April 22, 2011 Objective: Students will evaluate the purpose and need for Corporate Governance.

Junior Achievement Jude and Anastasia from Junior Achievement have been working with you and talking to you about Business Ethics and Corporate Governance. Because of this you do NOT need to read the 30 page chapter on Corporate Governance for this assignment’s lesson!

Review Who remembers what the company Arthur Anderson is, and why it was famous?

Professional Code of Conduct Many professions have developed a code of conduct. These set for the ideals of the profession and identify some of the challenges faces by members. These also provide detailed provisions to help members recognize conflicts of interest, issues of collegiality, and confidentiality.

Corporate Code of Ethics These have been adopted to respond to Federal Sentencing Guidelines. These provide guidelines on sticky issues – Example: When does a gift become a bribe? They also set forth the core values of the corporation.

Corporate Credo The Corporate Credo shortens the Corporate Code of Ethics into a few general provisions that form a creed. credo/

Statement of Values The Statement of values outlines the aspirations that can drive companies toward continued improvement versus the Code of Ethics which identifies the minimum standard of acceptable conduct.

Federal Sentencing Guidelines Recommendations for an Effective Compliance Program – Appointing individuals to serve as ethics or compliance officers – Developing corporate credos and codes of ethics that effectively communicate an organization's ethical standards and expectations to employees. – Designing ethics training programs for all employees – Designing and implementing monitoring and auditing systems – Designing and implementing an effective system of punishments and sanctions. These must be accompanied by investigative procedures that respect employee due process rights.

Compliance Strategy The initial and still probably the most prevalent method for responding to the Federal Sentencing Guidelines is the compliance strategy. This strategy is based on three interrelated components: 1. Rules: Compliance strategies are centered around strict codes of ethics composed of rules that set forth minimum thresholds of acceptable behavior. The use of rules to structure employee action does run into problems due to the gap between rule and application and the impression that it gives to employees that obedience is based on conformity to authority. 2. Monitoring: The second component consists of monitoring activities designed to ensure that employees are conforming to rules and to identify instances of non-compliance. Monitoring is certainly effective but it requires that the organization expend time, money, and energy. Monitoring also places stress upon employees in that they are aware of constantly being watched. Those under observation tend either to rebel or to automatically adopt behaviors they believe those doing the monitoring want. This considerably dampens creativity, legitimate criticism, and innovation. 3. Disciplining Misconduct: The last key component to a compliance strategy is punishment. Punishment can be effective especially when establishing and enforcing conduct that remains above the criminal level. But reliance on punishment for control tends to impose solidarity on an organization rather than elicit it. Employees conform because they fear sanction. Organizations based on this fear are never really free to pursue excellence.

Whistleblowers Policy While at times it is necessary to come forward and report your organization it isn’t always the right thing to do: When to Blow the Whistle. 1.Serious and Considerable Harm 2.Notification of immediate supervisor. 3.Exhaustion of internal channels of communication/appeal. 4.Documented Evidence. 5.Likelihood of successful resolution.

Assignment 9.2 Write a 300 word essay to address the following items using information learned in your readings and additional Internet search to support your answers. Based on your readings, what will be your Corporate Governance plan for your real or hypothetical business concept being created be? Explain 3 things (could be policies or rules) you can do to ensure that your business operates both legally and ethically. – Hint: Consider addressing topics such as – what will be your: Professional Code of Ethics? Corporate Credo? Statement of Values? Whistleblowers Policy? What education and discipline policy will you have for acts? How will you: Inspire, empower and protect ethical acts? Exactly how will you carry out the above? (your compliance strategy….policies, rules for monitoring, rewarding, etc…?