Corporate Values and Corporate Culture Discussion Essay

Corporate Values and Corporate Culture Discussion Essay

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Corporate Values and Corporate Culture Discussion Essay

Week 4 Seminar

Introduction to Corporate Values, Culture & Governance

Introduction

Following on from last week, this topic continues to explore issues about ethical and professional behaviour, although this week we focus on the corporate environment in which ICT professionals work. Specifically we consider corporate culture, values and governance.

Corporate Values and Corporate Culture

Stop & Consider

• Do you have a values statement at your current workplace, or at a client’s workplace? Perhaps there is a values statement at the educational institution where you completed your graduate or undergraduate studies? Even your local coffee shop will have a set of corporate values prominently displayed for customers. In the space of an average workday or personal day – make a note of how many Values, Visions and Corporate Statements you come into contact with. Start off with your local video shop, coffee house, grocer, pharmacist, bottle shop, supermarket, and look at printed receipts, promotional materials, wall plaques and posters, etc.
• If everybody is prominently displaying their corporate values and tying them explicitly to their service and products, then there must be significant worth or capital attributed to such displays. Can you think of some reasons for companies to do this? Might it have something to do with securing consumer confidence, the creation of a harmonious workplace environment, or is it more to do with transparent processes, or maybe even a certification process? There is no ‘right’ answer and in fact, there may be a number of reasons for companies to be internally and externally explicit about their corporate values and culture.

 

Corporate Values

Often when a major corporation fails, enough people are affected for the questions “Has the business world lost its values?” and “How did the situation get this far before it was noticed?” to be asked.

Values determine organizational behaviour and form the basis for codes of conduct. In this way they are similar to how ethical principles and values determine our personal behaviour. Many organizations have written values that sound impressive and desirable; the problem may be that they don’t live by them (by way of example, you might like to think about how organizations deal with conflicts of interest). An organisation’s values cannot be evaluated only by the values statements displayed on their websites, in their brochures or hung on foyer walls to impress clients. What is important is the set of values an organization follows in conducting business. We encourage you to be sceptical about  the role  of values in some organizations. Having good values and living by them is what good ethics, sustainability and professionalism is all about. Remember that in terms of ethical, sustainable professional practices, it is never enough to just say you will do something – even if you have the best of intentions of doing so.

The best ethical and sustainable professional practices put their values and codes into practice – being active and doing or performing of corporate values, statements and codes means all who participate – whether an individual employee, the corporation, client, or other stakeholders – can all hold clear expectations and have confidence in the promises, function and delivery of service and products.

As such, corporate values can play a key role in organizational survival, stability and success. Business ethics are founded in corporate values. Without a base of shared values throughout an organisation, there can be no agreed code of conduct or of ethical behaviour.

 

  Stop & Consider

• At this point you might like to stop and consider what is meant by the “sharing of values in an organisation”. Think about an organisation you belong to. This could be your current PE Course classmate and tutor, your badmington club, toastmasters, your community of faith, or your online gaming group. Now list the kinds of commonalities or shared understandings that are needed in order to play an enjoyable game of badminton, make/listen/appreciate a speech, practice your faith in community, engage in a successful campaign in Eve Online.
• You quickly realise that we do all these things (to different degrees of success or enjoyment) in relation with others. The aspect of relationality is crucial to all that we do as humans. Of course, to do things well, we need to cooperate with others and communicate effectively. In ICT and business, we do this by being clear about the shared values we can agree upon and conduct our businesses through.

Corporate Culture

A coherent culture promotes a sense of unity and purpose in an organization. A strong culture needs two things –

1. an organisation’s leaders need to determine what it is that makes the it different, and
2. that difference needs to be communicated throughout the organization.

So, it’s about leadership and communication.

A corporate culture, that is, a corporate way of practice, always exists in an organization even if it has not been formally described and communicated. To get some further insight into what culture is read Herb Kelleher’s thoughtful article”A Culture of Commitment”.  (This article is included in this week’s resources). Another useful way to think about leadership and its affects can be seen in this YouTube on “Engage Your Team” by Ken Wright. In this YouTube, Wright talks about the motivational aspects of leaders in creating a corporate culture through engagement with other people.

Culture is about how an organisation does things: “it’s how we do things here.” Many IT projects are about supporting organisational change with technology, so you need to be aware of cultural issues (recall we saw this topic detailed in last week’s YouTube by ACS past-President Phillip Argy). You may be involved with a project which is required simply to service an organization’s growth. Organisations also do not stay unchanged with time; they adapt to changes and influences including, but not limited to, local and distant demographics, consumer preferences, new competitors, government legislation, the availability of resources, technological progress, politics, and more.

Two questions you may want to ask yourself time and time again throughout your career are:

1. What happens as organisations grow?
2. Can the corporate culture that the founders created remain unchanging, or should corporate culture evolve?

With these two questions in mind, take a moment to watch this short YouTube titled “Ideas for Your World: The New Zealand Experience”.

 

In this YouTube, a number of New Zealand corporations discuss the way a positive and dynamic corporate culture has enhanced their local, national and international profile. You will notice that the defining characteristics centre around identifying core values, and drawing on them to form not only corporate culture, but to promote different ways of engaging competitively. Their methods for shaping their corporate identities spill out enthusiastically to all aspects of the professional workplace. Lastly, their success in shaping a dynamic corporate culture rely heavily on excellence in both leadership and communication.

 

Corporate Governance  

Corporate governance has received wider publicity in recent years, mainly because of the size of the organizations which have collapsed and the extent to which their collapses have impacted on large numbers of stakeholders.

Recently, the Global Financial Crisis (GFC) impacted on many organizations, employees and citizens in many countries. You can view a brief description of the GFC in the following YouTube titled “Global Financial Crisis Explained in 96 Seconds”.

It is generally considered that “the crisis stemmed from a combination of unsustainable global macroeconomic imbalances and structural financial system weaknesses in the context of excessively loose monetary policy, abundant liquidity, rising asset prices, and increased financial innovation and globalization” (Stephanou, 2009).

Many people have since questioned whether the GFC need have happened, and what sort of practices could have avoided or at least mitigated it. Corporate collapses such as the ones arising from the GFC, place pressure on the corporate sector and they make investors wary of investing. This threatens the role of the private sector, can cripple innovation and cause a serious downturn in an economy – we need only look to the recent examples of sovereign fiscal crisis being experienced by Greece and Spain, as well as the burden of bailing as exemplified by Germany to appreciate the enormity of such crises. No government wants this collapse or burden because for governments – just as in a global economy – economic progress is vital for global growth.

Even before the GFC, the economic threat posed by large corporate collapses (e.g. HIH, OneTel, Parmalat, Enron) caused alarm. Such alarm was the driving force behind what is known as the  Sarbanes-Oxley legislation  in the US. This is an act of legislation in response to the GFC to protect investors by improving the accuracy and reliability of corporate disclosures made in accordance with to US security laws. It is one example of introduced legalisation seeking to improve corporate governance. New legislation places a greater burden on senior executives and members of corporate boards to pay attention to operational processes and internal control systems. It is no longer possible for Board members to claim ignorance or poor controls, they can be held personally liable for bad business practices.

The following article titled “The Ethics of the Global Financial Crisis” is worth reading if you are interested in tracking a more detailed discussion of the ethical concerns arising out of the criticism directed at corporate leadership during the GFC. It is written by Simon Longstaff from the St James Ethics Centre.

It is also worth thinking about the ‘butterfly effect’ of large corporate collapse and the long term effects of the GFC which move beyond the financial and business world. Many people would argue that with with the financial crisis, culture is being very slowly eroded. For example, orchestras around the world are unable to continue playing for the public, musicians are taking pay-cuts of up to 50%, and in some instances, orchestras are being disbanded due to the financial crisis (think here about the Greek Radio Symphony Orchestra (GRSO), the Minnesota Orchestra, St Pauls Chamber Orchestra, and the Detroit Orchestra, etc). You can watch this YouTube of the GRSO playing for the last time together.

This is an example of the erosion of culture that can occur with significant impacts on the local, national and global level, and we have also seen it lead to a great deal of civil unrest. The onus is on each one of us to be accountable and responsive to governance.

 

 Stop & Consider

• As ICT professionals, you need to be aware of what corporate governance is, what IT governance is, why governance is important, how it differs from both management and compliance, and who is involved in making decisions about it.
• It is worth stopping to briefly reflect on your understanding of what each of these concepts refers to, as well as if you can identify any examples that are closer to your experience as an ICT professional (e.g., at your internship, your workplace, your university, corporations in the media, etc)

Governance is about control, accountability, responsibility, and authority. It is about rules and regulations, about who sets the rules and how compliance is monitored. There are various forms of governance. For example, the Board members of an organisation must ensure compliance with certain legal rules and regulations. If not, the Directors are liable for that non-compliance. Governance can also be understood in ethical terms insofar as it defines the beliefs, values and morals of an organisation, which in turn determine the organisation’s culture and set what is and is not acceptable behaviour.

There is a link between corporate values and ethics (see Week 3) and governance, and there is also a need to ensure that compliance does not limit innovation. It is a balancing act and the balance needs to be addressed when designing a governance framework.

Corporate governance is the highest level of governance. We need to be able to link governance of key assets, like ICT, back to corporate governance. For example, effective governance determines behaviour in the use of ICT.

 

 Stop & Consider

• Corporate values are about defining suitable behaviours. At this point, you might like to look up the “Use of ICT Policy” at your internship, workplace or educational institution. Did you realise this policy is in part, a way to shape your behaviour to align it with corporate values?
• To what degree does your corporation or institution police this document? Are you aware of the consequences of breaching them? Do you agreee with this (or any other policy, rule or regulation) in a professional capacity (or even a personal one)? What do you imagine might happen if you disagreed with it?

There is also a link between governance and values and we have already seen that there is a link between values and ethics. Although we are exploring IT governance in this module, you need to see where it fits in the overall governance framework.

As an example of these links between values, ethics, and IT governance, The Australian Stock Exchange (ASX) defines corporate governance as:

“the system by which companies are directed and managed. It influences how the objectives of the company are set and achieved, how risk is monitored and assessed, and how performance is optimised.”

And states that:

“Good corporate governance structures encourage companies to create value (through entrepreneurism, innovation, development and exploration) and provide accountability and control systems commensurate with the risks involved.”

 

IT Governance

What is IT Governance and how does it relate to Corporate Governance? A succinct start on this is provided by ServiceXen. Further this short introduction also gives us a basic definition of the difference between management and governance which is often confused by those looking at IT Governance for the first time. An important and implicit concern is the link between information technology and the present and future business objectives. Imagine a World without Standards is a documentary on YouTube on the importance of global standardisation. It is quite long (18 mins) but the first 2 minutes are worth viewing for the context of the International Standards Organisation (ISO), and help to place both Standards Australia, as well as corporate governance (including ethics and compliance), into perspective.

In 2006, building on the Australian Standard, AS 8015:2003 Corporate Governance of Information and Communication Technology , the ISO released its ISO/IEC 38500:2008 – Corporate governance of information technology which now guides corporations around the world in their Governance of ICT. It is currently under further revision and some of this is covered in the documentary link above. (Please note you are not expected to purchase these standards at this stage, but should know from where they can be sourced. Your organisation may already have copies of these standards, or may be willing to purchase them.)

According to the Standard:

“the benefits of using this Standard are that it establishes principles for the effective, efficient and acceptable use of IT. Ensuring that their organisations follow these principles will assist directors in balancing risks and encouraging opportunities arising from the use of IT”.

In summation, there are six principles:

• Principle 1: Responsibility
• Principle 2: Strategy
• Principle 3: Acquisition
• Principle 4: Performance
• Principle 5: Conformance
• Principle 6: Human Behaviour

Each of these, in the Standard, are explained against the model below in Figure 1: evaluate – direct – monitor:

According to the “Taking Governance Forward (TGF)” initiative of the IT Governance Institute (ITGI), the definition of IT governance is:

“A governance view that consists of the business governance of IT – ensuring that IT supports and enables the business strategy—and the functional governance of IT – ensuring that the IT function itself runs efficiently and effectively”

TGF (ITGI) further provides the following high level definition that:

“A governance system is all the means and mechanisms that will enable multiple stakeholders at various levels of an entity for specific purposes to have an organized say in setting direction and monitoring compliance and performance so as to create for them acceptable value, while taking acceptable risk levels and using limited resources responsibly. In the definition, the enablers of governance are “framework, principles, structure, processes and practices”; the activities are “set direction and monitor compliance and performance.”

The application of these activities is intended to provide a means by which an IT can sustain and extend an organisation’s strategies and objectives, whatever these may be. Now look at Governance on a Page which summarises these relationships. The specific application in IT is summarized in Governance Views of IT. When you look at these diagrams, take the time to read and understand, the associated explanations.

Tip!

• If you are interested in pursuing standardisation, the ISOhas a number of useful links on its website under ‘Common Questions’. In terms of the foci of Module 2 here in the PE Course, you may find “What are the benefits of standardisation?”and “What can I do if I think a standard is being misused?” of most interest.
• In addition, Standards Australiahas a number of informative PDFs on developing Australian standards.

Application of IT Governance

Compliance

So far we have been discussing standards, but it is also important that ICT professionals keep themselves informed about any laws which may impact on their activities. These may be broad business laws such as Occupational Health and Safety (OH & S).

We can think of compliance, as we mentioned in the Module overview, being in two forms, regulatory/legislative and ethical. Both are relevant to work as an ICT professional and in this week’s seminar we will look at how and why.

In Australia compliance in general is determined by the Australian Standard on Compliance AS3806 – 2006 which defines compliance as “adhering to the requirements of laws, industry and organizational standards and codes, principles of good governance and accepted community and ethical standards”. The standard recommends that organisations implement a compliance program to manage the risks associated with the compliance obligation. A compliance program is “a series of activities that when combined are intended to achieve compliance”.

• Is compliance a big deal?
• Does it really matter?
• Why should you be interested in compliance?

To answer this read what Allan Fels, former chief of the Australian Competition and Consumer Commission has to say. We learn from the definition above that compliance is about “laws, industry and organizational standards and codes”.

A recent example of OH & S and regulatory/legislative compliance can be found in thisYouTube on “Communications Compliance and Safety”.

In this YouTube, Brendon Woods addresses the 2013 Comms Connect audience about the need for compliance for mobile and wireless technologies. At 31 minutes in length, this video is longer than usual ones used to demonstrate key points, but it offers a broad sweep across OH & S on the ground for technicians, as well as specific changes to regulatory/legislative acts in Australia. The first 10 minutes are sufficient to put the content in context for you. There is also an excellent synopsis of his talk on the YouTube website underneath the video

Ethics Compliance

The question of compliance in ethics arises from the definition above in the second part when it refers to “accepted community and ethical standards”. Richard Lucas, in a presentation to the 2008 ACS Canberra Branch Conference titled “Ethics and regulation in the ICT Industry: Lessons for the ACS” suggests that ethics compliance is an underwhelming imperative to ICT performance and practice.

Compliance issues affect all professionals and this is illustrated for the accounting profession in Australia. You can read this example from the Certified Practicing Account (CPA) website which details the workings of Compliance Committees (e.g., the Quality Review Committee and the Disciplinary Committee) which work to regulate ethical compliance within the industry. This YouTube titled “Ethics and Compliance in Financial Planning” briefly discusses the kinds of ethical frameworks that financial planners need to comply with. The speaker is Mark Rantall from the Financial Planning Association of Australia.

In the next four weeks you will be delving into aspects of project management and developing a risk management plan for your project. Later in this course you will learn about compliance and managing risks in ICT projects. Keep this week’s material in mind when you develop your Project and its Risk management Plan.

Acknowledgements & References

Acknowledgements

This seminar is a revision by Marnie Nolton of material originally written by Brenda Aynsley for the Australian Computer Society.

References

Addison-Hewitt Associates (2006).“A Guide to the Sarbanes Legislation”, The Sarbanes-Oxley Act. Accessed 5 October 2013. http://www.soxlaw.com/.

ASX Corporate Governance Council (2007). Corporate Governance Principles and Recommendations, Second Edition August 2007. Accessed 5 October 2013.  http://asx.ice4.interactiveinvestor.com.au/ASX0701/Corporate%20Governance%20Principles/EN/body.aspx?z=1&p=3&v=1&uid=.

Committee IT-030, IT Governance (2005). Australian Standard ™ Corporate Governance of Information and Communication Technology, Standards Australia, Accessed 5 October 2013. http://www.saiglobal.com/PDFTemp/Previews/OSH/as/as8000/8000/8015-2005.pdf.

DP World (2011). “DP World Corporate Values”. Accessed 5 October 2013. http://www.youtube.com/watch?v=f_0VzzqKvbQ.

Fells, A (1999). “Compliance programs – the benefits for companies and their stakeholders”, Australian Competition and Consumer Commission. Accessed 5 October 2013.  http://www.accc.gov.au/content/item.phtml?itemId=179168&nodeId=0fcc9c80fc56ca40fe42efefdcc8d895&fn=Compliance%20speech.pdf.

GS1US (2013). Imagine a World without Standards. Documentary. Accessed 1 October 2013. http://www.youtube.com/watch?v=TaxWfz_MB2A.

I.T. Governance Institute (2016). “Taking Governance Forward”. Accessed 20 July 2016. http://www.isaca.org/restricted/Archived-Journals/2009/Volume-1/Pages/In-Summary-The-Taking-Governance-Forward-Mapping-Initiative1.aspx

International Organisation for Standardization (2008). ISO/IEC 38500:2008 Corporate Governance of Information Technology. Accessed 5 October 2013. http://www.iso.org/iso/iso_catalogue/catalogue_tc/catalogue_detail.htm?csnumber=51639.

International Organisation for Standardization (2008). “What are the Benefits of Standardisation?”, Benefits. Accessed 30 September 2013. http://www.iso.org/iso/home/standards/benefitsofstandards.htm.

International Organisation for Standardization (2008). “What Can I Do if I Think a Standard is Being Misused?”, Making a Complaint to ISO. Accessed 30 September 2013. http://www.iso.org/iso/home/standards/certification/complaints.htm.

London Business School (2013). “Post-financial Crisis: Where Has Progress Been Made?” Accessed 3 October 2013. http://www.youtube.com/watch?v=OM29qW3_HSM&list=SPwUU0JAv_JxhayNgOjjnE6FIGVAoIzeYN.

Lucas, Richard (2008). “Ethics and regulation in the ICT industry – Lessons for the ACS”, ACS Canberra Branch Conference, 2008. Accessed 5 October 2013. http://web.archive.org/web/20060211060350/http://www.acs.org.au/act/2008conference/docs/LucasACSConference2008.pdf.

NZ Business (2011). “Ideas for Your World – The New Zealand Experience”, NZ Business. Accessed 5 October 2013. http://www.youtube.com/watch?v=NsfSrd1BfJI.

Rantall, Mark (2011). “Ethics and Compliance in Financial Planning”, Lexis Nexis Australia. Accessed 5 October 2013. http://www.youtube.com/watch?v=_TppVWe9nsY.

Paladex77 (no date). “Global Financial Crisis Explained in 96 Seconds”. Accessed 5 October 2013. http://www.youtube.com/watch?v=0zPyZZIvwCc.

ServiceXen, (2008) “IT Governance vs. Corporate Governance vs. IT Management”, ServiceXen. Accessed 5 October 2013. http://servicexen.wordpress.com/2008/06/01/it-governance-vs-corporate-governance-vs-it-management/.

Standards Australia (2013). “Developing Australian Standards”. Standards Australia. Accessed: 30 September 2013. http://www.standards.org.au/OurOrganisation/Pages/Brochures.aspx.

Stephanou, C. (2009). “Dealing with the Crisis – Taking Stock of the Global Policy Response.” The World Bank Group. Accessed 5 October 2013.  http://siteresources.worldbank.org/FINANCIALSECTOR/Resources/Crisis_Response_Dealing_with_the_Crisis.pdf.

Woods, Brendon (2013). Communications Compliance and Safety”, Comms Connect. Accessed 5 October 2013. http://www.youtube.com/watch?v=3STdefHu6mk.

Wright, Ken (2013). “Leadership – Enagae Your Team – Create a Culture of Engagement”. Accessed 5 October 2013. http://www.youtube.com/watch?v=IZA94smSkQg.

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