Corporate ethics reform
A policy maker is someone who does an analysis on the policies created to govern various institutions such as a company on a small scale to country on a larger scale and which define the way it works. Without such policies, an institution becomes paralyzed and cannot function accordingly meeting the needs of the people. An institution without policies is doomed to destruction with time. A policy maker looks at such policies critically at different levels. He/she should be a critical thinker to clearly explain to what extent either positively or negatively would a policy implemented to what extent affect an institution. He/she should also come up with strategies to counter such effects at any given time (Dror, 2005).
Being in charge of the policy making docket, there is a need to ensure that policy implemented by an institution are logical and futuristic to achievement of the goals of the institution. The policy maker should also research on the best practices and advice on solutions that would best serve the citizen tax payers in the most effective way possible. A policy maker should use a fact-based approach in the research when producing policy brief and legislative findings. A policy maker is also an individual charged with the thought of change and betterment of policies implemented. He/she should constantly perceive and view things differently from the rest and come of ways of constantly changing and renovating ideas that was once thought to be ideal and realistic to the people’s needs. A policy maker should not side with anybody (the government i.e. policy maker or the people) he/she should critically look at policies created keeping in mind how successful each side will be at the end of the day. He/she should put aside selfish interests (Dror, 2005).
Once a policy analyst sides with a policy maker they fail to see the negative attributes of the policies created which result in the implementation of poor policies. The policy analyst in this case becomes a puppet to the policy maker as they agree entirely to whatever policy maker comes up with. Such an analyst should be done away with as he/she will lead to decay and downfall of a nation. A sober minded analyst should always look for the loop holes of any policy created thus keeping policy makers on their toes trying to make even better policies. A policy maker should undergo certain changes so as to increase the effectiveness of corporate governance post-Enron. In the pursuit of profits which must stay within the boundaries of ethics, a policy maker should not at any point come up with policies that have hidden agendas. The policies should be sound minded and not benefiting the policy maker in any way while straining the people in terms of revenue the pay. A policy maker should make policies which do not conflict in whichever way with the goals of the country (Dror, 2005).
Post-Enron reforms came about after the Enron scandal which was the cause of the biggest audit failure aside from having managerial scandals in American history. Corporate governance is the process by which a corporation’s management is held answerable to its shareholders who have a stake in the ownership of the corporation. Any actions the management plans to make the shareholders should be informed before such decisions or actions are made. Consultation is vital to the shareholders giving them a chance to express their views and also improve on the ideas the management has. It will also improve the confidence the shareholders have in their managers as they take time to listen to them. If the management fails to consult with shareholders and chose to do things behind their back, this would be betrayal to them as they are termed as the owners of the corporation. Issues revolving around dividends should be respected as the shareholders invested in the corporation, and without their capital the corporation would be crippled (Culp & Niskanen, 2003).
The Enron scandal was an event that changed the face of corporate governance as it led to its improvement and implementation of stringent policies of corporate governance post-Enron. A policy maker should therefore, keep the certain issues in mind in response to proper corporate governance. The following policy pathway is crucial as it not only touches issues related directly to increase in effectiveness in corporate governance post-Enron but also approaches to policy development styles borrowed from issues. This would approach the matter more critically and responsively. External issues (externalities) also affect corporations in its daily life (Culp & Niskanen, 2003).
Market mechanism, which refer to the forces of demand and supply in the market depend on reliable policy making so as to function well. Many human wants cannot be handled by the market mechanism which does not make them entirely appropriate in making of policies but must be taken into consideration in policy making. The revenue taxed from certain human wants should be seriously considered so as to make sure it easy accessible to all and affordable. Market mechanisms need thorough considerations both in terms of its potential and limitation in the formulation of policies to determine the relevance of a policy and its response to the mechanism (McGee, 2008).
Allocation of funds to research such as excavation of minerals requires a large amount of investment. Upon discovery of such materials on country would lead to the breakthrough in its economy and failure to get anything out of the research would lead to loss of revenue. Such revenue would take time to be regenerated and might sometimes plunge a country in debt. Good policy maker should foresee the events or such a situation and ways to counter the effects rather than ordering the issuance of funds without a plan. Such a situation would lead to government workers being laid-off due to the absence of funds to pay the workers, over taxation of citizens in an attempt to recover the funds in goods and services sold to the citizens. Policies regarding investment should therefore, be assessed in both an optimistic and pessimistic manner before being made (McGee, 2008).
A principled policy maker should critically assess the environment and identify popular movements that threaten to eradicate policies made in a country. He/she should know how to handle such a group accordingly. However, such masses may be extremely useful if it supports a certain policy that favors the success and improvement of the standards of living of the people. In this case, the policy maker will be successful and encouraged to come up with even better policies. If the hopes and wishes of a popular movement are not fulfilled and they hinder the movement of a nation or institution, a policy maker should therefore, make an effort to consult such a group to hear out what they have to say. A vigorous policy maker will keep the interest of the people first before the interests of such a group. If what they are suggesting will lead to improvement of the policy adjustments should be made accordingly. Good policy makers should also take time and provide a forum for people at the grass-root level to voice their concerns. These are the people who actually know what goes on in the field. Policy makers might not have any prior experience of some issues that trouble the people. This will stimulate better policies and the citizens will see transparency in their government. A ruinous policy maker will ignore the people which might result in negative reactions from the people leading to a poor economic performance (McGee, 2008).
Security of the people should be of enormous importance to a policy maker especially on matters related to a crisis such as terror attacks which pose a, serious threat to lives of many when it occurs. A vigorous policy maker should device mechanisms that should evaluate a crisis before it takes place in order to prevent costs that would have been easily avoided. Such policies however, require time to properly evaluate and formulate due to several experimentations. Such exercises should be kept a secret so as to take the enemy by surprise. For example, a vigorous policy maker should come up with policies that improve security of its citizens in the airport, at the seaport where terror attacks have recently taken place. Decisive actions should be formulated on steps to take up hijacking of a plane or a ship to safely rescue the citizens without having to always meet the terrorist’s demand (McGee, 2008).
The environment should also be an area where the policy should not forget to preserve and maintain its beauty. Failure of preservation of the environment has led to issues such as global warming, which has become an extremely expensive investment for all the countries worldwide as they try to fight its effects. Good policy making should create rules and regulations governing the environments in terms of the total forest cover, wildlife and water catchment areas. Good policies should clearly state the consequences of violating these key components of the environments, whoever violates them despite whatever their social status justice must be served. A formal policy maker must ensure such policies are followed to the letter (Dror, 2005).
A democratic country must have policy makers who think democratically in terms of the way they make policies. If a policy maker claims to be democratic then he/she must make an effort to enlighten the public on the various policies that have been created and how it affects their day to day lives. If the public do not get informed of what goes on riots and demonstration will be the order of the day as people get upset of things happening without understanding why and when they began. A policy maker must therefore ensure that the media plays a crucial role in informing the public on fundamental policies that affect them directly (Dror, 2005).
Policy making should also involve a person who is well enlightened and fairly exposed to most issues affecting a country. It would be seriously wrong for a foreigner to be invited in the country to start making policies. The people should therefore, make sure that the leader they elect is well educated and capable of making sound judgment. An illiterate person would have no idea or would make outrageous policies. Policy making requires time and thinking, at times adapting some policies that were successful in other countries and trying to figure out if they would be applicable to your country. Corporate governance can be improved letting its relationships and practices be determined by market forces since it should remain as decisions that are made by people or bodies in the private sector. This will enable its flexibility and improvement. Competition brings about market-driven solutions. Other forces other than competition also bring about this effect which is much more superior to those found in regulatory bodies (McGee, 2008).
It can also be improved sensitizing issues related to social concerns raised while allowing corporations to reap the benefits of investment capital which is more mobile. These corporations find them as a source of finance. Such finance has a wide-range of reward sharing equity placements. By allowing corporate governance to comprehend the relationships and responsibilities among the shareholders, board members and managers, the corporation’s primary objectives will be met through the fostering of competitive performance. In this case, corporate governance is improved. Seeking to attain a sustained competitive advantage is also a way of improving corporate governance. This is achievable when corporations succeed in generating long-term economic profit but will require the corporation to be flexible in its response to risks associated with the changing environment. In order for competition to take place, investors and corporations to adapt their governance practices so as to create an impression that corporate governance does not satisfy everyone but continuously needs adjustments to fit different bodies appropriately. This in turn will improve corporate governance by allowing it to adapt and adjust continuously (McGee, 2008).
Increasing transparency and an independent approach of management by the board of directors will improve corporate governance to a certain level as well. The board should also consist of a group of elite individuals who have no selfish interests but the success and attainment of the goals corporation. Close supervision of the audit team is also advisable so as to make sure that everything can be accountable. Strict rules should also be imposed on those found committing offences or any theft committed. A regular rearrangement of the workers is also advised to discourage familiarity among the workers. Moving workers from one department to another will undoubtedly disrupt a scheme that is in place in a certain department (McGee, 2008).
Corporate governance can also be improved by making sure that the company does not put profits before the people. The management should try as hard as possible to look socially responsible in front of the public. The management should also make sure that tax due is paid and on time. It should avoid reducing social investment through cheating the government by stealing billions from it. The company should also make sure that the individual shareholder has enough information about the company. This information should either be political or economic resources that give each shareholder a capability of holding the management accountable of it actions in the event of fraud or mistreatment. To improve corporate governance the company must ensure that institutional investors have an interest in their company. This will make sure that they become significantly if not totally involved in the doings of the company thus enhancing corporate governance. The company must also ensure that all the audit reports submitted should be accurate and not misleading. They should also be submitted on time and be worth what they claim to account for. Weaknesses in the board should also be eliminated ensuring a strong board. Lack of competition and rational thinking within the board brings about reluctance and carelessness. Any decisions made by the management will not be challenged in any way making them weak. Structuring of remuneration policies should have significant improvements with time to improve corporate governance.
In conclusion, policy making is essential issues with regard to in response to increasing corporate governance post-Enron since policy do not just make policies without considering their outcome. A policy analyst must question the policy maker and carry out appropriate research and presenting the findings to the board of directors. With this form of approach favoring corporate governance will lead to increment in the profits of any corporation intending to prosper. Shareholders must also play a role in encouraging the policy makers and devoting themselves at all times. Individuals who threaten the existence of the corporation and its future prosperity should be immediately done away with (Culp & Niskanen, 2003).
Cross, F. B., & Miller, R. L. (2012). The Legal Environment of Business: Text and Cases 8th edition. Mason, OH : South-Western Cengage Learning.
Culp, C. L., & Niskanen, W. A. (2003). Corporate aftershock : the public policy lessons from the collapse of Enron and other major corporations. Boston: Hoboken, N.J. : J. Wiley.
Dror, J. (2005). Policymaking in adversity. New Brunswick (U.S.A.): Transaction Books.
McGee, R. W. (2008). Corporate governance in transition economies. New York: Springe.
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