Executive summary
The National Bank of Canada has its headquarters in Montreal, and it is Canada’s sixth largest bank. It was started on 4th May 1859 by the francophone business people in Banque and Ontario. The bank has 2.4 million personal clients and most of its branches in the Canadian provinces. It has many representative offices partnerships and subsidiaries in other countries where it serves both non-Canadian and Canadian customers. The bank’s management structure consists of the board of directors and the office of the president. The bank is upholding a proper governance system and appropriate ethical strategies to govern its operations. The report addresses the key components of its governance structure, that is, its stakeholders, board of directors and the governance mechanisms. It goes ahead to discuss the bank's ethical practices and approach, policies, and strategies. Lastly is addressing the bank’s corporate social responsibility.
1.0 Leadership/Corporate Governance Structure
1.1 Key Components of the Corporate Governance Structure
The management structure of the National Bank of Canada comprises of many people and groups. It has both external and internal stakeholders to ensure that the bank is operating efficiently. Ownership dispersion is critical so that the company can be able to manage its assets and liabilities. The board of directors consists of many groups and individuals who work with them. The bank leaders apply various governance mechanisms so that it can successfully achieve its goals.
1.1.1 Internal and External Stakeholders
National Bank of Canada has both internal and external shareholders. The internal shareholders consist of the personnel, the administrators, and the proprietors. The employees have a task of efficiently serving the clients so that the bank gains a significant market share, yields high results and increases the profits. The managers ensure that the employees are working efficiently, the bank meets its basic requirements, and they control all activities in the bank (Johnson et al., 2003). The bank owners work to ensure that the company is yielding profits, and it is highly competing with other banking institutions.
The external shareholders of the bank include; their contractors, the public, the government, creditors, investors and the clients. The bank has to satisfy the customers’ needs and in return, the client’s give feedback on how the institution can improve. The government provides policies and interventions which govern the bank’s activities. The suppliers provide the bank with are the basic needs so that it can operate normally. The creditors give the bank financial assistance so that its operations are smooth. The shareholders are just like owners because they own the company’s shares (Datamonitor, 2000).
1.1.2 Dispersion of Ownership
Many people are shareholders in the National Bank of Canada. The Government of Canada owns the majority of the bank’s shares. Other shares are under joint ownership while others belong to wealthy individuals. The shareholders are both Canadians and non-Canadians. The bank does not restrict the ownership of shares and transfers to individuals as long as the person meets the standard requirements (Cheffins, National Bank of Canada and Canadian Corporate Governance, 2000). The owners can sell their shares by strictly following the set requirements. The diverse ownership helps the bank to acquire growth ideas from various great minded individuals.
1.1.3 Composition of Board of Directors
The board of directors comprises of different committees so as to properly execute its responsibilities. It appoints and mandates the risk management committee, the audit committees, the human resource committee and the corporate and conduct review committee. There is an independent auditor who is accountable to the audit committee. The bank’s board of directors has another role of appointing the bank’s CEO and President and in return, the CEO and president appoint the office of the president. There is the chairperson of the board who assumes the board leadership by considering the bank’s interest, the client’s and those of the shareholders. He has the role of promoting a high standard of ethical conduct and integrity within the board, maintaining high corporate governance standards and ensuring the bank is complying with pertinent regulatory requirements (Datamonitor, 2000).
The board has a significant role of overall bank management. The shareholders elect the directors who supervise the bank’s affairs and its management with an aim of improving long-term shareholder value. They have two fundamental roles, that is, oversight and decision making. They exercise the decision-making function by formulating strategic goals and policies and approving certain actions. The monitoring function entails reviewing the management decisions, the competence of controls and systems and policy implementation. The board at the end makes first policy decisions, take part in strategic planning, reviews the effectiveness and performance of the management and it delegates to the management the daily responsibility and authority (Datamonitor, 2000).
1.1.4 Internal and External Governance Mechanisms
With the support of the four committees, that is, the risk management, the audit, human resource and the corporate and conduct review committee the board and the bank can adopt best governance practices. The boards make the necessary changes to the governance rules of the corporate, the practices, procedures, and policies. The board deliberates and defines the principles and structure of the general corporate governance which are applicable business units, functions, and divisions of the group i.e. the bank and its subsidiaries. The bank dictates this so that there is an enhancement of the effectiveness of the board’s activities.
The audit committee can be an external governance mechanism which examines the financial statements and reports of the bank. It ensures that there is the establishment of appropriate procedures so that they can supervise financial reports reaching the public. It evaluates, approves and reviews relevant internal control mechanisms (Datamonitor, 2000). The risk management committee is both an internal and external governance mechanism which manages procedures that fight terrorist financing and money laundering. They also monitor funding management, liquidity, capital adequacy assessment and stress testing. The human resource is an internal mechanism which sets key performance indicators and annual objectives for the key management team. They also examine and review the plan for succession management (Johnson et al., 2003). The corporate governance and conduct review committee in an external governance mechanism that evaluates the effectiveness and performance of its members and the board. They ensure that all the staffs are complying with the business conduct standards and practicing ethical behavior. They have a role in making sure that there is the implementation of procedures, policies and governance rules.
1.2 Value of Strategic Leadership Governance Mechanisms to the Bank
The strategic leadership governance arrangements have been of great value to the bank because they have made it improve its profits and also to have a huge client base. There has been a success because the management knows its functions, and it delegates specific responsibilities to specific committees and staff. The audit governance had been successful, and it has had immense contributions to the bank making them aware of their expenditure. By using this mechanism, National Bank of Canada is putting into place different control mechanisms which are managing their expenditures so that it does not face liquidation.
2 Ethical Strategies, Policies, Practices, and Approaches
Any company should adopt a set of ethical codes which govern their behavior. The ethical procedures and policies should be in line with the expected code of behavior. Adopting this will promote the bank’s efficiency and success. The ethical code of conduct defines a given behavior which the bank requires from the employees so as to safeguard bank and the subsidiaries’ reputation in other countries and also in Canada. They establish rules of conduct that are in respect to professional conduct, conflict of interest and respect to confidentiality (Bondy, Matten, & Moon, 2004).
2.1 Ethical Frameworks and Their Implications
The National Bank of Canada adopts numerous ethical frameworks in their daily operations. In return, this has different consequences for the National Bank of Canada. The ethical frameworks that the management chooses guide all the bank’s activities. The bank adopts the structure so that it achieves the goal of preserving the quality of the working environment, and maintaining public interest. It works under a set of principles which they apply in their daily activities. The bank has a close alignment to different frameworks which in return have positive implications.
The bank has an ethical framework of demanding everybody to act with integrity, loyalty, and honesty (Tricker, 2015). The bank carries out its operations by respecting the reputation and privacy of other, respecting human rights by promoting equality and non-discrimination. The institution should have respect for the clients. They demonstrate integrity, transparency, and professionalism in all the communications they hold with customers so that they can provide them with complete information while advising them appropriately. The bank encourages the members to conduct transactions and advertising that is accurate and clear. The aspect has concern for the shareholders where the bank should provide the stakeholders with concise and clear information. By adopting this framework, they will in return earn the respect of the employees and that of the shareholders. The company will be widely known. Thus more clients will prefer to work with them.
The bank has an alignment to the framework of safeguarding confidential information. They keep the shareholders, suppliers, customers and employees’ information confidential. The move is making the company earn respect from other individuals. The bank adopts the framework of compliance with the law. They pledge not to take part in illegal activities including those that are beyond their roles. The bank will comply with regulations and legislation that apply to them both locally and internationally. The bank will not involve itself in illegal activities which will destroy its reputation. Another framework is treating other people with respect. The behaviors of non-discrimination and respect characterize their relationship with the general public and their employees. Adopting the framework will promote their relation with the employees and the community and thus people will always turn to them when they need financial assistance (Tricker, 2015).
2.2 Assessment of the Alignment of Ethical Policies to Good Ethical Standards.
The ethical policies of the National Bank of Canada are in alignment with proper ethical conduct because they encourage positive behavior that does not negatively impact other individuals. According to McCallum (2005), an organization should have respect for all the human rights. The bank ensures that its staff, clients and shareholders receive equal treatment. The bank also avoids any conflicts of interest by abiding by the set rules regarding the circumstances which can cause the conflict of interest. For an ethical policy to be in line with proper ethical standards, it should not only serve the organization, but it should endeavor to help all people (Bondy, Matten, & Moon, 2004).
2.3 Approach to Ethics and Implications of Taking the Approach
National Bank of Canada has selected a governing board which ensures that there is the maintenance of standards and rules of conduct. The bank has a process which is continuous which is adequate and appropriate, and it ensures that there is strict compliance with the ethical standards. The board has a role of disclosing any member who breaches the code of ethics as well and code of conduct. The committee is encouraging the bank to establish a compliance program which ensures that the bank complies with the regulations, rules, and other obligations. The board supports and it usually ensures that the Chief Executive Officer, other management members, and the President comply with the principles and they promote an integrity culture wherever they are.at the long run, the bank will gain a lot of trust from many citizens who keenly monitor their actions. They can globally expand because they will easily get along with people of the foreign countries by treating them with the proper ethical conducts (Tricker, 2015). The bank will significantly increase its income because it is likely to get many people turning to them.
3.0 Corporate Social Responsibility of the National Bank of Canada
Any bank has to uphold corporate social responsibility for it to emerge successfully. They should give back to the community so that in return they can also acquire some benefits.
3.1 Major Components of a Corporate Social Responsibility Strategy
There are four major elements of a corporate social responsibility strategy, and they include; obligation of knowledge to the shareholders and the society, values, and aspirations, cooperate skills and resources and market opportunities. The company should disperse information to the community and the shareholders about their social responsibility. Everybody should be aware of what the institution should do to change the situation. Appropriate disbursement of information will help the company in minimizing unnecessary accusations and expenses. The bank should uphold relevant aspirations and values which are in line with their social responsibility. The values include responsibility, accountability, transparency, and competitiveness (Aguilera et al., 2007. The National Bank of Canada has adopted the values which are promoting its relationship with the shareholders and the community members. The bank’s employees and shareholders possess skills and resources which enable them to carry out their corporate social responsibility voluntarily. Any business should appropriately identify its market opportunities so that it can achieve competitive advantage, gain the market share and increase its productivity and profits (Andrews, 2001). Being aware of the market opportunities makes any company identify the level of corporate social responsibility to convey and the time that they can practice it.
3.2 3P/Triple Bottom Line Approach
The approach is an accounting structure which has three segments; financial, environmental and social. It makes an organization to be aware of its moral and social responsibility. The approach is useful for the evaluation of performance so as generate greater business value. In the past years, the plan was referring to either loss or profit researchers have been working to the change the term and explain it from a wider perspective. Commitment towards transparent reporting about the influence of business undertakings on the people and the environment is the corporate social responsibility (Hohnen, & Potts, 2007). The triple bottom is a framework for reporting the impact of the business to the community. The framework sets sustainability concerns and sustainable development apart from the previous economic, environmental and social considerations (Hall, 2011). The approach can be of value to the National Bank of Canada in reporting various impact to the customers and the community because it is usually applicable to the financial sector. The bank has adopted the approach because they report having various programs and principles which have a goal of informing the clients their activities. They involve the top level management, i.e., the board of directors in addressing various community issues.
3.3 National Bank of Canada’s Corporate Social Responsibility
The bank has a concern for the society’s impact on the environment, specifically the climate change effects. It involves itself in implementing different initiatives with an aim of reducing the environmental footprint. Over the years, it has great partnerships with businesses and organizations which share a similar goal of contributing to the sustainable social development (Hemphill, 2004). The initiate is valuing the organization because through the initiatives, and it is marketing itself and many people are willing to invest with then. The companies that the bank partners with assist it in improving its management skills. Similarly, the bank’s partners have accounts in the bank which generate a lot of revenue for the National Bank of Canada.
The bank is significantly contributing to the wealth of the Canadian society. It is among the greatest employers in Canada because it has branches in many provinces and also in the city (McCallum, 2005). The bank is a loan provider, a taxpayer and a significant purchaser of services and goods. It maximizes the community’s economic benefits by giving the citizens quality jobs, making responsible investments in the local facilities and usually honoring the commitment they have to the shareholders. The initiative is of value to the company because if it generates a lot of revenue, an enormous amount of money is remaining with them (Clarkson, 2002). The people that they employ market their name to other clients and they invest their returns in the bank.
In conclusion, the National Bank of Canada is a great business which offers great employment opportunities to the local and international people. The bank has a well-organized governance structure which ensures that all banking activities are running smoothly. The board of directors performs much of the management work through its four committees. The governance has been of great value to the enterprise because through it the bank is competitive in the banking industry. The bank has appropriate ethical strategies and policies which govern their daily operations with the clients and the stakeholders. The company upholds a corporate social responsibility because it contributes to community’s environmental impacts and it promotes the Canadian economy by creating employment to the residents.
References
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