Corporate governance within an organisation constitutes of two elements – one in relation to value chains and having a positive view on issues of sustainability and the other in relation to internal constituents, the employees.
In a recent press release by the Employers’ Federation of Ceylon (EFC), its former Director General and former International Labour Organisation (ILO) Senior Specialist for Employers’ Organisations East Asia Franklyn Amerasinghe asserted that merely making a payment in return for services, while complying with the law, is no longer what constitutes corporate governance.
The former EFC chief, who was also Remuneration Committee Chairman of several companies, will be moderating the session on ‘Governance’ at the upcoming annual EFC Symposium on ‘Sustainable Enterprises- Creating Value’.
This year’s symposium, which unfolds in early November, will draw experts from the EFC member companies, who will deliberate on creating value through sustainable practices along the themes of governance, managing talent, green initiatives and supply chain.
“In order to satisfy the requirements of corporate governance, you need to first make sure that what you take from the community and environment in terms of raw materials and resources are responsibly drawn and utilized for the benefit of the immediate community, all stakeholders as well as the planet in terms of respecting the legitimate expectations of future generations,” observes the senior professional.
He urged the management of any organisation to be aggressive in ensuring quality at every point and to be fair and equitable towards employees.
“Governance in the corporate sector has also become quite entangled and enmeshed in externalities which cannot be controlled without tact and diplomacy,” reflected Amerasinghe. He opined that success in the corporate sector does not merely depend on brilliance in entrepreneurship and creativity today but also on ‘political intelligence’.
When there is improper governance in the public and political spheres, the organisations in order to carry on their business also descend to the levels of corruption required to stay afloat, he said.
“In a society where there is rampant corruption staring you in the face and making competition not merely a matter of quality, quantity and reliable delivery, but a question of also oiling the machine which makes one acceptable, corporates find themselves in a quandary. Political patronage, however, is a dangerous thing for any corporate, given the unpredictability of the political fabric.”
The senior industrial relations specialist maintained that adhering to proper principles of governance when taking decisions concerning how one competes in the market is imperative. The board is especially responsible for due compliance with laws and regulations and needs to be continuously engaged with the internal management in this regard, he asserted. “The role of independent directors calls for professional excellence and not mere competence and fortunately one finds that the Companies Act provides that a board could call in external expertise whenever it deems necessary.”
The role of sub-committees of a board in assuring compliance with laws and regulations too cannot be overemphasized, he noted.
The impact of governance on talent management too is decisive, said Amerasinghe, who charged that merely proclaiming ‘best practices’ alone will not help retain the best talent within an organisation.
“The organisation must have a machinery, which monitors the performance of managers and supervisors at all levels to ensure that there is a meritocracy and fairness in rewards.”
Good governance in this aspect becomes two-pronged: while creating a ‘nurturing’ working environment for the employee, it should reward and sustain the team players who add value to an organisation.
The proper governance of employees is “closest to the heart of the EFC”, pointed out its former chief who urged the EFC to be a watchdog of practices and processes among its membership, a role it has played with pride and acceptance over the last 78 years.