Management Consulting/MS-21

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Question
Dear Sir

Pls ans the following question.
If you do this it will be great help for me.

1) Briefly discuss the importance of values, work ethics and corporate governance in the present day context of organisations. Give examples.


Thanks in Advance

Krishna

Answer
Why Corporate Governance?

a) The liberalization and de-regulation world over gave greater freedom in management. This would imply greater responsibilities.
b) The players in the field are many. Competition brings in its wake
weakness in standards of reporting and accountability.
c) Market conditions are increasingly becoming complex in the light of global developments like WTO, removal of barriers/reduction in duties.
d) The failure of corporates due to lack of transparency and disclosures and instances of falsification of accounts/embezzlement and the effect of such undesirable practices in other companies.

Good corporate governance is simply about building a transparent, efficient and fair system of decision-making. This course is designed to help enterprises build such a system, with practical solutions to build a system of good corporate governance that incorporates good management-staff ties, a strong HR, a solid accounting system and containing this within a clear, transparent legal framework.
good Corporate Governance will evolve with the changing circumstances of a company and must be tailored to meet
these circumstances. There is therefore no one single model of Corporate Governance.

ETHICAL  DUTY   GROWS  OUT  OF  EFFECTIVE   CORPORATE GOVERNANCE.

Corporate governance is the set of processes.customs,policies, laws  and  institutions  affecting the way a corporation  (or company) is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, the board of directors, employees, customers, creditors, suppliers, and the community at large.
Corporate governance is a multi-faceted subject. An important theme of corporate governance is to ensure the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate the principal-agent problem. A related but separate thread of discussions focuses on the impact of a corporate governance system in economic efficiency, with a strong emphasis on shareholders' welfare. There are yet other aspects to the corporate governance subject, such as the stakeholder view and the corporate governance models around the world.
It is a system of structuring, operating and controlling a company with a view to achieve long term strategic goals to satisfy shareholders, creditors, employees, customers and suppliers, and complying with the legal and regulatory requirements, apart from meeting environmental and local community needs.
Parties to corporate governance
Parties involved in corporate governance include the regulatory body (e.g. the Chief Executive Officer, the board of directors, management, shareholders and Auditors). Other stakeholders who take part include suppliers, employees, creditors, customers and the community at large.
In corporations, the shareholder delegates decision rights to the manager to act in the principal's best interests. This separation of ownership from control implies a loss of effective control by shareholders over managerial decisions. Partly as a result of this separation between the two parties, a system of corporate governance controls is implemented to assist in aligning the incentives of managers with those of shareholders. With the significant increase in equity holdings of investors, there has been an opportunity for a reversal of the separation of ownership and control problems because ownership is not so diffuse.
A board of directors often plays a key role in corporate governance. It is their responsibility to endorse the organisation's strategy, develop directional policy, appoint, supervise and remunerate senior executives and to ensure accountability of the organisation to its owners and authorities.
The Company Secretary, known as a Corporate Secretary in the US and often referred to as a Chartered Secretary if qualified by the Institute of Chartered Secretaries and Administrators (ICSA), is a high ranking professional who is trained to uphold the highest standards of corporate governance, effective operations, compliance and administration.
All parties to corporate governance have an interest, whether direct or indirect, in the effective performance of the organization. Directors, workers and management receive salaries, benefits and reputation, while shareholders receive capital return. Customers receive goods and services; suppliers receive compensation for their goods or services. In return these individuals provide value in the form of natural, human, social and other forms of capital.
A key factor is an individual's decision to participate in an organisation e.g. through providing financial capital and trust that they will receive a fair share of the organisational returns. If some parties are receiving more than their fair return then participants may choose to not continue participating leading to organizational collapse.
Principles
Key elements of good corporate governance principles include honesty, trust and integrity, openness, performance orientation, responsibility and accountability, mutual respect, and commitment to the organization.
Of importance is how directors and management develop a model of governance that aligns the values of the corporate participants and then evaluate this model periodically for its effectiveness. In particular, senior executives should conduct themselves honestly and ethically, especially concerning actual or apparent conflicts of interest, and disclosure in financial reports.
Commonly accepted principles of corporate governance include:
•   Rights and equitable treatment of shareholders: Organizations should respect the rights of shareholders and help shareholders to exercise those rights. They can help shareholders exercise their rights by effectively communicating information that is understandable and accessible and encouraging shareholders to participate in general meetings.
•   Interests of other stakeholders: Organizations should recognize that they have legal and other obligations to all legitimate stakeholders.
•   Role and responsibilities of the board: The board needs a range of skills and understanding to be able to deal with various business issues and have the ability to review and challenge management performance. It needs to be of sufficient size and have an appropriate level of commitment to fulfill its responsibilities and duties. There are issues about the appropriate mix of executive and non-executive directors.
•   Integrity and ethical behaviour: Ethical and responsible decision making is not only important for public relations, but it is also a necessary element in risk management and avoiding lawsuits. Organizations should develop a code of conduct for their directors and executives that promotes ethical and responsible decision making. It is important to understand, though, that reliance by a company on the integrity and ethics of individuals is bound to eventual failure. Because of this, many organizations establish Compliance and Ethics Programs to minimize the risk that the firm steps outside of ethical and legal boundaries.
•   Disclosure and transparency: Organizations should clarify and make publicly known the roles and responsibilities of board and management to provide shareholders with a level of accountability. They should also implement procedures to independently verify and safeguard the integrity of the company's financial reporting. Disclosure of material matters concerning the organization should be timely and balanced to ensure that all investors have access to clear, factual information.
Issues involving corporate governance principles include:
•   internal controls and internal auditors
•   the independence of the entity's external auditors and the quality of their audits
•   oversight and management of risk
•   oversight of the preparation of the entity's financial statements
•   review of the compensation arrangements for the chief executive officer and other senior executives
•   the resources made available to directors in carrying out their duties
•   the way in which individuals are nominated for positions on the board
•   dividend policy
Nevertheless "corporate governance," despite some feeble attempts from various quarters, remains an ambiguous and often misunderstood phrase. For quite some time it was confined only to corporate management. That is not so. It is something much broader, for it must include a fair, efficient and transparent administration and strive to meet certain well defined, written objectives. Corporate governance must go well beyond law. The quantity, quality and frequency of financial and managerial disclosure, the degree and extent to which the board of Director (BOD) exercise their trustee responsibilities (largely an ethical commitment), and the commitment to run a transparent organization- these should be constantly evolving due to interplay of many factors and the roles played by the more progressive/responsible elements within the corporate sector. John G. Smale, a former member of the General Motors board of directors, wrote: "The Board is responsible for the successful perpetuation of the corporation. That responsibility cannot be relegated to management." However it should be noted that a corporation should cease to exist if that is in the best interests of its stakeholders. Perpetuation for its own sake may be counterproductive.
Mechanisms and controls
Corporate governance mechanisms and controls are designed to reduce the inefficiencies that arise from moral hazard and adverse selection. For example, to monitor managers' behaviour, an independent third party (the external auditor) attests the accuracy of information provided by management to investors. An ideal control system should regulate both motivation and ability.
Internal corporate governance controls
Internal corporate governance controls monitor activities and then take corrective action to accomplish organisational goals. Examples include:
•   Monitoring by the board of directors: The board of directors, with its legal authority to hire, fire and compensate top management, safeguards invested capital. Regular board meetings allow potential problems to be identified, discussed and avoided. Whilst non-executive directors are thought to be more independent, they may not always result in more effective corporate governance and may not increase performance. Different board structures are optimal for different firms. Moreover, the ability of the board to monitor the firm's executives is a function of its access to information. Executive directors possess superior knowledge of the decision-making process and therefore evaluate top management on the basis of the quality of its decisions that lead to financial performance outcomes, ex ante. It could be argued, therefore, that executive directors look beyond the financial criteria.
•   Internal control procedures and internal auditors: Internal control procedures are policies implemented by an entity's board of directors, audit committee, management, and other personnel to provide reasonable assurance of the entity achieving its objectives related to reliable financial reporting, operating efficiency, and compliance with laws and regulations. Internal auditors are personnel within an organization who test the design and implementation of the entity's internal control procedures and the reliability of its financial reporting
•   Balance of power: The simplest balance of power is very common; require that the President be a different person from the Treasurer. This application of separation of power is further developed in companies where separate divisions check and balance each other's actions. One group may propose company-wide administrative changes, another group review and can veto the changes, and a third group check that the interests of people (customers, shareholders, employees) outside the three groups are being met.
•   Remuneration: Performance-based remuneration is designed to relate some proportion of salary to individual performance. It may be in the form of cash or non-cash payments such as shares and share options, superannuation or other benefits. Such incentive schemes, however, are reactive in the sense that they provide no mechanism for preventing mistakes or opportunistic behaviour, and can elicit myopic behaviour.
External corporate governance controls
External corporate governance controls encompass the controls external stakeholders exercise over the organisation. Examples include:
•   competition
•   debt covenants
•   demand for and assessment of performance information (especially financial statements)
•   government regulations
•   managerial labour market
•   media pressure
•   takeovers
Systemic problems of corporate governance
•   Demand for information: In order to influence the directors, the shareholders must combine with others to form a significant voting group which can pose a real threat of carrying resolutions or appointing directors at a general meeting.
•   Monitoring costs: A barrier to shareholders using good information is the cost of processing it, especially to a small shareholder. The traditional answer to this problem is the efficient market hypothesis (in finance, the efficient market hypothesis (EMH) asserts that financial markets are efficient), which suggests that the small shareholder will free ride on the judgements of larger professional investors.
•   Supply of accounting information: Financial accounts form a crucial link in enabling providers of finance to monitor directors. Imperfections in the financial reporting process will cause imperfections in the effectiveness of corporate governance. This should, ideally, be corrected by the working of the external auditing process.
Rules versus principles
Rules are typically thought to be simpler to follow than principles, demarcating a clear line between acceptable and unacceptable behaviour. Rules also reduce discretion on the part of individual managers or auditors.
In practice rules can be more complex than principles. They may be ill-equipped to deal with new types of transactions not covered by the code. Moreover, even if clear rules are followed, one can still find a way to circumvent their underlying purpose - this is harder to achieve if one is bound by a broader principle.
Principles on the other hand is a form of self regulation. It allows the sector to determine what standards are acceptable or unacceptable. It also pre-empts over zealous legislations that might not be practical.
Enforcement
Enforcement can affect the overall credibility of a regulatory system. They both deter bad actors and level the competitive playing field. Nevertheless, greater enforcement is not always better, for taken too far it can dampen valuable risk-taking. In practice, however, this is largely a theoretical, as opposed to a real, risk. There are various integrated governance, risk and compliance solutions available to capture information in order to evaluate risk and to identify gaps in the organization’s principles and processes. This type of software is based on project management style methodologies such as the ABACUS methodology which attempts to unify the management of these areas, rather than treat them as separate entities.
Action Beyond Obligation
Enlightened boards regard their mission as helping management lead the company. They are more likely to be supportive of the senior management team. Because enlightened directors strongly believe that it is their duty to involve themselves in an intellectual analysis of how the company should move forward into the future, most of the time, the enlightened board is aligned on the critically important issues facing the company.
Unlike traditional boards, enlightened boards do not feel hampered by the rules and regulations of the Sarbanes-Oxley Act. Unlike standard boards that aim to comply with regulations, enlightened boards regard compliance with regulations as merely a baseline for board performance. Enlightened directors go far beyond merely meeting the requirements on a checklist. They do not need Sarbanes-Oxley to mandate that they protect values and ethics or monitor CEO performance.
At the same time, enlightened directors recognize that it is not their role to be involved in the day-to-day operations of the corporation. They lead by example. Overall, what most distinguishes enlightened directors from traditional and standard directors is the passionate obligation they feel to engage in the day-to-day challenges and strategizing of the company. Enlightened boards can be found in very large, complex companies, as well as smaller companies.

A.  TOP  MANAGEMENT
Top Level of Management
It consists of board of directors, chief executive or managing director. The top management is the ultimate source of authority and it manages goals and policies for an enterprise. It devotes more time on planning and coordinating functions.
The role of the top management can be summarized as follows -
a.   Top management lays down the objectives and broad policies of the enterprise.
b.   It issues necessary instructions for preparation of department budgets, procedures, schedules etc.
c.   It prepares strategic plans & policies for the enterprise.
d.   It appoints the executive for middle level i.e. departmental managers.
e.   It controls & coordinates the activities of all the departments.
f.   It is also responsible for maintaining a contact with the outside world.
g.   It provides guidance and direction.
h.   The top management is also responsible towards the shareholders for the performance of the enterprise.
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AUDIT  COMMITTEES

The Audit Committee is formed to regularly review processes and procedures to ensure the effectiveness of internal control systems so that the accuracy and adequacy of the reporting of financial results is maintained at high level at all times. It is important for the members of Audit Committee to have formal knowledge of accounting and financial management or experience of interpreting financial statements.

Provisions of Audit Committees and Its Formation:
The provisions in respect of the same are as follows:
1)Committee members are drawn from members of the Company's board of directors, with a  Chairperson selected from among the members.
2)The Chairperson should be an independent Director.
3)The Committee shall have at least three (3) members (directors).
4)Two-third (2/3) of the members shall be non-executive directors.
5)The Board of Directors shall prescribe the Committee’s terms of reference in writing.
6)Auditors—internal and external—and Director (Finance) shall attend the meeting but not have right to vote.
7)The Chairman of the Audit Committee shall attend the annual general meeting to provide  clarifications on matters relating to audit.
8)The constitution and composition of the Audit Committee is to be disclosed in the annual  report of the Company.
9)Any default in complying with the provision of section 292A may attract imprisonment up to one year or fine up to Rs. XXXXX  or both. The prosecution lies against the company and every officer of the company who is in default. The offence is compoundable under section 621A.
10)The Listing Agreement requires at least one director having financial management and accounting knowledge expertise to be a member of Audit Committee while other members should be financially literate. Section 292A(5).

Functions of Audit Committee under Section 292A
The Audit Committee constituted under this section shall act in accordance with terms of reference to be specified in writing by the Board. The Audit Committee should have periodic discussions with the auditors about the following matters:
(a) Internal Control System.
(b) Scope of audit including the observation of auditors.
(c) Review the half-yearly and annual financial statement before submission to the Board.
(d) Compliance of internal control system.
The Audit Committee shall also have authority to investigate into the matters in relation to the items specified in this section or matters referred to it by the Board of Directors. To carry out such investigation the Audit Committee will have full access to information contained in the records of the Company and external professional advice, if necessary.
The recommendations of the Audit Committee on any matters relating to financial
management including the audit report shall be binding on the Board. In case the Board does not agree with the recommendations made by the Audit Committee, the Board shall record the reasons for disagreement and communicate the same to the shareholders to be reported in Annual General Meeting.

Functions of Audit Committee under
• Financial Management including responsibility, integrity, objectivity of information of
financial reports and transparency in disclosures.
•Auditing –
- Internal
- External
•Legal compliance to ensure –
- Legal compliance
- Charter compliance
- Audit independence
- Review and assessment of financial implications of litigations and claims against the
Company
- Ensuring security of assets accounting standards and going concern.
•  Communication and quality assurance–
-         With shareholders
- Presentation of Board of Directors
- Quarterly reviews
- Compliance of Accounting Standards
- Preparation and improvement in the Audit Committee charter
- Selection of members of the Audit Committee
- Appraisal and performance review

Generally the major Functions of Audit Committee are as follows:
* overseeing the Company’s financial reporting process and disclosure of financial information to  ensure that the financial statements are correct, sufficient and credible,
* recommending the appointment and removal of external auditor, fixation of audit fee and approval  for payment of any other services,
* reviewing with the Management the annual financial statements before submission to the Board,
* reviewing with the Management the annual financial statements of the subsidiary companies,
* reviewing with the Management and the external and internal auditors, the adequacy of internal control systems,
* reviewing the adequacy of internal audit function,
* discussing with internal auditors any significant finding and follow up on such issues,
* reviewing the findings of any internal investigations by the internal auditors in matters where there is suspected fraud or irregularity, or a failure of internal control systems of a material nature, and then  reporting such matters to the Board,
* discussing with external auditors before the audit commences on the nature and scope of audit, as  well as having post-audit discussion to ascertain any area of concern,
* reviewing the Company’s financial and risk management policies; and
* examining reasons for substantial default in the payment to depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors, if any.
In addition to the areas noted above, the Audit Committee looks into the controls and security of the Company’s critical IT applications, internal and control assurance audit reports of all the major divisions and deviations from the Code of Business Principles, if any
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STATUTORY   AUDITORS
The statutory auditors participate in the meetings of the Board of Directors and the Executive Committee, and receive information from the corporate bodies with delegated powers.
The Board of Statutory Auditors
•   verifies compliance with the law, bylaws and principles of correct administration of the operations of greatest economic, financial and balance sheet significance;
•   verifies respect of the self-regulatory principles and procedures adopted for undertaking transactions with related parties and their compliance with the Company’s interests;
•   supervises compliance with the principles of correct administration and the adequacy of the Company’s organizational structure.
It likewise supervises the internal control system and the administrative and accounting mechanisms, as well as the reliability of the latter in correctly representing transactions. The Board of Statutory Auditors draws up proposals for the shareholders’ meeting for the appointment of the external auditors and monitors the independence of the auditing firm over time.
The audit committee must also adopt formal procedures for receiving and handling complaints from third parties, as well as the concerns of employees regarding accounting and auditing; it must have economic independence and be able to acquire technical and professional consultancy. In relation to this role, among other things, it has adopted a procedure governing the acceptance, retention and handling of complaints and concerns.

VALUES

What are Values?
Values are ideals that guide or qualify your personal conduct, interaction with others, and involvement in your career. Like morals, they
•   help you to distinguish what is right from what is wrong and
•   inform you on how you can conduct your life in a meaningful way.
Values can be classified into four categories:
•   Personal Values
•   Cultural Values
•   Social Values
•   Work Values
Personal Values
Personal values are principles that define you as an individual. Personal values, such as honesty, reliability, and trust, determine how you will face the world and relate with people.
-caring
-courage
-creativity
-friendliness
-honesty
-honour
-independent
plus  others
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Cultural Values
Cultural values, like the practice of your faith and customs, are principles that sustain connections with your cultural roots. They help you feel connected to a larger community of people with similar backgrounds.
-roots  in  tradition
-faith
-linguistic - tie
plus  others
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Social Values
Social values are principles that indicate how you relate meaningfully to others in social situations, including those involving family, friends, and co-workers.
-equality
-fairness
-reliability
-family  oriented
-environment  conscious
-diversity
plus  others
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Work Values
Work values are principles that guide your behaviour in professional contexts. They define how you work and how you relate to your co-workers, bosses, and clients. They also reveal your potential for advancement.
-autonomy
-competitiveness
-conscientiousness
-dedication
-loyalty
-punctuality
-teamwork
plus  others.
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Identify and Live Your Personal Values
Values are traits or qualities that are considered worthwhile; they represent your highest priorities and deeply held driving forces. When you are part of any organization, you bring your deeply held values and beliefs to the organization. There they co-mingle with those of the other members to create an organization or family culture.
Value statements are grounded in values and define how people want to behave with each other in an organization, an institution, a company, or a family. They are statements about how the organization will value customers, suppliers, and the internal community. Value statements describe actions which are the living enactment of the fundamental values held by most individuals within the organization.
Why Identify and Establish Your Values?
Your values are made up of everything that has happened to you in your life and include influences from: your parents and family, your religious affiliation, your friends and peers, your education, your reading, and more. Effective people recognize these environmental influences and identify and develop a clear, concise, and meaningful set of values/beliefs, and priorities. Once defined, values impact every aspect of your life.
•   You demonstrate and model your values in action in your personal and work behaviors, decision making, contribution, and interpersonal interaction.
•   You use your values to make decisions about priorities in your daily work and home life.
•   Your goals and life purpose are grounded in your values.
Choose the values that are most important to you, the values you believe in and that define your character. Then live them visibly every day at work and at home. Living your values is one of the most powerful tools available to you to help you be the person you want to be, to help you accomplish your goals and dreams, and to help you lead and influence others. Don't waste your best opportunity.
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The following table provides examples of each type of values.
Values Sampler
Personal Values    Cultural Values
   Social Values    Work Values
Caring    Celebration of Diversity    Altruism    Autonomy
Courage    Ethnic roots    Diversity    Competitiveness
Creativity    Faith    Eco-consciousness    Conscientiousness
Friendliness    Linguistic ties    Equality    Dedication
Honesty    National ties    Fairness    Equanimity/Ethics
Honour    Regional ties    Family closeness    Loyalty
Independence    Tradition    Lovingness    Professionalism
Integrity       Morality    Punctuality
Spirituality       Reliability    Remunerative worth
        Team player

Identify and Live Your Personal Values
Values are traits or qualities that are considered worthwhile; they represent your highest priorities and deeply held driving forces. When you are part of any organization, you bring your deeply held values and beliefs to the organization. There they co-mingle with those of the other members to create an organization or family culture.
Value statements are grounded in values and define how people want to behave with each other in an organization, an institution, a company, or a family. They are statements about how the organization will value customers, suppliers, and the internal community. Value statements describe actions which are the living enactment of the fundamental values held by most individuals within the organization.
The following are examples of values
You might use these as the starting point for thinking about and articulating your values as a human being.
Examples of Values
ambition, competency, individuality, equality, integrity, service, responsibility, accuracy, respect, dedication, diversity, improvement, enjoyment/fun, loyalty, credibility, honesty, innovativeness, teamwork, excellence, accountability, empowerment, quality, efficiency, dignity, collaboration, stewardship, empathy, accomplishment, courage, wisdom, independence, security, challenge, influence, learning, compassion, friendliness, discipline/order, generosity, persistency, optimism, dependability, flexibility
Why Identify and Establish Your Values?
Your values are made up of everything that has happened to you in your life and include influences from: your parents and family, your religious affiliation, your friends and peers, your education, your reading, and more. Effective people recognize these environmental influences and identify and develop a clear, concise, and meaningful set of values/beliefs, and priorities. Once defined, values impact every aspect of your life.
•   You demonstrate and model your values in action in your personal and work behaviors, decision making, contribution, and interpersonal interaction.
•   You use your values to make decisions about priorities in your daily work and home life.
•   Your goals and life purpose are grounded in your values.
Choose the values that are most important to you, the values you believe in and that define your character. Then live them visibly every day at work and at home. Living your values is one of the most powerful tools available to you to help you be the person you want to be, to help you accomplish your goals and dreams, and to help you lead and influence others. Don't waste your best opportunity.
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ORGANIZATION    HAVE   A SET OF   VALUES
-to  instill within its basic policy structure and patterns of behavior a corporate culture, a corporate conscience that can prevail.
-with the following values: the dignity of the individual, openness to people and ideas, optimum standards of service, entrepreneurship, synergism, leadership through competence, and behavior based on values.

Nine Desirable Attributes of Corporate Value Systems
There  are  nine desirable attributes of corporate value systems. These attributes are to be measured by the attitudes of management and employees in the organizations.

The attributes we defined as follows together with typical statements that express the existence of each attribute.

1.Honesty
The degree to which each employee has total confidence in the integrity, ability, and good character of other employees and the organization - regardless of their role
"I trust the people I work with." "I find it easy to be open and honest with staff from other departments."
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2.Alignment
The degree to which the interests and actions of every employee support the clearly stated and communicated key goals of the organization
"We have clear aims & objectives which everyone understands." "We build consensus around key objectives." "We recognize and reward loyalty."
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3.Freedom
The degree to which self-initiated and unofficial activities are tolerated and approved of throughout the organization
"I am allowed to do my own thing." "We encourage people to take initiatives." "We recognize the individual."
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4.Stimuli
The degree to which it is understood that unrelated knowledge is desirable in the pursuit of improving products, services, and operations
"I am encouraged to search externally for new information." "I obtain data from many different sources." "We listen to suggestions from suppliers." "We use consultants in focused roles."
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5.Risk
The degree to which the organization, employees, and managers take risk
"I am encouraged to experiment." "We take calculated risks." "We encourage trial and error."
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6.Empowerment
The degree to which each employee feels empowered by managers and the organization
"As a manager, I am expected to delegate." "We have a 'no-blame' culture." "We allow staff to make decisions."
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7.Teams
The degree to which team performance is emphasized over individual performance
"We promote teamwork and make it the center of everything we do." "There are usually people from other departments in my team." "We have both creative problem solvers and 'out-of-the-box' thinkers in our teams."
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8.Communication
The degree to which there is both planned and random interaction between functions and divisions at all levels within an organization
"We clearly explain what our objectives are." "I am kept in the picture on how we are performing." "We have excellent formal channels of communication." "We manage best practice knowledge transfer between departments." "We actively manage our intellectual assets."
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9.SUPPORT
The degree to which team performance is emphasized over  TEAMWORK   and
supporting  each  other  to  achieve  the  common  goal/ objectives.
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A value system refers to how an individual or a group of individuals organize their ethical or ideological values. A well-defined value system is a moral code.
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ORGANIZATION  value systems
Corporate value systems that consists of three value TYPES.
These are considered complementary and juxtaposed on the same level if illustrated graphically on for instance an organization’s web page.
-The first value TYPE  is Core Values, which prescribe the attitude and character of an organization, and are often found in sections on Code of conduct on its web page. The philosophical antecedents of these values are Virtue ethics.
The  second  TYPE   is  Protected Values are protected through rules, standards and certifications. They are often concerned with areas such as health, environment and safety.
-The third TYPE - Created Values, is the values that stakeholders, including the shareholders expect in return for their contributions to the firm. These values are subject to trade-off by decision-makers or bargaining processes.
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CREATORS  OF   CORPORATE  VALUES

CORPORATE  VALUES  is shaped by a handful of people who are guardians of the vision and the shapers of the corporate conscience. It is especially the role of the chief executive to define the character of the business and to establish the corporate VALUES  SYSTEM /  CULTURE .

A corporation can instill within its basic policy structure and patterns of behavior a corporate culture, a corporate  value  system    that can prevail.
Categories
Values may be grouped into categories, but each are up to debate:
Healthy values and habits - Sensual and Operational Values -- Sensual values are are individual values and are functional or dysfunctional to an individual's emotional survival. They are sensitive or insensitive depending upon an individual's emotional maturity. Operational values are indiviudal values and are functional or dysfunctional to an individual's physical survival. They are active or inactive depending upon an individual's physical development. Healthy values and habits are acquired through personal satisfaction, practice and personal experience.

Moral values and norms - Social and Religious/Traditional Values -- Social values are family/group values and are functional or dysfunctional to the survival of the family/group. They are nurturing or agressive depending upon the family/group's social maturity. Religious/Traditional values are are interpersonal values and are functional or dysfunctional to impersonal survival outside the family/group. They are tolerant or intolerant depending upon the religion's/tradtion's maturity. Moral values are acquired through encouragement, instruction and interpersonal experience.

Ethical values and behavior - Economic and Political Values -- Economic values are national values and are functional or dysfunctional to the survival of the nation. They are productive or unproductive depending upon the nation's economic development. Political values are national values and are functional or dysfunctional to national surival. They are progressive or regressive depending upon a nation's political development. Ethical values are acquired through rewards, education and impersonal experience.

Historical values and conduct - Aesthetic and Theoretical Values -- Aesthetic values are human values that are functional or dysfunctional to human surival. They are are beautiful or ugly (meaningful or unmeaningful) depending upon human artistic development. Theoretical values are human values that are true or false(purposeful or irrelevant)to human survival depending upon human scientific development. Historical values are acquired through inspiration, cognition and creative experience.
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Organization culture  can  be  a  set  of  key values , assumptions,
understandings  and  norms that  is  shared  by  members of an
organization.

Organization  values  are fundamental beliefs that  an organization
considers  to  be  important , that are  relatively stable over time,
and  they have an  impact on  employees behaviors and  attitudes.

Organization  Norms  are  shared  standards that define what
behaviors  are  acceptable  and  desirable within organization.

Shared  assumptions  are  about  how  things  are  done
in  an  organization.

Understandings  are  coping  with internal /  external  problems
uniformly.
=================================================
LEVELS  OF  ORGANIZATION  CULTURE

LEVEL 1---VISIBLE, that can be  seen  at the surface level
-dress  codes
-office layout  [ open  office]
-symbols
-slogans
-ceremonies[ monthly / annual awards/long service/birthdays etc.
etc etc

LEVEL 2-  INVISIBLE , that can be cannot be  seen but only felt.
-stories  about people performance
-symbols [  flag, trademark, logos, etc]
-corporate mission  statements
-recruitment/selection  [ methods  used]L
-fairness in treatment
-social  equality
-risk  taking in  business deals
-formality  in  approach
-discipline
-autonomy  for  departments
-responsiveness  to  communication
-empowerment  of  staff.
etc  etc.
===============================================
FROM  THE   ABOVE, YOU CAN SEE  THAT  THE  ''VALUES''
IS  A  CORE  FACTOR  OF   CULTURE.
===============================================
Values are traits or qualities that are considered worthwhile; they represent an individual’s highest priorities and deeply held driving forces.
Value statements are grounded in values and define how people want to behave with each other in the organization. They are statements about how the organization will value customers, suppliers, and the internal community. Value statements describe actions that are the living enactment of the fundamental values held by most individuals within the organization.

Values exist in every workplace. Your organization’s culture is partially the outward demonstration of the values currently existing in your workplace. The question you need to ask is whether these existing values are creating the workplace you desire.
==========================================================
Examples of Workplace Values
These were developed by several of my clients.
A Human Resources Development office chose:
•   Integrity
•   Belonging/Caring
•   Helping/Contributing
•   Inner Harmony, Peace of Mind
•   Personal Growth, Learning, and Self-Actualization
•   Achievement /Accomplishment
•   Financial Stability
•   Fun
   *Integrity
   *Compassion
   *Accountability
   *Respect
   *Excellence

The following are examples of values. You might use these as the starting point for discussing values within your organization.
ambition, competency, individuality, equality, integrity, service, responsibility, accuracy, respect, dedication, diversity, improvement, enjoyment/fun, loyalty, credibility, honesty, innovativeness, teamwork, excellence, accountability, empowerment, quality, efficiency, dignity, collaboration, stewardship, empathy, accomplishment, courage, wisdom, independence, security, challenge, influence, learning, compassion, friendliness, discipline/order, generosity, persistency,optimism, dependability, flexibility
=======================================================================
Why Values, What Values?
"Our people are our most important asset." You’ve heard these words many times, if you work in an organization. Yet how many organizations act as if they really believe these words? Not many. These words are the clear expression of a value, and values are visible through the actions people take, not their talk.
Values form the foundation for everything that happens in your workplace. If you are the founder of an organization, your values permeate the workplace. You naturally hire people who share your values. Whatever you value, will largely govern the actions of your workforce.
Sample Workplace Value-based Actions
If you value integrity and you experience a quality problem in your manufacturing process, you honestly inform your customer of the exact nature of the problem.
You discuss your actions to eliminate the problem, and the anticipated delivery time the customer can expect. If integrity is not a fundamental value, you may make excuses and mislead the customer.
If you value and care about the people in your organization, you will pay for health insurance, dental insurance, retirement accounts and provide regular raises and bonuses for dedicated staff. If you value equality and a sense of family, you will wipe out the physical trappings of power, status, and inequality such as executive parking places and offices that grow larger by a foot with every promotion.
Whatever You Value Is What You Live in Your Organization
You know, as an individual, what you personally value. However, most of you work in organizations that have already operated for many years. The values, and the subsequent culture created by those values, are in place, for better or worse.
If you are generally happy with your work environment, you undoubtedly selected an organization with values congruent with your own. If you're not, watch for the disconnects between what you value and the actions of people in your organization.
As an HR professional, you will want to influence your larger organization to identify its core values, and make them the foundation for its interactions with employees, customers, and suppliers. Minimally, you will want to work within your own HR organization to identify a strategic framework for serving your customers that is firmly value-based.
Strategic Framework
Every organization has a vision or picture of what it desires for its future, whether foggy or crystal clear. The current mission of the organization or the purpose for its existence is also understood in general terms.
The values members of the organization manifest in daily decision making, and the norms or relationship guidelines which informally define how people interact with each other and customers, are also visible. But are these usually vague and unspoken understandings enough to fuel your long term success? I don’t think so.
Every organization has a choice. You can allow these fundamental underpinnings of your organization to develop on their own with each individual acting in a self-defined vacuum. Or, you can invest the time to proactively define them to best serve members of the organization and its customers.
Many successful organizations agree upon and articulate their vision, mission or purpose, values, and strategies so all organization members can enroll in and own their achievement.
===========================================================
If you want the values you identify to have an impact, the following must occur.
•   People demonstrate and model the values in action in their personal work behaviors, decision making, contribution, and interpersonal interaction.
•   Organizational values help each person establish priorities in their daily work life.
•   Values guide every decision that is made once the organization has cooperatively created the values and the value statements.
•   Rewards and recognition within the organization are structured to recognize those people whose work embodies the values the organization embraced.
•   Organizational goals are grounded in the identified values.
•   Adoption of the values and the behaviors that result is recognized in regular performance feedback.
•   People hire and promote individuals whose outlook and actions are congruent with the values.
•   Only the active participation of all members of the organization will ensure a truly organization-wide, value-based, shared culture.
====================================================================
FOR EVALUATING VALUES, THERE  IS  NO  DIRECT  METHOD  BUT
BY  THE  OUTCOMES  ONLY.
1.CONDUCT  A   BUSINESS  AUDIT, WHICH  INCLUDE
-vision/ mission/objectives/strategies  etc.
which  should  highlight values in it.
2.CONDUCT  EMPLOYEE SATISFACTION SURVEY
which  would  reveal  employees  practices/  expectations/dissatisfaction.

3. MAKE  AN OBSERVATION   SURVEY  OF   THE  IMPACT
OF  VALUES  ON
-recruitment/selection
-customer  service
-sales  results
-promotions
etc etc
=================================
=========================================
====================================

===========================================================
The Strategic Planning Framework for Vision, Mission, Values
Want the background about why values are important in an organization?
Values are traits or qualities that are considered worthwhile; they represent an individual’s highest priorities and deeply held driving forces.
Value statements are grounded in values and define how people want to behave with each other in the organization. They are statements about how the organization will value customers, suppliers, and the internal community. Value statements describe actions that are the living enactment of the fundamental values held by most individuals within the organization.
Vision is a statement about what the organization wants to become
The vision should resonate with all members of the organization and help them feel proud, excited, and part of something much bigger than themselves. A vision should stretch the organization’s capabilities and image of itself. It gives shape and direction to the organization’s future.
Mission/Purpose is a precise description of what an organization does. It should describe the business the organization is in. It is a definition of "why" the organization exists currently. Each member of an organization should be able to verbally express this mission.
Strategies are the broadly defined four or five key approaches the organization will use to accomplish its mission and drive toward the vision. Goals and action plans usually flow from each strategy.
1.One example of a strategy is employee empowerment and teams.
2.Another is to pursue a new worldwide market in Asia.
3.Another is to streamline your current distribution system using lean management principles.

What are Values?  XXX
The following are examples of values. You might use these as the starting point for discussing values within your organization.
ambition, competency, individuality, equality, integrity, service, responsibility, accuracy, respect, dedication, diversity, improvement, enjoyment/fun, loyalty, credibility, honesty, innovativeness, teamwork, excellence, accountability, empowerment, quality, efficiency, dignity, collaboration, stewardship, empathy, accomplishment, courage, wisdom, independence, security, challenge, influence, learning, compassion, friendliness, discipline/order, generosity, persistency,optimism, dependability, flexibility  XXX

Why Identify and Establish Values?
Effective organizations identify and develop a clear, concise and shared meaning of values/beliefs, priorities, and direction so that everyone understands and can contribute. Once defined, values impact every aspect of your organization.
You must support and nurture this impact or identifying values will have been a wasted exercise. People will feel fooled and misled unless they see the impact of the exercise within your organization.
If you want the values you identify to have an impact, the following must occur.
•   People demonstrate and model the values in action in their personal work behaviors, decision making, contribution, and interpersonal interaction.
•   Organizational values help each person establish priorities in their daily work life.
•   Values guide every decision that is made once the organization has cooperatively created the values and the value statements.
•   Rewards and recognition within the organization are structured to recognize those people whose work embodies the values the organization embraced.
•   Organizational goals are grounded in the identified values.
•   Adoption of the values and the behaviors that result is recognized in regular performance feedback.
•   People hire and promote individuals whose outlook and actions are congruent with the values.
•   Only the active participation of all members of the organization will ensure a truly organization-wide, value-based, shared culture.
==========================================================================
THE ORGANIZATION, I  AM  REFERRING  TO.

Begin Your Values Alignment Process
Values exist in every workplace. Your organization’s culture is partially the outward demonstration of the values currently existing in your workplace. The question you need to ask is whether these existing values are creating the workplace you desire. XXX
Do these values promote a culture of extraordinary customer care by happy, motivated, productive people? If not, you will want to:
•   identify the values that currently exist in your workplace;
•   determine if these are the right values for your workplace; and
•   change the actions and behaviors by which the values are demonstrated, if necessary.
To really make a difference in your organization, you need to do all three.

"Within the organizations I have had the opportunity to serve, the core values were communicated by actions mostly - in the ways in which business is conducted on a day-to-day basis, and not so much in words directly spoken or written.
"I am a strong advocate of demonstrated values more than written or spoken - actions speak louder, but also believe that written values that reinforce and support specific actions, and specific actions that reinforce and support written values, make a powerful combination that far exceeds one or the other by itself.
If it is written down and demonstrated in action, we can really hold our feet to the fire when we need to."

Values Development Process
Steps in a Values Identification Process
To identify organization values, bring together your executive group to:
•   learn about and discuss the power of shared values;
•   obtain consensus that these leaders are committed to creating a value-based workplace;
•   define the role of the executives in leading this process; and
•   provide written material the executives can share with their reporting staff.
In one of my client organizations, that recently completed this process, the Team Culture and Training Team, a cross-functional group of employees from every level of the organization, asked the executive group to initiate and lead this process.
Where possible, acting on a desire for change that is percolating from all corners of an organization, is a powerful assurance of success.
Design and schedule a series of values alignment sessions in which all members of the organization will participate. Schedule each member of the organization to attend a three-four hour session. (If your group is small, it is most effective for all members to meet in one session together.)
These sessions are most effective when led by a trained facilitator. This allows each member of your organization to fully participate in the process. Alternatively, train internal facilitators who lead one session, and participate in another.

Prior to the values identification and alignment sessions, each leader must do the following.
•   Share any written materials as well as the spirit and context of the executives’ values discussion with every individual in your reporting group.
•   Promote the rationale for, need for, and desired organizational impact of the process.
•   Make certain your reporting staff members understand the importance of their participation in the process.
•   Assure that every member of your reporting group is signed up for and attends a session.
•   Answer questions and provide feedback about any staff concerns to the rest of the executive or cross-functional group leading the process.
Values Identification Workshop Overview
The facilitator begins the sessions with a brief overview, since the rationale and process have already been communicated by organization leaders.
Key concepts include the following.
•   Each person brings his or her own set of values to the workplace.
•   Sharing similar or agreed upon values at work helps clarify:
--expected behavior and actions to each other and customers,
--how decisions are made, and
--exactly what is important in the organization.
Steps in Workplace Values Identification
During the workplace values identification session, participants begin by identifying their own individual values. These are the five-ten most important values they hold as individuals and bring to the workplace every day. It is the melding of all of the values of the members of your workforce that creates your current work environment.
I have found this process most effective when participants work from the list of possible values .

People voluntarily post the values that each person has identified as their most important. Then, everyone in the session walks around to look at the various lists.
This is a learning opportunity and can provide great insight into the beliefs and needs of coworkers. You can ask people to verbally talk about their list of values with another individual in a mutual sharing.
Participants then work with a small group of people, from across the organization, to identify which of their personal values are the most important for creating the environment the group wants to “live in” at work. Participants in the small groups then prioritize these identified values into a list of five-six they most want to see expressed at work.
When the small groups have completed their task, they share their prioritized lists with all session participants. Generally, some of the values appear on each small group list.
In a larger organization, these prioritized lists are tallied across all sessions for frequency and meaning. In a small organization, in which everyone is participating simultaneously, prioritize and reach agreement on the most important values.
Value Statements
During this session, or in an additional session, participants discuss how and whether these values are currently operational in your workplace.
People then define each value by describing what they will see in behaviors and actions when the value is truly incorporated into the organization belief system and culture. The more graphic you can make these statements, the better for producing shared meaning. Several examples of these value statements follow.
Integrity: We maintain credibility by making certain our actions always match our words.
Respect: We respect each patient's right to be involved, to the greatest extent possible or desired, in making informed decisions about his or her health and plan of care.
Accountability: We accept personal responsibility to efficiently use organization resources, improve our systems, and help others improve their effectiveness.
Now that you know how to identify workplace values and value statements read about how to finalize your VALUE  IDENTIFICATION  PROCESS, with examples of values, too.
Make Your Workplace Values Process Successful
Follow-up Process for Workplace Values Identification
Using the work and insights from each values identification session, volunteers from each session meet to:
•   reach consensus on the values;
•   develop value statements for each of the prioritized values; and
•   share the value statements with all staff for feedback and refinement.
Staff will discuss the draft value statements during organization-wide meetings, where possible. The total group adopts the values by voting when the organization believes the value statements are complete.
The Leaders' Role Following the Workplace Values Process
Following the values identification and alignment sessions and agreement on the values, leaders, with staff, will:
•   communicate and discuss the mission and organizational values frequently with staff members;
•   establish organizational goals that are grounded in the identified values;
•   model personal work behaviors, decision making, contribution, and interpersonal interaction that reflect the values;
•   translate the values into expectations, priorities, and behaviors with colleagues, reporting staff, and self;
•   link participation in the adoption of the values and the behaviors that result, to regular performance feedback and the performance development process;
•   reward and recognize staff members whose actions and accomplishments reflect the values in action within the organization;
•   hire and promote individuals whose outlook and actions are congruent with these values; and
•   meet periodically to talk about how the group is doing via living the identified values.
Make This Workplace Values Process Not Just Another Exercise
•   "Don’t oversell the process.
•   Always anchor, or relate the values expressed to real world problems.
•   Encourage people to identify examples where there is a gap between values, or beliefs, and behaviour.
•   Remember that you are not going to alter a person's values and beliefs by talking about them. Values clarification exercises are, at best, an opportunity to share them, not change them."
I agree. If you want your investment in this workplace values identification and alignment process to make a difference in your organization, the leadership and individual follow-up is critical.
The organization must commit to change and enhance work behaviors, actions, and interactions. Reward and recognition systems and performance management systems must support and reward new behaviors. Consequences must exist for behaviors that undermine the values agreed upon.
If you can't make this commitment, don’t even start the process. You’ll just create a group of cynical, unhappy people who feel misled and betrayed. They’ll be much less likely to jump on board for your next organizational initiative. And you know what? They’ll be right.
Examples of Workplace Values  XXX
These were developed by several of my clients.
A Human Resources Development office chose:
•   Integrity
•   Belonging/Caring
•   Helping/Contributing
•   Inner Harmony, Peace of Mind
•   Personal Growth, Learning, and Self-Actualization
•   Achievement /Accomplishment
•   Financial Stability
•   Fun

SHARED VALUES  DEFINED.

Shared values are what engender trust and link an organization together. Shared values are also the identity by which an organization is known throughout its business areas. These values must be stated as both corporate objectives and individual values. Every organization and every leader will have a different set of values that are appropriate to its business situation.
=========================
THE  BIGGEST  CHALLENGE  IS  Enforcement.
Enforcement can affect the overall credibility of a regulatory system. They both deter bad actors and level the competitive playing field. Nevertheless, greater enforcement is not always better, for taken too far it can dampen valuable risk-taking. In practice, however, this is largely a theoretical, as opposed to a real, risk.  

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Leo Lingham

Expertise

management consulting process, management consulting career, management development, human resource planning and development, strategic planning in human resources, marketing, careers in management, product management etc

Experience

18 years working managerial experience covering business planning, strategic planning, corporate planning, management service, organization development, marketing, sales management etc

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24 years in management consulting which includes business planning, strategic planning, marketing , product management,
human resource management, management training, business coaching,
counseling etc

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PRINCIPAL -- BESTBUSICON Pty Ltd

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MASTERS IN SCIENCE

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