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Restoring Order

With elections knocking fiercely on the doors of the country bidding its citizens to choose the next rule-makers, we have been kept updated about the dark scams shadowing the work done by the current government. With the increase in the number of frauds highlighted in the last year, people are looking forward to change and encourage paradigm shift in India in terms of governance and politicians’ accountability.

The same gap is witnessed in the corporate world that is swarmed by scandals, bringing our attention to the importance of corporate governance. Cases like Enron, K-Mart, Tyco and Worldcom acquaint one with the inability of corporate governance’s current systems to efficiently manage the behaviour of top executives. These companies got engaged in unethical and illegal practices that filled their pockets but left the shareholders with the bills.

Not restricted to the West, scams like Satyam and the Sahara Group have engulfed the Indian corporate space with its negative consequences. The outcome was out in open for everyone’s view. The prices of the stocks in the market fell like a pack of cards.

Directly connected with economic transition and reform, corporate governance is all about how to convince economic factors to act differently and become more efficient and effective; to avail new opportunities than waiting for current problems to mitigate magically or by government.

With these frauds and scams gaining prominence in the Asian countries as well, it has become vital for the management to direct and control the company by setting stricter rules and regulations. Responsibilities and rights have to be divided evenly among the board, management and stakeholders of the organisation.

These scams have shed light on a crisis of trust. This is where HR comes into picture. In the past, HR leaders were not challenged by governance issues. One cause of these scams could be a failure of seniors HR leaders not being an integral part of decision-making of the company. But with employees losing confidence in the top management, HR has to take front seat and take initiatives proactively before a big blunder takes place.

A senior HR executive has a responsibility towards shareholders and employees, and it is necessary to observe how effectively and efficiently they fulfill these responsibilities. There is a need to create controls and systems to ensure illegal or unethical decisions and behaviors are discouraged.


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