AMP is one of the Australian based financial services organizations which are situated in Australia and New Zealand. The services which are offered by the company are financial advice, superannuation, banking products, saving accounts and home loans. In the present scenario, the company engaged in the investigation of the Australian securities and investment commission just because of its unethical behavior. It has been investigated that managers of the company failed to focus on the standards related to care which is important to be maintained by them so that the activities can be completed in an ethical manner. The impact is seen on the entire image of the company after the Banking Royal Commission 2018 (Ferguson, 2018).
So, in this report the emphasis will be given on the corporate governance and ethics system which should be implemented by AMP so that it can be easy to perform the activities in an ethical manner. It can be investigated that there are many deficiencies in the structure of corporate governance of AMP which will be focused in this report.
In the next phase of the report the evaluation will be made of the circumstances due to which the breakdown of AMP took place. Also the mechanism that should be considered by the organization to secure the whistle blowers will be elaborated in this report to analyze whether these policies are effective to secure the overall interest of the stakeholders. In the last phase of the report there are various strategies which will be recommended for AMP so that these types of scandal can be reduced.
Problems in the system of corporate governance and ethics at AMP
AMP is one of the largest companies in the finance sector. The activities of the organization affected the large number of individuals and just because of this the company considered a corporate governance structure which directs the management of the company to complete the activities in an ethical manner. By taking into consideration this structure, the company emphasizes on maintaining the transparency by giving the statement of governance in every year. The organization considers the data related with the activities under this statement and it can also help to enhance the ethical concerns. The organization created a corporate governance charter which offers outline for the activities of the board and managerial personnel. Also the provisions are given which they have to follow so that it can be easy to maintain the high ethical standard (Filatotchev & Nakajima, 2014).
There are various roles and responsibilities which are considered in the charter of the organization and it is important to be followed by the board and management team of the organization. All these policies are related with the constitution of the organization along with different laws. It can be stated that corporate governance structure considers a proper code of conduct of the organization which is also related with the decision of the business while complying the overall ethical and legal principles. The code also focuses on the behavior of the organization that represents AMP and also the overall values. Also employee’s policies are considered which ensures that company manages its activities with the customers by considering the overall regulatory obligations (AMP, 2018a).
Also, it can be analyzed that there are many deficiencies in the entire system which impact the stakeholders of the organization. One of the deficiencies is related with lack of ethical training. It can be analyzed that there is no proper training given to the team of the organization. Just because of lack of training, it is simple for the team to violate the overall policies given under the structure of the corporate governance and the values. It can be evaluated that company do not have any strict policies on the people who breach the overall policies of the corporate governance. There is also no method to focus on the activities of the company due to which it is not easy for the company to emphasize on the management and board to comply with the policies of corporate governance and ethics (Gulen & O'Brien, 2017).
Reasons for breakdown
It has been seen that there are almost 20 occasions in which the organization has not followed the corporate regulations. Also, there are information related to the unethical practice of the company which a whistle blower has leaked and this simply states that the management of the company does not take care of its customers. Board of the company also said that interference is seen in the independent investigation which is done by ASIC (AMP, 2018b). These problems have enhanced various concerns related to the social license. The concern raised related to whether the company should be given social license to manage the activities of the company. Anthony Regan also states that the organization have the data of the activities in which it has been stated that they charged fees from the customers and also the truth is that, it was the intentional decision which was taken by the management of AMP (AMP, 2018b). The company became aware about this problem in 2008, and it still continued till 2013. In 2015, it has been said by the company to ASIC that “there are no systematic problems that were analyzed” in the audit which was done by PwC, but the statement given by the company was not correct (Matthews, 2016). The internal emails of the organization and draft reports states that the audit was not done on the independent platform. These breakdowns are the overall result of the ineffective corporate governance system as the organization is not able not considers the ethical policies.
It has also been investigated that board and management of the organization did not considered with the provisions which were offered under the code of conduct and also they have not able to satisfy the principles of corporate governance. To confirm that companies are maintaining the activities ethically, it is necessary to focus on maintaining proper transparency in the structure of corporate governance. They should also consider complying with the principles and also recommendations which are given by the Australian securities exchange. The organization has not been successful to comply with the initial principle given by ASX which offers that companies should have a good foundation for the team. Just because if the lack of oversight policies the team of the organization was conducting the activities unethically (Rodriguez-Fernandez, 2016).
The next principle which is violated is related with the overall failure of the organization to encourage ethical and proper decision making as its board of directors consider the unethical activities like taking fees from the customers. The principles related to time and disclosure was not taken into consideration as the organization has not focused on maintaining the transparency in its entire activities. Just because of these failures the breakdown of the organization took place, in which the organization was guilty of engaging with the independent audit and also was not successful to consider its policies related to corporate governance (Klettner, Clarke & Boersma, 2014).
Whistle blowers and the mechanisms sufficient to protect the various stakeholders
AMP has considered a whistleblowing policy in the overall structure of corporate governance which emphasized on boosting and securing whistle blowers to inform about the ethical behavior of the organization. By considering this policy, the organization is emphasized on creating a supportive work culture which also comply this policy with the overall organizational values (Stahl & Sully de Luque, 2014).
It has been seen that organizational culture boosts the values like professionalism, integrity and also honesty in which the policy related to whistleblowing is made. The organization also offered people and culture advice line for its workers in which they can report any act which is not ethical so that it can be easy to maintain security. Also the management encouraged the whistle blowers to report related to the unethical act of the organization to the top management. So, all these policies are not proper as they do not focus on securing the interest of the whistle blowers of the company. There are many incidences which are considered in which the board of directors and also the top management of the organization were guilty of the not considering the policies of the corporate governance (Khan, Khan & Liaqat, 2017).
There are also many examples in which the workers are reported related to the unethical behavior of the organization. The top management did not consider any actions by considering the report. The whistle blowers are not secured in the organization as the tem fired them for giving wrong information of the company. Also, these policies are not enough to ensure that the stakeholder interest is secured. The stakeholders of the organization also consist of the customers, employees, government and environment (Tricker & Tricker, 2015). It has been seen that company has made many wrong claims to ASIC related to the independence of the audit and other information which states that it has been unsuccessful to consider the entire interest of ASIC. The organization has also focused on charging from the customers by knowing that it was an administrative error as it was the decision which was considered by the board of directors. The workers have also accused the organization of acting as dictators as they report the wrong act to the top management. So, the policies which are considered by the companies are not satisfactory to ensure that the security will be maintained of the stakeholders (Chanticleer, 2018).
It has been analyzed that corporate governance structure of the organization has not been successful, so it is important for the company to consider these strategies. These strategies consider the principles of ASX and also recommended along with the policies of the corporate governance.
The strategies that should be considered are related to the corporate social responsibility. It is important for the company to consider a strategy related to corporate social responsibility. In this strategy the board of director should boost the transparency by creating continuous disclosure related to the overall activities of the organization. These disclosures should also consider both ethical and unethical practices of the company so that it can be ensured that the people on the top management are not using their position to boost the unethical operations (Jain & Jamali, 2016). This was the case related with AMP, and if proper CSR structure was considered then it have solve the issue.
The next strategy is related with training. In this, it has been analyzed that training is considered as one of the important factor for maintaining proper corporate governance policies which also ensures that the management with the employees can understand their role in the entire ethical policies. If no training was given to the team then it is not possible to manage the case. Training can also boost the ethical practice and can maintain the behavior of the employees towards the activities. This same situation took place in the case of AMP. So, training should be offered so that the scandal of AMP can be prevented and it would also prevent the requirement of the whistle blowers to showcase the ethical behavior of the company (Tai & Chuang, 2014).
It can be investigated that there were no proper measures considered by the organization in its corporate governance structure to give punishment to the people who violated the policies. There are many people from top management who were engaged in these activities or in this method and they were also promoted by the organization after knowing about the involvement of the people in the unethical activities. The step taken by the company to promote the people who are doing unethical practice was not right (Palmer, Greenwood & Smith-Crowe, 2016).
They should punish the people who are involved in the unethical practices so that it can be simple to boost the ethical practice in the company. The punishment should be given to the people who are engaged in the unethical act as they should know the drawback of taking wrong steps in the workplace. If punishment is given to the people who are engaged in unethical practice then only it can be possible to reduce unethical practices in the company. So, it is important for the company to stop promoting the employees who are involved in the wrong act as it can give positive impact on the entire activities of the company (McCahery, Sautner & Starks, 2016).
The company should also consider a method for overseeing the acts and functions of the management and workers. If the actions are not overseen then it can be easy for the employees and the team to ignore the corporate governance policies as they do not give any information to anyone. So, by focusing on implementing these policies it can be easy for the company to reduce these types of scandal in future. It can also enhance the ethical practices in the workplace which will affect the operation of the company in a positive manner (Shi, Connelly & Hoskisson, 2017).
By analyzing the paper it has been concluded that, AMP has been engaged in more than 20 incidents in which the regulatory authorities are not considered and also the top management was also engaged in the practices which are not ethical and affect the overall independence of the audit of the organization. These examples can state that there are many deficiencies which are there in the corporate governance and ethics system of the organization. Also the corporate governance system of the company does not focus on training and also the activities are not considered by the management and employees which resulted in the breakdown of the AMP. Also there are many policies which are implemented by the organization for securing the whistle blowers and also these policies are not sufficient.
It has been stated that they did not enforce the management to consider the acts to maintain security so that the interest of the stakeholders can be maintained. There are also many strategies which are recommended and it is important for AMP to consider these strategies so that it can be easy to reduce the scandal in future. It can also help in maintaining the entire activities of the workplace. So, it can be stated that unethical practices should not be done by the top management as it can affect the overall image of the company.
If there is proper CSR structure then it can help in enhancing the overall transparency in the activities of the company. But in this case the information was leaked of the senior management involved in the unethical practices of the company. The next strategy relates to the training which is necessary to be given to the employees so that the employees would not be able to violate the policies and can consider the policies in a proper manner. Training is considered as one of the strategies that can help the employees to consider the right or ethical practices in the workplace. Also it is important to oversee the functions of the workplace and also of the board so that it can be easy to maintain the activities of the company. If proper functions are considered by the company then it can be simple to avoid the scandal related to AMP. So, these strategies can also help to maintain the overall activities of the company
AMP. (2018a). Corporate governance. Retrieved from https://corporate.amp.com.au/about-amp/corporate-governance
AMP. (2018b). Whistleblowing policy. Retrieved from https://www.amp.com.au/content/dam/amp/digitalhub/common/Documents/global/whistleblowing_policy_website.pdf
Chanticleer. (2018). Whistleblower reveals more unethical behaviour inside AMP. Retrieved from https://www.afr.com/brand/chanticleer/whistleblower-reveals-more-unethical-behaviour-inside-amp-20180510-h0zx4g
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