THIS ASSIGNMENT IS A PARTIAL FULFILLMENT FOR Ethics and Governance IE 2001 hartered Is!a"ic Finance Pro#essiona!

$ IFP% IN EIF

Se&te"'er Se"ester 2012

Student Name: FASHOLA OLA(IN)A NURU*EEN Student ID: 11002+,

-.estion 1/ There are three main concepts here which are good governance, leadership and management. Its wise to have a firm definition of these concepts before one can be better able to do a meaningful compare and contrast the terms in relation to good governance. Good 0overnance is an indeterminate term used in development literature to describe how public institutions conduct public affairs and manage public resources in order to guarantee the realization of human rights. Governance describes the process of decision!ma"ing and the process b# which decisions are implemented $or not implemented% . The term governance can appl# to corporate, international, national, local governance or to the interactions between other sectors of societ#&. Leadershi& is organizing a group of people to achieve a common goal . The leader ma# or ma# not have an# formal authorit#. Students of leadership have produced theories involving traits, situational interaction, function, behavior, power, vision and values, charisma, and intelligence, among others. Somebod# whom people follow: somebod# who guides or directs others'. Mana0e"ent is a social process entailing responsibilit# for the effective and economical planning and regulation of the operations of an enterprise, in fulfilment of a given purpose or tas", such responsibilit# involving: $a% (udgement and decision in determining plans and in using data to control performance, and progress against plans) and $b% the guidance, integration,

*hat is Good Governance. +N,S-./, '001. .ccessed 2ul# &0, '001. -hemers 3. $&114% An integrative theory of leadership. 5awrence ,rlbaum .ssociates, /ublishers.

motivation and supervision of the personnel composing the enterprise and carr#ing out its operations6. The table4 below shows the comparison of management and leadership in terms of roles, responsibilities and functions. Mana0e"ent
8 /lanning and 9udgeting 7oles 7esponsibilities ;unctions

Leadershi& 8 ,stablishing Direction 8 -reating a vision 8 -larif#ing the big picture 8 Setting strategies 8 .ligning /eople 8 -ommunicating goals 8 See"ing commitment and 8 9uilding teams and coalitions 8 3otivating and Inspiring 8 Inspiring and energize

8 ,stablishing agendas 8 Setting timetables 8 .llocating resources

8 :rganizing and Staffing

8 /rovide structure 8 3a"ing (ob placements 8 ,stablishing rules

procedures
8 -ontrolling and /roblem Solving

8 Developing incentives 8 Generating

creative 8 ,mpowering subordinates 8 Satisf#ing unmet needs

solutions 8 Ta"ing corrective action -.estion 2/

. paper to the board of 9an" Sedar

<ow to develop a corporate culture that goes be#ond compliance.

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,dward ;ranz 5eopold 9rech $&14=% The /rinciple and practice of management. 5ongman publications Northouse, /. $'004%. Leadership theory and practice. Thousand :a"s, -.: Sage /ublications.

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;ashola :la#in"a Nurudeen -hairman 9oard of 9an" Sedar.

September, '0&'.

1/0 Introd.ction -ompan# culture is important because it can ma"e or brea" #our compan#. -ompanies with an adaptive culture that is aligned to their business goals routinel# outperform their competitors. To achieve results li"e this for our organization, we have to figure out what our culture is, decide what it should be, and move ever#one toward the desired culture.

-ompan# cultures evolve and the# change over time. .s emplo#ee leave the compan# and replacements are hired the compan# culture will change. If it is a strong culture, it ma# not change much. <owever, since each new emplo#ee brings their own values and practices to the group the culture will change, at least a little. .s the compan# matures from a startup to a more established compan#, the compan# culture will change. .s the environment in which the compan# operates $the laws, regulations, business climate, etc.% changes, the compan# culture will also change. These changes ma# be positive, or the# ma# not. The changes in compan# culture ma# be intended, but often the# are unintended. The# ma# be ma(or changes or minor ones. The compan# culture will change and it is important to be aware of the changes.

<owever, it is the responsibilities of the board members to ensure that at all times the corporate culture of the compan# is maintained and sustained towards achieving the common ob(ectives of ensuring that the compan# remains afloat.

2/0 *e#inition o# or&orate .!t.re In order to measure corporate culture, we must first define it. .s one studies culture it becomes clear that arriving at a common definition is not an eas# tas". Several definitions of culture have been offered) some of the most prominent include: -ulture is the shared philosophies, ideologies, values, assumptions, beliefs, e>pectations, attitudes, and norms that "nit a communit# together. .ll of these interrelated ps#chological ?ualities reveal a group@s agreement, implicit or e>plicit, on how to approach decisions and problems, i.e., the wa# things are done around here
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-ulture involves how and wh# organisations create m#ths and legends, engage in rites and rituals, and are governed through shared s#mbols and customsA. ,ver# organisation is a uni?ue culture. It has its own special histor# of how the organisation has been managed, its own set wa#s of approaching problems and conducting activities, its own mi> of managerial personalities and st#les, its own established patterns of how we do things around here , its own legendar# set of war stories and heroes, its own e>periences of how changes have been instituted!in other words, its own climate, fol"lore, and organisation personalit#4.

Bilmann, Sa>ton, and Serpa, &1CA, @Issues in +nderstanding and -hanging -ulture@,. -alifornia 3anagement 7eview, vol. 'C, no. ', pp. C4!1D
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3ee", &1CC, :rganizational -ulture: :rigins and *ea"nesses, p.D=6 Thompson and Stric"land, &1C4, Strategic 3anagement: -oncepts and -ases, p. '64

-ulture can be the social or normative glue that holds the organization together. The corporate culture e>presses the values and beliefs that members of the organisation have come to share. 3oreover, these values are t#picall# manifested b# s#mbolic devices such as m#ths, rituals, stories, legends, and specialised languageC. :rganisational culture refers to the unwritten, often unconscious message that fills in the gaps between what is formall# decreed and what actuall# ta"es place) it involves shared philosophies, ideologies, values, beliefs, e>pectations, and norms1.

1/0 I"&ortance o# or&orate .!t.re/ ,ver# compan# must have its uni?ue st#le of wor"ing which often contributes to its culture. The beliefs, ideologies, principles and values of an organization form its culture. The culture of the wor"place controls the wa# emplo#ees behave amongst themselves as well as with people outside the organization. 9elow are some of the ver# important reasons wh# the compan# must ensure that itEs corporate culture is nurtured and sustained.

The c.!t.re decides the 2a3 e"&!o3ees interact at their 2or4&!ace . . health# culture encourages the emplo#ees to sta# motivated and lo#al towards the management.

The c.!t.re o# the 2or4&!ace a!so 0oes a !on0 2a3 in &ro"otin0 hea!th3 co"&etition at the 2or4&!ace. ,mplo#ees tr# their level best to perform better than their fellow wor"ers and earn recognition and appreciation of the superiors. It is the culture of the wor"place which actuall# motivates the emplo#ees to perform.

7eimann and *iener, &1CC, Ignorance at the top: *h# bad news ma# never reach the boss , International 2ournal of 3anagement, Fol. = pp.&40 ! &41.
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Deshpande and /arasuraman, &1CA, /ractical Guidelines for Small 9usiness 3ar"eting 7esearch, 2ournal of Small 9usiness 3anagement, 'D$2an%, &, &!C.

The c.!t.re o# an or0ani5ation re&resents certain &rede#ined &o!icies 2hich 0.ide the e"&!o3ees and 0ive the" a sense o# direction at the 2or4&!ace . ,ver# individual is clear about his roles and responsibilities in the organization and "now how to accomplish the tas"s ahead of the deadlines.

The 2or4 c.!t.re 0oes a !on0 2a3 in creatin0 the 'rand i"a0e o# the or0ani5ation . No two organizations can have the same wor" culture. It is the culture of an organization which ma"es it distinct from others. The wor" culture gives an identit# to the organization. In other words, an organization is "nown b# its culture.

The or0ani5ation c.!t.re 'rin0s a!! the e"&!o3ees on a co""on &!at#or" . The emplo#ees must be treated e?uall# and no one should feel neglected or left out at the wor"place. It is essential for the emplo#ees to ad(ust well in the organization culture for them to deliver their level best.

The 2or4 c.!t.re .nites the e"&!o3ees 2ho are other2ise #ro" di##erent 'ac4 0ro.nds, families and have varied attitudes and mentalities. The culture gives the emplo#ees a sense of unit# at the wor"place.

Ever3 e"&!o3ee is c!ear 2ith his ro!es and res&onsi'i!ities and strives hard to acco"&!ish the tas4s 2ithin the desired ti"e #ra"e as &er the set 0.ide!ines . Implementation of policies is never a problem in organizations where people follow a set culture. The new emplo#ees also tr# their level best to understand the wor" culture and ma"e the organization a better place to wor".

The 2or4 c.!t.re &ro"otes hea!th3 re!ationshi& a"on0st the e"&!o3ees . No one treats wor" as a burden and moulds himself according to the culture.

It is the c.!t.re o# the or0ani5ation 2hich e6tracts the 'est o.t o# each tea" "e"'er. In a culture where management is ver# particular about the reporting s#stem, the emplo#ees however bus# the# are would send their reports b# end of the da#. No one has to force an#one to wor". The culture develops a habit in the individuals which ma"es them successful at the wor"place.

7/0 Ho2 to deve!o& or&orate .!t.re To develop a corporate culture that is enduring and sustainable the follow "e# point must be understood and followed religiousl#. 1/ *e#ine 3o.r !e0ac3 The compan# must define its legac#, that is, what "ind of compan# #ou want. Gou must also thin" about what #ou want people to sa# about #our compan# while the# wor" there and when the# leave. 2/ Hire S"art!3 The right people with the right attitude must be emplo#ed to wor" with the compan#. Gou can la# out a vision, but #ou need good people to ta"e it to the ne>t level. 3ost great wor"ers alread# have (obs. 3a"e sure #ou offer a differentiator. 1/ Listen ,mplo#ee!to!emplo#er feedbac" is hugel# underrated in companies of all sizes. In developing an enduring corporate culture #ou must constantl# as" #our emplo#ees what the# li"e about wor"ing at #our compan#, what the# hate about it, and what the# would do differentl# if it was their compan#. Thus the leadership of the compan# must focus on the needs that creates a positive corporate culture. 7/ En0a0e

-onsider sharing compan# goals and financialsHgood and badHwith #our emplo#ees. :pen lines of communication will create a culture of openness in #our organization, and emplo#ees ma# become more engaged in the success of the business. ,/ Re2ard . pat on the bac" is alwa#s appreciated, especiall# when it comes from the management. The compan# should institute a robust reward s#stem to appreciate those emplo#ees that live the compan#Es corporate culture. 8/ Pre&are to chan0e -hanging a compan#Es culture ta"es time, patience, and serious dedication. 9ut the change must happen to ensure that the appropriate culture permeate all the strata of the organization. .ll the aforementioned must be at the fingertips of the leadership and management of the compan# when developing a corporate culture that will be enduring and transform the growth of the compan#.

,/0 Mana0e"ent o# or&orate .!t.re/ :rganizational leaders manage their operations and finances. The# must manage their cultures as well. In his landmar" boo" :rganizational -ulture and 5eadership, the noted cultural theorist ,dgar <. Schein writes: -ulture not onl# e>plains man# organizational phenomena I it is also something that leaders can manipulate to create a more effective organization. Schein

emphasizes that culture can be activel# administered to advance corporate aims. 3anaging culture is a central responsibilit# of leaders toda#. *hat@s more, it must be an ongoing process if the# are to "eep pace with ever!changing mar"ets, customer needs, and competition.

-ulture management is especiall# relevant when #ou consider a compan#@s macro!environment and micro!environment. The macro!environment contains all the e>ternal forces $i.e., socio! economic, regulator#, geo!political% that are be#ond management@s control. The

microenvironment includes all the internal variables that are within management@s control $i.e., decisions on staffing, resource allocations, or corporate development strategies%. -ulture falls s?uarel# in the realm of the microenvironment.

8/0 The Ro!e o# the 9oard/ The roles and responsibilities of the board members of the compan# in the implementation and driving the corporate culture cannot be over emphasized. The# are solel# responsible for the conceptualization and implementation of the corporate culture of an# organization. This point is further corroborated b# the provisions of the Bing III report in the J/rinciple &.6: The board should ensure that the compan#Es ethics are managed effectivel#K below are the e>tracts:

66. Good corporate governance re?uires that the board ta"es responsibilit# for building and sustaining an ethical corporate culture in the compan#. Such a culture consists of both formal and informal cultural s#stems. Selection and reward s#stems, for e>ample, are elements of formal culture, whereas LlivingM practices and language usage are elements of informal culture. . cultural approach to governing and managing the compan#Ms ethics would ensure that ethical standards infuse and align both formal and informal cultural elements.

6D. 9uilding and sustaining an ethical corporate culture re?uires ethical leadership. .n ethical leader is a role model for the compan#Ms sta"eholders b# ma"ing ethics e>plicit, legitimising

ethics discourse, encouraging ethical conduct in others, and holding others accountable for the ethics of their conduct. It is the responsibilit# of the board $and e>ecutive management% to provide ethical leadership in the compan#. The board should ensure that the compan#Ms ethical standards are clearl# articulated and should be seen to support them activel# b# ta"ing measures to achieve adherence to them in all aspects of the business. In this wa#, the board would ensure that ethics is an integral part of the wa# in which a compan# conducts its business. 6=. The boardMs commitment to building and sustaining an ethical organisational culture should be reflected in the compan#Ms vision, mission, strategies and operations) its decisions and conduct) and the manner in which it treats its internal and e>ternal sta"eholders. The boardMs commitment to ethics should also manifest in the com!pan#Ms responsibilit# towards the communities and natural environment in which it operates. .n ethical culture is, therefore, about more than social philanthrop# or charitable donations. Internal and e>ternal ethics performance should be aligned with the same ethical standards. 6A. 9uilding and sustaining an ethical corporate culture re?uires active governance of ethics. The board assumes ultimate responsibilit# for the compan#Ms ethics performance b# delegating to e>ecutive management the tas" of setting up a well!designed and properl# implemented ethics management process N or ethics programme&0.

:/0 onc!.sion/ It is ver# important that as board members we are e>pected to be the driving force for the formulation, development and implementation of the corporate culture for the ban". The leadership is critical in codif#ing and maintaining an organizational purpose, values, and vision. -ulled from: Bing 7eport on Governance for South .fricaM, and the LBing -ode of Governance /rinciplesM$Bing III%.
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.s leaders we must set the e>ample b# living the elements of culture: values, behaviors, measures, and actions.

5i"e an#thing worthwhile, culture is something in which #ou invest. .n organization@s norms and values aren@t formed through speeches but through actions and team learning. Strong cultures have teeth. The# are much more than slogans and empt# promises. Some organizations choose to part wa#s with those who do not manage according to the values and behaviors that other emplo#ees embrace. :thers accomplish the same ob(ective more positivel# for us at 9an" Sedar we shall constantl# reinforce the culture b# recognizing those whose actions e>emplif# its values, its behaviors, and its standards. Team successes are cause for fre?uent celebrations.