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MGMT1102 Corporate Social Responsibility Paper Editing Services
The assignment will analyse an issue relating to the companies investigated by the Banking Royal Commission. The chosen organization in this assignment is Australian Mutual provident. The organization was founded in the year 1849 and has been a key financial service provider in Australia. The organization has its operation in Australia and New Zealand and the headquarter lies at Sydney, Australia. AMP has the largest shareholders registered in Australia; this is because when AMP demutualised thepolicy holderof the organization management received shares (loans, retirement and education 2018).
Background and ethical question:
After the investigation conducted by the banking royal commission, it can be seen that AMP continues to charge the deadcustomerslife insurance (Boleat 2012). AMP has admitted that they continue to deduct life insurance premium from their deceased customer (Siegel 2013). The reports suggest that the organization has charged more than 4600 deceased superannuation life insurance customers. This has been done intentionally knowing that they are dead and there was no more life insurer. The largest wealth manager of AMP owes about 1.3 milliondollarin lost earnings and the insurance premium to the deceased family members. The organization knew about one of the similar incidents in 2016, but the organization started to investigate in July after the revelations in the banking royal commission. On Monday, the customer and the wealth executive told the enquiry team that there are other kinds of fees that also have been deducted from the deceased customer’s account that also need to be refunded. The banking royal commission heard the same incident when one of the staffs of the AMP questioned whether it is justifiable to charge from the deceased customer’s bank account.Mr.Sainsburry explained that the money which has been deducted from the account of the deceased customers will be refunded once the death claim was submitted (Karim, HudanadKhan 2012).
The ethical question that arises from the current scenario is that is it justifiable to charge the deceased customer’s and deduct for their life insurance when there is no life to insure. The amount which was deducted from the customer needs to be refunded to the deceased customer family.
Corporate Social Responsibility:
Corporate social responsibility is a management theory where an organization integrates the entire social and the environmental concerns in theirworkplaceenvironment to better the interaction with the key stakeholders of the company (Saeidi et al. 2015). CSR helps in providingbetterunderstanding of the environment and the responsibilities which helps the company to achieve balance among the economic, social and environmental imperatives and at the same time fulfilling the expectations of the key stakeholders of the organization.
The organization has certain rules and regulations that they need to follow for sustaining in the organization. The organization is very much committedinmanaging the business in a sustainable mannerfor examplethe organization created long-term, shared values for their customers and the community. The sustainability of AMP is mainly built within the three areas of focus – customers, community and people. AMPhavebeen involved insustainability,when they reduced their environmental footprints being an organization and improved the gender diversity in the organization. According toAMPthe organization is recognised for their social, environmental and governance policies through the inclusion in FTSE4Good index series (Belghitar, Clark and Deshmukh 2014). To help and continue the progress that the organization madetilldate and to set a path for future the organization is focused on strengthening their sustainability strategies. AMP is looking forward to:
1. Continue in integrating the sustainability in Australia Mutual Provident entire strategy by changing their business from product and distribution to customer-led organization.
2. Create robust targets and indicators for the expected performance (Nicholson et al. 2012).
3. Identifying the ways how the organization can implement Taskforce recommendation in the climate-related financial disclosures.
4. Expand the materiality process which was undertaken in 2017 to gain more feedback from the stakeholders.
Creating shared value:
Creating shared value is a business concept that was first introduced in the Harvard Business review article named as Strategy & Society: the link between competitive advantage and the corporate social responsibility (Crane, Palazzo and Spence 2014). The concept was explained by Professor Mark Kramer and Michael Porter in 2011. They explained that the shared value is used by the organizations to measure or create measurable value by addressing and identifying the social and the environmental issues that may come up and intersect with the business operation. Creating shared value will help in developing the future markets and will also strengthen the economy and the community. Creating shared value helps in increasing the profit at the same time provides benefits to the community. Porter and Kramer explained that the shared value can be created in three different ways:
1. Re-conceiving the markets and the product: Develop profitable service and products to fulfil and meet the social issues with the objective of rectifying the conditions (Lane and Watson 2012).
2. Redefining productivity: Identify the social and environmental constraints in the industry and then successfully address the following constraints while maximising the productivity of the suppliers and the company.
3. Develop industry clusters: Increasethe productivityandthe growthby strengthening the competitive aspects of the business.
The organizations can increase their share value by implementing the ISO 14001 standards, which will make the organization greener and will put the organization in a better position for the tenders. This will help them by giving them a competitive advantage in the industry. This ISO standard will help the organization to reduce their operational cost by using the reuse and recycling principles. There are other ISO standards that focus on increasing their product quality which will also help them to create shared value.
Stakeholder’s analysis is a method that is used for facilitating institutional and policy reform processes by accounting for and often including the needs of those people who have a stake or interest in the organizational reforms. A stakeholder is any person whoareinterested in the organization and who can be affected by the organizational process. It is important to analyse the stakeholders of the company as theyplaysa vital role in deciding the revenue of the organization. Stakeholders of the organization can be individuals, unorganized groups or any organizations.
The four major attributes that are important for the stakeholder’s analysis are -Stakeholders position on the reform issue, level of interest they have in a specific reform, level of influence they hold and the coalition/group to which they are associated with. These attributes are measured with the help of various data collection methods, which includesinterviewwith the knowledgeable country experts who can explain the stakeholder’s needs and the actual st6akeholders of the company.
The level of stakeholder’s influence highly depends on the quantity and the type of power and resources the stakeholders can put to promote their position on the reform. The level of salience and interest is the importance and the priority that the stakeholders put in the reform area. Stakeholdersplaysan important role in the organization, they help in setting up the rules and the regulations of the company, the targets and the objectives for which the organization will work. Therearenumberof stakeholders in a company and it varies from industry to industry.
The stakeholder’s power and their impact on the organizationalpolicy makingprocess are conducted in several steps. The initial step is to form a continuum. These stakeholders are mapped on a continuum, which indicates support for the new reform on a scale of 0 to 100 from low to high. The second stage is organizing the data of the stakeholder’s according to power/influence and the salience of each of the stakeholders for understanding their potential opposition and support for the reform that is proposed. More often a particular matrix is taken for organizing and classifying the data of the stakeholders. Stakeholders are grouped according to the following aspects:
Promoters: Stakeholders who possess a high priority in the reform policy and their action can have a huge impact on the policy implementation.
Defenders: These are the stakeholders who have a high priority in the reform but who does not have a huge impact on the policy implementation.
Latent: These are the stakeholders who can affect the reform implementation but possess very low priority to the policy.
Apathetic: Stakeholders whodoesnot possess much power in the reform implementation as well as does not possess any power in the policy.
The stakeholders of the company are the most important aspect. AMP should analyse their key stakeholders correctly and then make their policy band reforms. The key stakeholders of the organization are the customer, government and the shareholders. The organization needs to divide them in a specific group so that they can fulfil each of their desires and interests towards the organization.
ASX 2010 principles and recommendations:
The principles and the recommendations of the ASX 2010 are listed below:
1. Grow a solid for the foundation for the management and oversight:Anestablishcompany should grow a strong foundation and ma01ke proper roles and responsibilities for the board and the management. This will also include how the performance of the employees will be evaluated and monitored. This will make the things clear for the stakeholders of the company and there will not be any conflict about the individual role and responsibilities. The organization must up a parameter by which the performance of the individuals will be measured.
2. Structure the management:The listed organization should havea managementof appropriate composition, skills, size and commitment. If there iseffectiveboard of members who are excellent in their positions then the organization can be highly benefited by that. The organization needs to havean effectiveemployees who understand their role and executes their duties correctly then the organization can be more competitive in the business environment.
3. Ethical acts: The organization needs to act ethically and responsibly in the industry. Following the ethical guidelines and maintaining those and then achieving the objectives should be the aim of the organziatio9nj. The organization needs to follow proper environmental and social rules and regulationsdothat their operation does notaffectsthe common people. The organization needs to createethicalguideline for the stakeholders so that it does not affect in the later stage.
4. Balanced and timely disclosure: An organization should make balanced and timely disclosure of all the matters concerning an individual person and would expecthavinga material effect onvaluean price of the securities.
5. Recognize and manage risk: The organization needs to establish an effective risk management system that will help the organization to identify the risks and will help to implement proper guidelines so that the threats can be avoided. A risk management framework needs to be established first and then according to that the organization needs to work. Periodic review of the framework also needs to be done so that they can handle the changes in the industry and the market. The risk management system helps in managing the risks and also helps in reducing the loss of the organization.
6. Remunerate responsibly and fairly:The organization needs to act fairly so that it can attract the best and the most effective directors in the organization, which will help them to design the executive remuneration to attract, motivate and retain the senior executives of the highest in the organization. The organization needs to attract the best and the most talented board of directors and the executives which will prove to be fruitful for the organization.
7. Respect the rights of security holders: A listed entity should respect the rights of its security holders by providing them with appropriate information and facilities to allow them to exercise those rights effectively.
The organization needs to follow the following principles in order to effectively perform in the industry. The organization needs to manage their risks and form proper risk management system, which will help the organization to lead in an effective manner.
In general terms ethics is the study which involves morality. It examines the objectives andthe significanceof establishing moral norms.
Banking ethics is the system of standards and rules of conduct for the organizational body and for its employees. Banking ethics can also be defined as the particular economic ethic’s form that covers the conduct of the banking employees. The banking ethics helps the financial body to operate the business smoothly and helps to follow the proper rules and guidelines. Many researchers believe the banking ethics is a type of professional ethics that includes in the field of finance, which exists along with the universal principles of morality and is characterized by specific norms of human behaviour in its specific activity.
The banking ethics are two levels of manifestation:
1. Corporate banking ethics, that is, a set of ethical standards of conduct of the bank as a legal entity.
2. Bank etiquette- rules of conduct for the bank employee. Depending on the scope this can be distinguished into two forms of banking ethics the internal andthe externalbanking ethics.
3. Internal banking ethics contains rules of conduct between bank managers, shareholders andthe employees. This type of ethics is designed to create a favourable psychological climate and cultivation of the spirit of cooperation in the banks, avoiding and resolving internal conflicts and prevent domestic bank fraud.
4. External banking ethicsgovernsthe conduct of bank managers and employees with business representatives of the bank. It meant to create a positive image of banking institutions, fostering collaboration, avoidance and resolution of external conflicts of banks. Actual theory examines the bank as a financial institution customer oriented, occupied by permanent lifting quality of its products, whose business is based onmassivedeployment of information technologies. This inevitably leads to improving ethical banking standards.
Modern banks are motivated to have ethical conduct based on the following considerations:
1. Ethical behaviour can become a competitive advantage that can help the bank to expand its customer base and increase revenue.
2. Reputation and positive image of the bank also attract customers ethically aware.
3. Banks well-known for ethical conduct may be able to attract and retain qualified and honest employees, optimizing human resources management and internal management and improving operational efficiency.
4. Positive bank’s reputation can facilitate effective and timely obtaining of additional capital. With the deployment changes in philosophical visions, social, economic and global financial metamorphoses, banking ethics has become one of the concepts addressed in the most diverse.
Basic principles ofthe bankingethics are:
1. Mutual trust is most vital which can lead to successful operation of the banking sectors. Valuable and important offers are often discussed and contracted over telephones, without any witness, this is where mutual trust is needed
2.Principleof mutual benefit and interest means that none of the partners in a business relationship should feel cheated
3.Principleof good intentions is very important for business ethics and moral behaviour. This basically means that there is no intention to treatbusinesspartner in animmoral,if it relates to fraud, theft orother undesired handlinga business partner4.
4.Principleof business compromise and business tolerance refers to harmonize conflicting interests of participants in the business process.
5. The principle of ethical improvement of business behaviour is availability business partner to accept the mistake that was made as a result of his own actions. He should admit mistakes and to respond in an appropriate manner.
6. Principleofdemonopolizationof one's own position as monopolistic behaviour on the market contains no ethical value market.
The aim of this assignment was to analyse an issue relating to the companies investigated by the Banking Royal Commission. The chosen organization for this assignment is Australian Mutual provident, founded in the year 1849 and has been a key financial service provider in Australia. Afterinvestigationby the banking royal commission, it can be seen that the organization continues to charge from the dead customer’s life insurance. The ethical question that arises from the current scenario is that is it justifiable to charge the deceased customer’s and deduct for their life insurance when there is no life to insure. The amount which was deducted from the customer needs to be refunded to the deceased customer family. Corporate social responsibility has also been discussed in this assignment. Corporate social responsibility is a management theory where an organization integrates the entire social and the environmental concerns in theirworkplaceenvironment to better the interaction with the key stakeholders of the company. Stakeholder’s analysis has also been done so that the organization can understand the key stakeholders of the company.
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8. Crane, A., Palazzo, G., Spence, L.J. and Matten, D., 2014. Contesting the value of “creating shared value”. California management review, 56(2), pp.130-153.
9. Lane, R. and Watson, M., 2012. Stewardship of things: The radical potential of product stewardship for re-framing responsibilities and relationships topromote products and servicematerials.Geoforum, 43(6), pp.1254-1265.