Tuesday, May 29, 2007

Directors must rise to challenge

The statistics are compelling, ranging from low savings and productivity to weak engagement with the world economy through poor growth in exports and outward direct investment.

As a nation of four million people, we lack the domestic scale to build and sustain future levels of prosperity in line with the developed world. At its simplest, New Zealand needs to earn more and it needs to do this in a competitive and global marketplace by providing more goods and services that meet the needs and wants of discerning consumers worldwide.

Effective corporate governance can play two roles in this endeavour. First, corporate governance deals with how companies are managed and led (and how capital is applied within them and by them) and is therefore highly relevant because increased New Zealand engagement with the world economy must be characterised by more world-class New Zealand companies.

Labels: new zealand, tone at the top

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Directors, managers set company's ethical tone

Contrary to a popular saying, ignorance is not bliss.

The business scandals of the 1990s and early 2000s revealed ignorance by business leaders and employees about ethical and legal behavior.

Congress responded by passing the Sarbanes-Oxley Act of 2002, which all but mandates corporate codes of conduct for the top managers of publicly traded corporations. The New York Stock Exchange and Nasdaq require those same corporations to create corporate codes applicable to all employees.

To encourage compliance and ethics training, Congress amended Section 8B2.1(B)(4) of the federal sentencing guidelines.

All organizations are to take reasonable steps periodically to communicate their standards and procedures to employees, high-level personnel and members of the governing body.

Compliance with the guidelines is valuable to organizations. Effective compliance and ethics programs impact employee behavior and often prevent illegal and unethical actions. If wrongdoing occurs, compliance with the guidelines can lessen penalties by 95 percent.

Directors, managers set company's ethical tone

(thanks to Dan Swanson for sharing reference to this article)

Labels: code of ethics, compliance, Federal Sentencing Guidelines, tone at the top

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