ROLE OF HR IN IMPROVING CORPORATE GOVERNANCE

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HR plays a vital leadership role in its capacity and position as a key strategic business partner in an organization and drives “governance” in an organizational leadership model. It refers to the system of management and controls exercised in the stewardship of an organization.

 

Under this role of Human Resources it is reassuring trust and leadership commitment while including the responsibilities of organization’s owners/shareholders, board of directors, and senior leaders in the governance framework. Sr. HR Leaders / CHRO are directly involved and act a custodian (integrity / ethics officer) of the company’s ethical framework (including the CEO) by creating, cascading and  implementing organizational charters, bylaws, and policies while documenting the rights and responsibilities of each of the parties / stakeholders and describe how an organization will be directed and controlled to ensure :

 

(1) accountability to owners/shareholders and other stakeholders,

(2) transparency of operations, and

(3) fair treatment of all stakeholders.

 

While the onus of creation and implementation of such policies is on HR, corporate governance processes usually include the approval of strategic direction, the monitoring and evaluation of the CEO’s performance, the establishment of executive compensation and benefits, succession planning, financial auditing, risk management, disclosure, and shareholder reporting.

 

Some of these attributes may not be under HR’s direct scope however having said this, ensuring effective corporate governance is important to stakeholders' and the larger society's trust and to organizational effectiveness and role and involvement of HR is crucial to ensure systematic adherence to said framework especially in the core areas where HR uses its expertise in area of culture creation, compensation and benefits, succession planning, ethics and legal / statutory compliance, managing diversity, talent management and most importantly “restoring trust” by monitoring and controlling top executive behavior.

 

Sr. HR Leaders / CHRO also by its virtue possesses a fiduciary responsibility to shareholders and a moral responsibility to employees and while driving ethics in the organization and hence it is the responsibility of HR leaders / professionals to keep the Sr. Executives (CEO) or the Board from getting close to the boundaries of breach of code of conduct and speak up as soon as they cross them. Under this capacity, HR Leaders today requires greater proactivity, diligence and courage that has been evidenced in the past.


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Article by - Vaibhav Garg: 


Vaibhav Garg serves as the Advisory Board Member at Cornell Institute of Healthy Futures - Cornell University, New York (a partnership between the School of Hotel Administration and the College of Human Ecology, believed to be the world’s first academic center to combine hospitality, health policy/management, and design).




Well-established at Cornell University, Vaibhav is involved in hospitality service research initiatives & programs and has presented his research papers at renown ed international universities, business schools, and hotel associations from Maldives, Asia, Europe, China and United States.