34.

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A bus driver, worked more than 3000 hours a year and without rest for 15 days just before his fall from stroke at the age of 37

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Mr.Miyazaki, whose widow get workers'compensation award only after 14 years of his death, worked at the world-biggest printing company in Tokyo for 4320 hours a year including midnight work and died from stroke at the age of 58.

The number of Karoshi among female workers is increasing after enactment of the Japanese Equal Employment Opportunities Law. • • •

Miss Yoshida, a 22-year-old nurse, died from heart attack after pursuing consecutive 34 hours' duty five times a month. Miss Iwata, 23-year-old teller at a major bank, worked illegal overtime over 50 hours a month and died from an asthma attack. Mr.Yagi, who worked over 70 hours a week at an advertising agency and spent 3.5 hours day in commuting, died from heart attack at age of 43,

Average number of overtime work is increasing 130 hours in 1975 185 hours in 1990 (245 hours in large enterprise). In 1987 200 hours longer than in the U.S. and some 500 hours longer than in France and in Germany.

Japanese male workers actually work 2700 to 3000 hours a year.

Suicide Because of Overworking

Reduce WorkPlace Stress • Undertake an audit of employee attitudes and stress levels • Provide clear job description and lines of reporting • Ensure regular upward and downward communication, and ensure employees’ opinion are heard • Make work more fulfilling • Increase the amount of control that employees have over their work • Ensure that workloads are managed and balanced • Increase employees’ technical work skills • Give employees better coping strategies, such as improve diet or exercise, or strategies for dealing with abusive customers • Improve support and supervision • Enhance working conditions (noise, breaks, fumes, so on) • Implement a fair reward system • Increase job security and career development • Increase flexibility in working arrangement • Introduce stress management training

Amazingly Comfortable place to work ???

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