Whistleblower Policies in Corporate Governance

 Whistleblower is an individual who intimates the authority about illegal activities. They play a critical role in Corporate Governance.

Corporate governance is a system by which companies are directed and controlled. It involves regulatory and market mechanisms, and the roles and relationships between a company’s management, its board, its shareholders and other stakeholders, and the goals for which the corporation is governed.

Role of the whistleblower in enhancing the effectiveness of corporate governance is to report the following issues:

•  a violation of rules and regulations
•  alleged dishonest activities
•  illegal activities
•  a direct threat to public interest
•  fraud
•  safety violations
•  corruption
•  an abuse to authority
•  waste of funds
•  a substantial danger to public health
•  mismanagement

 

  

Following are the points which should be taken into consideration while preparing whistle-blowing policies:

• People especially employees, will assume that they may be victimized by losing their job or damaging their career, unless culture, practice and the law indicate that it is safe and acceptable for individuals to raise a genuine concern about corruption or illegality.

• It is important to note that internal whistle-blowing is more ideal, as alleged malpractice will not become public knowledge and therefore may not inform unwarranted public debate.

• The policy should be promoted effectively and should ensure that individuals understand that reprisal for whistle-blowing is not tolerated. Such policy would allow the ordinary worker, for example, to appreciate and embrace good governance as well as enhance the self-regulation concept.

• The whistleblowers also have a responsibility to make the disclosure in good faith. They should show some substantive basis for their concerns, especially for external disclosures; they should take steps to ensure that issues are raised internally or with the prescribed regulator before any wider public disclosure.

• Embracing the corporate governance ideology involves empowering individuals to get involved when rules are being violated. Regulators, therefore, must erect the necessary safeguards in the event of reprisals.

• There should be a moral and legal obligation, to protect those who have made responsible disclosures to the appropriate authorities. This obligation will encourage companies to foster a culture which is open to hear and address the individual’s concerns about practices that contravene the law.

• A practical balance should be struck between self-regulation and effective regulatory oversight. Internal and external whistle-blowing policy or regulation should signal that there is a safe alternative to silence.

• There is some reason to believe that people are more likely to take action with respect to unacceptable behavior, within an organization, if there are complaint systems that offer not just options dictated by the planning and control organization, but a choice of options for absolute confidentiality.

• In light of the ongoing public debate on corporate governance, it is fitting to call on the relevant authorities, especially those in the financial services, to consider adopting appropriate procedures for whistle-bowing when developing a robust corporate governance framework. 

• Give whistleblower protections to employees who are not currently covered, including Transportation Security Administration officers.

The False Claims Act, also called the "Lincoln Law" is an American federal law that imposes liability on persons and companies who defraud governmental programs. Thomas Alured Faunce(an academics) feels that whistleblowers should be entitled to a controversial presumption that they are attempting to apply ethical principles in the face of obstacle. Also, whistle-blowing would be more respected in governance systems if it had a firmer academic basis in virtue ethics.

India

In the lights of Indian context, the Government over here has been considering to adopt a whistleblower protection law for several years. India is about to join an elite club of just four democracies (USA, UK, Australia and New Zealand) which have whistleblower protection. These democracies have not had these laws in place for too long. The US had its law in place only in 1989 and the other countries have followed after that.




 
Why there is a need of Whistleblower & law to protect their identity?

This question can be answered using the below mentioned two examples:

 

• Manjunath Shanmugam, a young manager with Indian Oil Corporation (IOC) and an IIM graduate, was shot dead on November 19, 2005. This incident happened just because of whistle-blowing regarding irregularities in the quality of fuel being marketed in some petrol pumps of Lakhimpur Kheri in UP.

• Satyendra Dubey was a project director at the National Highways Authority of India (NHAI) on November 27, 2003. He was murdered in Gaya, Bihar after whistle-blowing regarding corruption in the Golden Quadrilateral highway construction project.

Few of the steps taken by Indian Government are chronologically stated as follows:

• 2003

The Law Commission of India recommended the adoption of the Public Interest Disclosure (Protection of Informers) Act, 2002.

• 2004

The Central Vigilance Commission (CVC) was designated to receive public-interest disclosures through government resolution.

• 2010 (August)

The Public Interest Disclosure and Protection of Persons Making the Disclosures Bill, 2010 was introduced into the Lok Sabha, lower house of the Parliament of India.

• 2011 (June)

The Public Interest Disclosure and Protection of Persons Making the Disclosures Bill, 2010 was approved by the cabinet. It was  renamed as The Whistleblowers' Protection Bill, 2011 by the Standing Committee on Personnel, Public Grievances, Law and Justice.

• 2011 (December)

The Whistleblowers' Protection Bill, 2011 was passed by the Lok Sabha on 28 December 2011. However, the Bill is currently pending in the upper house of Parliament (Rajya Sabha) for discussion and further passage.

• 2012 (March)

The Bill was introduced in Rajya Sabha on 29 March 2012 by V. Narayanasamy, Minister of State for Parliamentary Affairs.

IKEA - 7 P's of Marketing Mix

  1) Product

As seen in the goods-service continuum, IKEA as a product have both tangible and intangible aspects, and it is the thing you offer to satisfy your customers’ wants and needs. Within this element, one need to consider such things as product range; its quality and design; its features and the benefits it offers; sizing and packaging; and any add-on guarantees and customer service offerings.

Following are the range of products in which IKEA has diversified itself:

• Eating
• Desks
• Mirrors
• Cooking
• Bathroom Storage 
•  Children’s IKEA
• Beds and Mattresses
• Chairs
• Clothes Storage
• Decoration
• Flooring
• IKEA Family products
• Kitchen cabinets and appliances
• Lighting
• Small storage
• Sofas and Armchairs
• Storage Furniture
• Tables
• Textiles and rugs
• Tools and hardware
• TV and media furniture

 

  2) Price

Sound pricing decisions are crucial to a successful business and should be considered at both long-term strategic and short-term tactical levels. Within this element of the mix IKEA considers list price and discount price; terms and conditions of payment; and the price sensitivity of the market. Worth remembering is the connection of price to it’s position in the marketing – specifically that only one operator in any market can be the cheapest. Jostling between competitors for this position is rarely wise.

Keys to IKEA's Low Prices Just how does IKEA manage to offer such consistently low prices?  Many people think that it's because the furniture is made cheaply, which isn't exactly true.  Read on to find out about some of IKEA's less obvious cost-saving strategies.  Recycling The Recovery Department (of which, the AS-IS room is part) is responsible for sorting and recycling all recyclable materials, including packaging broken down in-store as well as materials collected from customers at recycling donation bins where available. Automatic selling Despite the showrooms showcasing IKEA furniture in real living arrangements (typically located upstairs), IKEA is a warehouse store designed to maximize customer self-sufficiency with minimal reliance on staff assistance. Cost savings stem from reduced wages, training costs and lower design, maintenance and outfitting costs associated with the marketplace and warehouse areas of the stores. Economies of Scale IKEA utilizes it's massive economies of scale to secure long-term contracts with manufacturers and to reduce costs of raw materials through bulk-buying. Because of their sheer size, they can demand lower prices for materials which suppliers can afford to give if they have a steady income. Transportation All transportation of IKEA products is by cargo container - either via cargo carrier for overseas transportation or via tractor-trailer for ground transport rather than by more expensive air transport. Transportation costs are also minimized by carefully locating distribution centers and stores for optimum travel efficiency (see below). Minimal packaging The ubiquitous plain brown corrugated cardboard is the packaging material of choice for a reason - it's cheap, easy to recycle and can be made to fit around almost any product.  Small labels on the boxes identify the products within.  Printing wordless instruction materials also saves money by eliminating the need to translate the written word to the native languages of the many nations in which IKEA retails.

  

3) Promotion

This is the element of the marketing mix that most people mean when they talk about ‘marketing’. IKEA is one of the world's largest furniture retail brands. The brand itself is based upon the concept of offering home furnishing products at value prices. The promotions mix includes TV advertising, sponsorship, newspaper and magazine advertising, and many other elements. 

Some of its TV advertising is considered controversial whilst others see it as pretty plain. Recent campaigns include the IKEA kitchen party advert ‘Be Happy Inside’ campaign and the kitchen party advert. Obviously their iconic yellow IKEA logo serves to support the brand.

4) Place

Marketers love models that explain the way they work; they love it even more when elements of each model begin with the same letter – hence the use of the word ‘Place’ to describe distribution channels. The IKEA group is an international business, which sells furniture and accessories in Europe, North America, Asia and Australia.

IKEA's main business relates to its retail stores. Many of these stores are in out-of-town locations and do not benefit from the footfall of primary and secondary locations. The stores themselves are very large. Many of the stores even have restaurants, food shops and a Swedish market. Some stores even have a bespoke play area.

 

5) People

The impact that your people can have on your marketing cannot be underestimated. The IKEA brand is based upon strong relationships with customers and customer satisfaction. So, serving and working with people is central to IKEA's business philosophy. In 2011 its then president Mikael Ohlsson made a statement in their annual report outlining his view on the business and its future. In his view the business would be launching many energy-saving alternatives to conventional light bulbs. He commented that their kitchen range would offer many smart, eco-friendly solutions which would include water-saving taps, appliances and a special system that would sort household waste ready for recycling.

Ohlsson made a commitment to reduce the impact of his business on people, as well as the environment. The business would act responsibly, resources would be used efficiently and costs would be reduced. He also wanted sustainability to become more visible to customers and employees.

6) Process

The process part of the mix is about being ‘easy to do business with’. If you’ve ever become frustrated at call centers that can’t answer your questions, or annoyed when you can’t buy something in a shop because the computerized till doesn’t recognize that it exists, even when you can see it on the shelves, you’ll know how important this element can be. The furniture is made by IKEA itself whereby IKEA makes its own wood-based furniture and wooden components. So for example the business owns forestry sawmills.

The customer drives to the store, selects a product, orders, it, and then collect it, only then to have to drive the product home themselves. This is all part of the low pricing commitment.

 7) Physical Evidence

When you sell tangible goods, you can offer your customer the chance to ‘try before they buy’, or at least see, touch or smell. Interestingly IKEA was a business that encompassed sustainability quite early in its strategy. Many of its products are recyclable IKEA has invested in very green energy solutions such as solar power. Physical evidence for IKEA is its very large stores. They are out of town and offer a huge selection of furniture products. Stores tend to be well-equipped with restaurants, very large car parking, the space to move around and modern display technologies.