Day 30 – Q 5.Discuss the various dimensions of corporate governance. Why is it important to have an ethical corporate culture? Discuss.
5. Discuss the various dimensions of corporate governance. Why is it important to have an ethical corporate culture? Discuss.
कॉर्पोरेट शासन के विभिन्न आयामों पर चर्चा करें। नैतिक कॉर्पोरेट संस्कृति क्यों महत्वपूर्ण है? चर्चा करें।
Synopsis:
Corporate governance is the system of rules, practices and processes by which a firm is directed and controlled. Corporate governance essentially involves balancing the interests of a company’s many stakeholders, such as shareholders, management, customers, suppliers, financiers, government and the community.
Dimensions of corporate governance:
Though there are different yardsticks to ensure ethical corporate governance the dimensions can be summarised chiefly into harmonious integration of the below stated four process.
- Accountability & Responsibility: Accountability is an obligation of individual towards his actions, administrators must take responsibility not only of their jobs but the benefits of government programmes reaching people and in case of any failure must be held accountable. E.g. RTI act.
- Openness & Transparency: In the era of e-governance the administrators must ensure the maxim of “Minimum government and maximum governance” so that the public is aware of all the benefits of the programs, financial status of them and those in position of implementation must ensure last mile delivery of them the recent examples of PFMS (public finance management system), PM Jan dhan yojana are steps in that direction.
- Effective resource allocation: It is a necessary step as decentralisation leads to transfer of power to the lowest tier which will ensure passage of benefits as well as responsibility to the Government closest to the beneficiaries The 73rd and 74th amendment gave power to the panchayats and municipalities and is a chief feature of a true democracy. E.g. E-auctioning, as it is happening in 5g spectrum allocation.
- Corruption free public service: This is the most crucial aspect of ensuring benefits to the citizenry and the personal traits of the staff at all echelons like honesty and integrity is brought to the forefront which will create a more egalitarian society. e.g. E-governance pragathi portal.
- Economic prudence: No wasteful expenditure and also no waste of resources.
Importance to have ethical work cultural behaviour:
Companies with strong ethics programs have found that these efforts can reduce potential costly fines, decrease vulnerability, improve reputation, provide access to capital, favorably influence their bottom line, positively affect their employees’ commitment to work and enhance customer loyalty. These benefits are outlined below:
- Potential Avoidance of Fines: Companies and their employees are required to comply with national, international, and local laws governing their operation.
- Decreased Vulnerability: As companies develop or enhance their overseas operations, decentralize their business functions, and empower their workforce, it is imperative for them to develop ethics practices that provide the necessary training and tools to assure that their employees throughout the world can make ethical decisions.
- Improved Brand Image and Reputation: Several ethics awards and media lists on corporate reputation consider a range of ethical criteria for determining the companies’ rankings.
- Customer Loyalty: A 1996 survey by Bozell Worldwide, The Wall Street Journal International Edition, and Nihon Keizai Shimbun, titled “Global Corporate Good Citizenship: Improving Perceptions in the ’90s,” reports that business ethics matter to consumers.
Best Answer: Rajat
