Coorporate Governence

Introduction To Governence in Corporete World

Corporate government is linked with the rules, practices and processes with the help of which firm is controlled and directed. It is the way by which company can manage its stakeholders and helps in improving efficiency of the business (Joshi, 2004). Different parties are interest in knowing the affairs of the company, so with the help of corporate governance it becomes easy to manage stakeholders. In the present report, Xyz Ltd is taken as one of the bank that operates at global level. Different tasks have been discussed in the report which includes importance of corporate governance, purpose of human resource policies etc.

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Corporate governance is linked with the framework of rules and regulations with the help of which board of directors of Xyz Ltd ensure responsibility, transparency and fairness in a firm’s relationship with its stakeholders like customers, suppliers, government etc. The framework of corporate governance takes into consideration explicit and implicit contracts, procedures for integration of stakeholder’s interest and condition for appropriate control, supervision etc (Tricker and Tricker, 2012). Xyz Ltd has developed some rules and regulations in order to operate efficiently and corporate governance provides them guidelines which are linked with the ways that help in directing and controlling the firm. Company can easily manage its stakeholders and they are satisfied easily.

The best example of failure of corporate governance is British petroleum oil spill in 2010 due to which whole environment was badly affected especially marine life. It directly shows that company does not maintain its operations well which lead to such unethical activities that are in favor of surroundings and dissatisfy need of stakeholders (Joshi, 2004). This also has negative impact on the brand image of company as it is spoiling the environment which is against corporate governance.   

Legal requirements in corporate governance  

In corporate governance there are some key responsibilities as directed in the legislation and regulation which Xyz Ltd has to follow and they are discussed below:

  1. There is a single board with different members responsible for the long term progress of the enterprise.
  2. In order to run the board clear division of responsibilities and for company a separate chairman and board is required.
  3. At the time of appointing directors Xyz Ltd has to follow formal and transparent procedures and at the time of re- appointment, it needs to be ratified by shareholders (Alexander, 2004).
  4. It is required to evaluate the board effectively in order to judge the effectiveness.  
  5. It is the responsibility of the board to present balanced assessment of the firm’s position.
  6. Board has to examine the nature and oversee the sound risk management
  7. It is necessary for Xyz Ltd to be in touch with its shareholders in order to know their opinions and concerns.  
  8. All the decisions must be taken in general meetings.
  9. Transparent and formal procedures must be followed for deciding remuneration of executives and considers the remuneration committee developed of independent directors and advisory vote for shareholders.

So, these are some of the legal requirement in corporate governance that Xyz Ltd follows strictly and it highlights the ways with the help of which company can manage its principal stakeholders (Joshi, 2004). Various procedures are present that company has to follow linked with remuneration, relation with shareholders etc. For Xyz Ltd stakeholders like investors, government, customers are very important and they are linked with the success of the enterprise. So, by following all the legal requirements stated in corporate governance, company can easily manage its shareholders and they are given preference at the time of resolving major issues.

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Cadbury report was issued by the committee on the financial aspects of corporate governance that provides suggestions to the firm on the arrangement of firm nboards and accounting systems to mitigate corporate governance risks and failures. It contains the listing rules that xyz Ltd has to follow strictly and it is necessary to comply with the guidelines. It contains laws for both private and public companies. The committee was formed in 1991 and it was response to major scandals of corporate that are linked with failure of corporate governance in the country. This report involves some rules that xyz ltd has to follow like chairman and CEO of firm should be separate, board of the enterprise must contain three non executive directors but on the other hand it is necessary that two non executive directors should have no financial executives. It is required for each board to develop an audit committee which comprises of non executive directors (Tricker and Tricker, 2012). These rules are necessarily to be followed and company has to comply with them. Whereas in case if company wants to be listed in London stock Exchange then it is necessary and it is necessary for firm to follow guidelines. Whereas another committee was formed by Richard Cadbury that gave other guidelines like each board of the enterprise must have a remuneration committee made up of executive directors and it is necessary for directors to have long term performance linked with pay and it must be disclosed in the accounts of organization.  

It takes into consideration various sections that xyz has to follow like leadership which states that it is important for company to appoint effective leader who is capable to manage all the activities and there should be clear division of accountability. Section B describes effectiveness and states that board must have appropriate knowledge and skills. Section C is linked with accountability and states that board has responsibility for identifying the nature and extent of the different risks (Altés, 2010). Section D is linked with remuneration and it must be adequate for directors so that they can run business successfully. Section E is important and describes that relation of xyz with its stakeholders. Board of the enterprise has responsibility to ensure that stakeholders are effectively managed. So it is necessary for the company to work under the sections and follow the guidelines.

Stakeholder analysis is linked with identification of the parties that are directly interest in the affairs of the enterprise so it is necessary for xyz bank to satisfy the need of its stakeholders and will help company to help achieve the targeted objectives. Parties such as employees, management, government etc are interest in the affairs of the bank. Regulatory requirement has direct impact on interest of the parties due to which company is not able to manage them efficiently (Altés, 2010). Stakeholder’s interest can conflict in different ways like employees expectation is that they get good rewards and monetary benefits for the work done but in case of investors they expect faire return for the work done so interest vary from person to person. So organization can manage stakeholder conflict through effective communication, increasing understanding, self knowledge etc. Whereas management can adopt different conflict styles such as competitive, collaborative and accommodating.


Human resource policies are required in organization, so that all the employees working in enterprise can be managed effectively and their efficiency to perform operations can be increased. Xyz Ltd has formed different policies linked with human resource, as staff members working in company have to perform different tasks those linked with marketing, operations etc. So with the help of such policies it directly becomes easy to manage employees (Barbeito, 2004). Such policies are linked with discrimination, treatment of men and women in the workplace, maternity rights, pension and parental leave. By developing different policies for employees, it is ensured by management that people are given fair treatment in the workplace and this will help firm to achieve the targeted objectives.  

On the other hand, it gives the staff members a feeling of security and they work freely as no unethical practices are present within the firm. In xyz ltd, all the employees are given fair environment free from discrimination; remuneration is given on the basis of work done whereas other benefits are provided like pension etc. It directly helps in retaining employees and they work for the welfare of firm. Policies provide equal employment opportunities to all the staff members and they work with full motivation (Humphrey and et. al., 2003).

By developing effective human resource policies xyz ltd can easily manage its human resource as such policies will ensure that company is working in favor of them and this will increase their motivation level. Whereas it is the duty of management to save employees from the unethical practices that are found in other organizations like discrimination etc. Whereas human resources policies acts as development tool for the organization as it is developed for welfare of employees and they prefer to work for the welfare of firm as they are given proper right and duties (Garibay, 2011). So it can be said that xyz can satisfy need of its customers better by using appropriate human resource policy within the workplace.

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Policies developed by organization in favor of its human resources directly support them and provides consistency. On the other hand it is considered one of the most effective way to manage employees efficiently and directly increases their satisfaction level. Whereas to ensure that employees know about the human resource policy easily management uses notice board and emails to communicate with them important policies and it becomes easy for enterprise to manage them.;

Difference in HRM Policies of EU and UK

There are many differences present in the requirement of human resource legislation in UK and EU that have been discussed below:

In EU legislation, main focus is on establishing a framework linked with equal treatment of staff members in employment and occupation and forbids discrimination on the basis of religion, age, disability etc. As per principle of equal discrimination, there must not be any discrimination present and all employees must be treated fairly Anti discrimination is safeguarded by Directive 2000/43/EC and it covers areas such as education, social protection. Whereas in UK legislation, part of directive 2000/78/EC is implemented in UK by the employment equality and focuses on the sexual orientation. Disability discrimination act passed in 1995 is also used (Ellerman and Kleiner, 2000).

In EU legislation, the equal pay directive 75/117/EC is based on the approximation of member’s states and Directive 76/207/EC on the implementation of principle of equal treatment for men and women. Whereas in UK legislation equal pay act 1970, sex discrimination act 1975 and The Equal Pay (Amendment) Regulations 1983, SI No 1794 are used.

The differences in legal requirement mentioned above has direct impact on the managers working in Xyz Ltd and their attitude as they have to manage all the employees keeping in view the legislation in EU and UK. It is necessary for managers to provide equal pay to staff members; discrimination on the basis of caste, sex, age must not be present strictly and it is necessary for management to provide equal social security to the employees (Trönnberg and Hemlin, 2012). So, all these laws and regulations need to be implemented within the workplace and in case if they are not followed then regulatory authorities have right to take strict action against the firm for wrong behavior practiced on employees.


Government has passed various regulations that are applicable on banks and it is necessary for Xyz Ltd to follow it. Main business of bank is to provide loans to its clients and satisfy financial needs. But in past it was analyzed ,the banks provided loans to every organization in the country but now the scenario has changed and government has issued guidelines which states that companies that have  adverse impact on the environment will not be given any loan (Bracci and Maran, 2013). So, Xyz Ltd has to follow this regulation and loan will be provided on this basis. On the other hand, Xyz Ltd has taken various actions in order to adhere to these requirements. Presently, company is providing loan to those organizations that have less impact on environment and are eco friendly. So, by adopting this regulation, bank will be able to save environment and it will have positive impact on the surroundings. Whereas company has taken other initiatives like planting trees in various parts of the cities which is also favorable. All the policies issued by regulatory authorities are strictly followed by Xyz Ltd as it directly helps in managing government as an important stakeholder and improves performance.

Environmental issues such as paper, energy and waste are present which badly affects the bank. Such challenges are increasing day by day so it is the duty of management to take some corrective actions in order to resolve them. Wastage of resources like energy, paper can be reduced by using them in lesser amount. In bank paper work is done in large so they can use some other method by which environmental burden can be reduced easily. They can rely on internet and other advanced tools instead of using papers (Bracci and Maran, 2013). Whereas the wastage that is done by carrying out operations must be decomposed into the land instead of throwing them into some areas. Company must adopt recycling methods which are also beneficial. On the other hand bank can done cost benefit analysis where amount of recycling waste can be considered and benefit that bank will get after adopting these methods. Cost of resolving this issue will be very high as company has to arrange for various resources and surely it will provide many benefits to the business enterprise. Management has to manage all its financial resources efficiently so that funds can be used in the environmental issues. It will directly benefit bank and will have positive impact on the brand image as management is working in favor of environment.

Health and safety regulations  

Health and safety regulations are also developed by government, so that major accidents like fire can be avoided within the workplace. Company has installed various fire extinguishers with the help of which such incident can be handled easily. Whereas customers or employees who are handicapped for them company has built ramp on various places and this directly provides them more convenience (Altés, 2010). So, by following all these health and safety regulations Xyz Ltd can easily improve its performance. Whereas employees of the firm can work easily as they are given environment which is free from hazards and all safety measures are taken in advance.

Xyz Ltd has undertaken an environmental awareness program whose main objective is to save environment and provide information to all the stakeholders. So, main strength of this program is that all the parties like customers, government, suppliers and investors are able to understand the benefit of saving environment from their bad impact. So, each party is taking initiative in order to protect environment. Amount incurred by company on this program was totally recovered by seeing the response of participants. So, by seeing this awareness program every stakeholder of Xyz Ltd will take steps to save environment and will protect surroundings (Garibay, 2011).  

Employer can adopt different steps for the welfare of staff members like risk assessment with the help of which it can be determined what risks can arise in the workplace and on the basis of which company can take initiatives for the welfare of its staff members. In bank incidents like fire can rise so employer can install fire extinguishers in the workplace (Garibay, 2011.). Whereas training can be imparted to the staff members so that they can easily deal with the situations like fire and other accidents. On the other hand employer has to ensure that proper first aid box is present in the company that can be used at the time of accidents and this will have positive impact on the organization as initiatives are taken for the welfare of employees.   


From the above report, it has become easy to understand the importance of corporate governance. It has helped Xyz Ltd to manage its principal stakeholders by following all the legal requirements and regulations. It has also showed the responsibilities of firm towards its shareholders and other parties. Company has developed effective human resource policies that help in managing all the employees and they are provided fair environment to work. Company follows health and safety policies for welfare of its staff members. Whereas Xyz Ltd also comply with the environmental regulations and works in favor of surroundings.


  • Barbeito, L. C., 2004. Human Resource Policies and Procedures for Nonprofit Organizations. John Wiley & Sons.
  • Gup, E. B., 2007. Corporate Governance in Banking: A Global Perspective. Edward Elgar Publishing.  
  • Joshi, V., 2004.  Corporate Governance: The Indian Scenario. Foundation Books.
  • Tricker, B. and  Tricker, I. R., 2012. Corporate Governance: Principles, Policies and Practices. Oxford University Press.
  • Altés, M. C., 2010. Competition and choice: banks and savings banks in Spain. Journal of Management History.
  • Bracci, E. and Maran, L., 2013. Environmental management and regulation: pitfalls of environmental accounting? Management of Environmental Quality: An International Journal. 24(4) .pp.538 – 554.
  • Ellerman, S. J. and Kleiner, H. B., 2000. How to write excellent human resource policies. Management Research News.  23(7/8) .pp.95 – 98.
  • Garibay, G. M., 2011. The tradelabour and tradeenvironment linkages: together or apart? Journal of International Trade Law and Policy. 10(2) .pp.165 – 184.
  • Humphrey, C. and et. al., 2003. Human resources policies and continuity of care. Journal of Health Organization and Management. 17(2) .pp.102 – 121.
  • Trönnberg, C. C. and Hemlin, S., 2012. Banker's lending decision making: a psychological approach. Managerial Finance.  38(11) .pp.1032 – 1047.
  • Alexander, K., 2004. CORPORATE GOVERNANCE AND BANKING REGULATION. [Pdf]. Accessed through <> . [Accessed on 7th Nov 2014].
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