Question

Describe the purpose of an effective Corporate Governance Structure and a Corporate Value Statement. What can a company do to encourage its employees to follow these policies and procedures and act in an ethical manner in the workplace?

Answer 1

Corporate governance exhibit the system and processes of how a corporate is controlled and governed. The purpose of effective corporate governance structure is to achieve long term goals in an efficient and strategic manner. Corporate governance increases transparency and accountability and compliance system in a company. In an effective corporate governance structure, the interest of investors and other stakeholders is protected to increase shareholders wealth.

Corporate value statement describes the set of values of a company which further describe a culture and standards of company. Corporate value statement states the principles and beliefs of the organization. In a corporate value statement, investors and employees are given top priority. The purpose of corporate value statement is to make the employees and managers understand about their responsibilities, actions and their identity. The corporate value statement provides direction to employees for ethical conduct.

Following are the measures that a company can take to encourage its employees to follow these policies and procedures and act In an ethical manner in the workplace -

(1). Corporate governance structure is prepared by senior management. Senior management can formulate policies regarding ethical behaviour. Such policies must include all key points regarding ethical set of values and these policies must be very much clear to employees.

(2). Various trainings must be provided to employees to exhibit understanding of corporate governance and ethical behaviour. For example - conducting mock dramas, presentations, role plays etc..

(3). Effective communication between senior management and employees can improve ethical behaviour of employees. Senior management can ask queries and doubts of employees.

(4). Rewards can be great incentive for promoting ethical behaviour of employees. Various types of rewards such as best employee of the year, or providing extra bonus are good incentives.

(5). A strong compliance system and punishment would also discourage employees to jump into unethical behaviour.

(6). A separate corporate governance committee should be set up to monitor the behaviour of employees.