Ethics, Corporate Governance and Company Social Responsibility
Information that is essential to share includes financial performance, business strategy and overall company actions (Pfeffer, 1998). Sharing this information gives the employees the power to evaluate their performance and help them make the right decisions on how they can improve it. This is a simple and very straightforward practice but most companies are still apprehensive about this practice. One cause for this is that information is power and by sharing essential information like financial performance the management is scattering that power. Another reason is that the management is concern about information escaping to competitors. This will put the organization in an unfavourable position. But what companies do not realize that the competition most probably already know this information. Thus if a company withheld information they are only leaving their own employees in the dark. Because of this, employees will reply on speculation and rumours that could only lead to confusion and distrust. An environment such as this is not beneficial to the performance of the employees (Pfeffer 1998).
The capitalist societies hold their government and systems in great distrust and harbour great doubts and misgiving against the administration of the country. According to numerous researches conducted over the years, the feeling of insecurity has developed among the modern businessmen because of the failure of the governments to provide for more than just the basic necessities of most of the people; a practice that has arisen due to tyrannical corruption, inefficient systems and pressures of a rising population. Also, in East Asian and Nangyang economies, the policies that were made were thought to be unreliable because it lacked consistency by a majority of the citizens. They then came to the conclusion that their future business matters cannot be decided according to the fluctuating policies instead they needed to focus specifically on consumer trends. Consumer behaviour and patterns is another important variable when studying the TNA theory as consumer feedback serves as the backbone to the formation of the job requirements and employment criteria (Khatri, 2000; Kepes and Delery, 2006; 2007).
"A truly competitive market for corporate control will also decrease considerably the current pressure to ramp up both civil and criminal liability of directors and managers, since most of the cases of bad behaviour will be reflected in lower share price and the increased risk of a successful takeover. Shareholder voting and the whole idea of corporate democracy pale into near insignificance, as we realize that the vote carried by voting shares is merely the counter by which to determine who owns control, and that, as such, these counters may be freely traded in an open market. Indeed there is a very strong argument for allowing exchanges to conduct trading in votes alone, without the underlying share interest, something generally not legal today. Incidentally, consider what would be involved under the present regulatory regime in an effort to list votes as 'securities' on a registered stock exchange. This is a perfect example of how regulation inhibits innovation, often in the most unanticipated fashion" (Manne, 2003).
Similarly, a number of studies have shown that competition is good for the market. It encourages companies to innovate consistently to increase their productivity. There has been a growing research literature, at not only theoretical but also empirical level, relating to the methods in which competition increases company performance value. The literature point out that competition has increased workforce productivity and skill level immensely. In addition, it reveals that competition creates screening of managerial and workforce performance and skills more efficiently. This is because unnoticed performance or efficiency systems are prone to be connected across firms working in the same business and therefore managerial and workforce efforts and skills rises as the figure of companies in the same industry augments (Mart-n-Alcazar et al., 2008).
The conventional rules and regulations of the organization have their own significance and the developing law and contracts cannot be expected to replace them just yet. When there are no regulations offered by the state, a firm can resort to its own cultural norms and traditions, or engage in structural embeddedness i.e. when the entrepreneur also interacts with other networks. Subcontracting is one significant form of business networks as it has led to the development of many Asian economics. The accumulation of small-scale firms into one large industrial concern is achieved through subcontracting (Green et al., 2006).
Scandal-Free Corporate Governance
Most of the written work on the subject on corporate scandals revolves around the relationship amid corporate governance and its value, which indicates that, a firm's value is highly connected to the strong corporate governance and the impact it makes. Most of the writings describe the organizational structure and ownership under the governance's umbrella, however, some work relates the corporate governance to the individual governance practices. Lots of studies in United States have proposed that the individual governance indexes are the true reflectors of organizational governance. Comparatively, some of the studies have focused on to find out the human context of corporate governance, which includes appreciating/applying social responsibility, sustainability, humanity and ethical considerations. Certain presuppositions are imminent in these theories: business schools do not train students to act in an ethical manner taking into consideration their social responsibility. This is where corporate training programs need to step in. HR managers need to assess the current ethical standards being used to make decisions assess gaps and ultimately put forward solutions via training programs, hence avoiding centralization and scandals (Lepak, et al., 2004). Some of the aspects that are most vulnerable to critical and damaging scandals and explained below:
Organizational Analysis: The relationship between the organizational and its external environment so as to determine the links between external variables and the needs for training and development; How effective the organization and its various sub-units are in researching the objectives they set out to achieve; The organization's human resources, to assess current and long-term training and development requirements; The organization's internal environment, to identify those problem areas that can be tackled by means of training and development, and those which could potentially constitute unusually strong resistance to change; The relationship between the organizational and its external environment so as to determine the links between external variables and the needs for training and development.
Task Analysis: Any problem faced by job holders in learning the basic skills and applying them successfully; Any weaknesses in the performance of existing job holders arising from gaps in knowledge, lack of skill or poor motivation which need to be certified by training; Any areas where competence levels are clearly not up to the standards required; Any areas where future changed in work processes, methods or job responsibilities indicates a learning need; and How training is carried out at present -- and how effective it is (Hatch and Dyer, 2004).
Person Analysis: Directly observing job performance; Reviewing supervisory evaluations of performance; Using diagnostic tests, such as written ability tests and work samples; Comparing the behaviors of well -- performing employees with those of poorly performing employees; Discussing with employees their individual job performance and factors that may inhibit that performance.
Another component of the scandal-free conceptual framework intends to determine the initiatives that are conducted by manufacturing firms to make sure that the ethical and training gaps are addressed as soon as possible. The following issues/practices shall be focused on in this portion: whether the training is conducted based on the appraisal of the employees; the training focuses on the managers' acquisition of skills needed in order to ensure they are fulfilling the duties required of their positions; Human resources managers plan the training; the training was developed in such a way that it conforms with the goals of the organization; and the training program is aimed towards the managers' acquisition of leadership skills (Harris et al., 2001).
To close the loop, the last component of the conceptual framework is barriers in achieving the aforementioned components. The following are the items that fall under each component of scandal-free business activities and analysis: training satisfaction; learning achieved through training; self-efficiency after training; performance after training; motivation after training; support (before during and after training) from top management; Positive employee attitude; commitment from the trainees; Establishing training standards and benchmarks; Highly skilled questioning techniques; Tedious procedures; taking CSR as a holistic process; establishing a clear link between firm objectives and training; taking into account the needs of the individuals in the firm; awareness of the regulation/centralization process, rationale, and mechanism during decision making; acquiring data that is clear, precise, accurate, relevant and complete; taking into account the opinion and suggestions given by the workforce; increasing transparency and democracy; Market-led training needs analysis; focusing on mastery of self; focusing on bargaining jobs and priorities; focusing on interpersonal relationships management; and lastly focusing on cross-functional collaboration and focusing on project management competencies (Hammer et al., 2009).
Example of Regulation in China
In December 1998 the Security Law of China was established. This law caters to the regulation…