The more issues companies face outside of production is wasted energy. The reality is companies will have to deal with situations that are unfortunate for the employer and employee. In the case study that will be addressed in this paper, a company called Ordain will be evaluated. Also in the process of building a compliance plan, this paper will review a company called COOS which stands for (Committee of Sponsoring Organizations). COOS will be used as a basis of structuring and implementing recommendations for risk management and compliance plan.
This paper will outline and present a corporate compliance plan for Ordain to manage the legal liability of officers and directors. History of Ordain The company was founded by Dry. Ordain, a professor of chemistry, who had obtained several patents relative to processing polymers into high tensile strength plastic substrates. Sensing the commercial applications for his patents, Dry. Ordain started Ordain Plastics, Inc. In 1991. Initially, the company’s focus was on research and development and the licensing of its existing patents, but in 1992 Dry.
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Ordain obtained venture capital which he used to purchase a fan manufacturing plant in Pontiac, MI. At that time, the company’s name was changed to “Ordain Manufacturing, Inc. In 1993, the company expanded into the production of plastic beverage containers when it acquired a manufacturing plant in Albany, GA. The company’s most recent expansion took place in 2000 when it opened its operations in China. At that time, the entire fan manufacturing operation was moved from Michigan to China and the Pontiac, MI facility was retooled for the manufacture of custom plastic parts (Ordain, 2013).
Ordain Manufacturing is a global plastics manufacturer employing 550 people with projected annual earnings of $46 million. The company is wholly owned by Ordain Industries, a Fortune 1000 enterprise with avenues in excess of $1 billion. Radian’s major customers are automotive parts manufacturers, aircraft manufacturers, the Department of Defense, beverage makers and bottlers, and appliance manufacturers (Ordain, 2013). Role of the Board of Directors A good place to start in generating a corporate compliance plan for Ordain is to begin with their board of directors.
According to COOS one of the functions of the board of directors is enterprise risk management. Increasingly, boards and Business Law Paper By west to better connect their risk oversight with the creation and protection of stakeholder alee. ERM is a process that provides a robust and holistic top-down view of key risks facing an organization. To help boards and management understand the critical elements of an enterprise-wide approach to risk management, COOS issued in 2004 its Enterprise Risk Management – Integrated Framework (COOS, 2009).
COOS website goes on to say that the framework of enterprise risk management is a process, effected by the entity’s board of directors, management, and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events hat may affect the entity, and manage risk to be within the risk appetite, to provide reasonable assurance regarding the achievement of objectives (integrated Framework, 2004).
Overall Radian’s board of directors plays a critical role in overseeing an enterprise-wide approach to risk management (COOS, 2009). There are four general areas that require board oversight in regards to enterprise risk management they are as follows: 1 . Understand the entity’s risk philosophy and concur with the entity’s risk appetite, 2. Know the extent to which management has established effective enterprise risk management of the organization, 3. Review the entity’s portfolio of risk and consider it against the entity’s risk appetite (COOS, 2009).
In this first section the recommendation to establish the absolute necessity of having Radian’s officers and directors focused on enterprise risk management as their foundation of governing their company is crucial to the overall success as leaders. Every other area of business, liability, or compliance is going to be based from their framework of risk management. Radian’s board of directors and officers should develop several teams to oversee different aspects of liability the company has as a manufacturing business.
Liability Product Liability It is very important that the products that Ordain makes are safe, functional, effective and not defective in any way. “A manufacturer is strictly liable in tort when an article he places on the market, knowing that it is to be used without inspection for defects, proves to have a defect that causes injury to a human being (Agreement vs.. Yuba Power Products, Inc, 1963). ” According to Chessman, All parties in the chain of distribution of a defective product are strictly liable for the injuries caused by that product.
Thus, all manufacturers, distributors, wholesalers, retailers, lessons, ND subcomponent manufacturers may be sued under the doctrine of strict liability in tort. This view is based on public policy. Lawmakers presume that sellers and lessons will insure against the risk of a strict liability lawsuit and spread the cost to their consumers by raising the price of products (Chessman, 2010). Strict liability can be major headache for companies which do not exercise due diligence of researching their products. Strict liability is liability without fault.
A seller can be found strictly liable even though he or she has exercised all possible care in the reparation and sale of his or her product. Strict liability may not be disclaimed. The doctrine of strict liability applies to sellers and lessons of products who are engaged in the business of selling and leasing products (Chessman, 2010). The suggestion of an oversight team to head up product inspection and safety is critical to the overall product success of Ordain. As a manufacture, mass production can be somewhat a how much inventory is defective from mass production.
That way Radian’s management team can have a system in place to present product information to risk management team. Employee Liability In a manufacturing company like Ordain, employee safety standards are critical to have in place. In 1970, Congress enacted the Occupational safety and Health Act to promote safety in the workplace. Virtually all private employers are within the scope of the act, but federal, state, and local governments are exempt. Industries regulated by other federal safety legislation are also exempt.
The act also established the Occupational Safety and Health Administration (OSHA), a federal administrative agency within the Department of Labor that is empowered to enforce the act. The act imposes record-keeping and reporting requirements on employers and requires them to post notices in the workplace, informing employees of their rights under the act. OSHA is empowered to adopt rules and regulations to interpret and enforce the Occupational Safety and Health Act. OSHA has adopted thousands of regulations to enforce the safety standards established by the act (Chessman, 2010).
Chessman goes on to give more insight on the specific duty standards OSHA has. OSHA standards establish safety requirements for equipment (e. G. , safety guards), set maximum exposure levels for hazardous chemicals, regulate the location of chicanery, and establish safety procedures for employees and the like (Chessman, 2010). An oversight safety team must be assembled to make sure all equipment is safe and functional. Also it is recommended that maintenance be conducted on all machine equipment every 30 to 90 days. Labels for operating all equipment need to be visible and clear for all employees.
All labels need to be written in both English and Spanish. Regulation Ordain employee handbook must make sure that the company does not discriminate based upon Title VI’. The Equal Employment Opportunity Act of 1972 add it unlawful for an employer to refuse to hire or to discharge any individual because of race, color, religion, sex, or national origin (Chessman, 2010). Front end managers of Ordain will be responsible of having annual reviews of the company’s expectation and zero tolerance for any infringement on Title VII protection for employees. This needs to be expressed clearly by management, signage, and the employee handbook.
It is suggested that Ordain evaluate their workforce to make sure that they are not violating Title VII in regards to new hires and promotions throughout their company. Serbians-Solely Act Congress enacted the federal Serbians-Solely Act of 2002. This act establishes far- reaching rules regarding corporate governance. The goals of the Serbians-Solely Act are to improve corporate governance rules, eliminate conflicts of interest, and instill confidence in investors and the public that management will run public companies in the best interests of all constituents (Chessman, 2010).
It is imperative that Ordain keep a watchful eye on the decisions the board of directors and officers are making. Any strange transactions or cash outs that can raise a red flag have to be acknowledged and called to task immediately. In 2012,JP Morgan Chase made some Chase over 5. 8 billion dollars. The bank announced that it is forcing executives and traders responsible for the massive loss to give back substantial chunks of their pay from bonuses and stock grants, a punishment known as “callbacks. Callback provisions were introduced in 2002 in the Serbians-Solely Act following the accounting scandal at energy-trading firm Enron (USA Today, 2012). This is a good example of what the lack of oversight can cause a company to lose. Since Ordain has expanded into international growth in China, it is even more critical that the sections made are for the best interest of the company, shareholders, and employees. Random audits from an outside firm should be conducted at least every two quarters of the year to track the board financial decisions. Also recommended is updated communication of quarterly financial outlook of the company.
International Laws Chessman states International law, important to both nations and businesses, has many unique features. First, there is no single legislative source of international law. All countries of the world and numerous international organizations are responsible for enacting international law. Chessman goes on to say, as technology and transportation bring nations closer together and as American and foreign firms increase their global activities, international law will become even more important to governments and businesses (Chessman, 2010).
It is important that Ordain adheres to and abides by the laws that regulate business in foreign countries. American government is not sovereign over other countries, but works through treaties signed and registered with the United Nations. Ordain needs to make sure they have established a foreign business department that specializes in understanding international law. From the information that is gathered, a document should be uploaded on the company’s intranet detailing how Ordain foreign business should be handled.
Along with the company’s intranet, all supervisors and staff should have a series of meetings/trainings that are conducted by the training and development department that handles foreign affairs. Real and Intellectual Property With the increase of patent infringement, it is critical that Ordain continues to keep a close eye on similar products that can be produce. Many companies are outsourcing their business production to countries like China because of cheaper abort. Federal law provides protections for intellectual property rights, such as patents, copyrights, and trademarks.
Certain federal statutes provide for either civil damages or criminal penalties, or both, to be assessed against infringes of patents, copyrights, and trademarks (Chessman, 2010). In many cases company have former or current employees who disclose proprietary information to competitor. Ordain should have all employees sign a disclaimer annually that stating the disclosure of any proprietary information is punishable by fines up to imprisonment. State unfair intention laws allow the owner of a trade secret to bring a lawsuit for misappropriation against anyone who steals a trade secret.
For the lawsuit to be actionable, the defendant (often an employee of the owner or a competitor) must have obtained the trade secret through unlawful means, such as theft, bribery, or industrial espionage (Chessman, 2010). Also selling property that is not been Conclusion Implementing the information in this paper will help Ordain protect themselves and help the company have a strict compliance plan that can be implemented rather quickly. This is really the heartbeat of businesses today risk management and implicate. References Chessman, Henry R.