Introduction. Presentation Outline: GOOD CORPORATE GOVERNANCE THE STRATEGIC ROLE OF HUMAM RESOURCES MANAGEMENT 07/07/2009
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1 GOOD CORPORATE GOVERNANCE THE STRATEGIC ROLE OF HUMAM RESOURCES MANAGEMENT George T. Koranteng, Manager, Organisation Development & Management Systems, VRA, Ghana Introduction Strategic HR in every company is crucial in the face of: a globalised and knowledge-based economy, where change is pervasive war for talent is rife Strategic HR becomes more of a business imperative when it is considered against the background of good corporate governance. Presentation Outline: What is Good Corporate Governance? What is Good Corporate Governance? Elements of Good Corporate Governance What is Strategic HR Management? Achieving Good Corporate Governance through Strategic HR Management- The case of VRA Conclusion/Recommendation Corporate governance represents the relationship among stakeholders that is used to determine and control the strategic direction and performance of organizations. (Hillman, A.J. et al 2001). At its core, corporate governance is concerned with identifying ways to ensure that strategic decisions are made effectively. (Stiles, P. 2001). In modern corporations, the primary objective of corporate governance is to ensure that the interests of top-level managers are aligned with the interests of the business owners/shareholders. 1
2 Agency Theory Stakeholder concept According to the Agency Theory, directors and top management of every organization are agents of owners of the business and, therefore, have fiduciary responsibility to deliver effective results to the business owners. The Stakeholder concept, on the other hand, requires that directors and executives endeavour to meet the legitimate but competing needs of all key stakeholders as this will in the long run be in the interest of shareholders. Other ingredients of Good Corporate Governance Accountability Transparency Predictability Participation Effective Board constitution and operation Separate Board chairman and CEO position Strengthen NED (Non Exe Director) membership Effective Strategic Management system/process Effective Internal controls including Code of Business Conduct Effective Financial Reporting including full disclosure 2
3 The underlying issue regarding the best interest of principals is the maximisation of shareholders value. Good corporate governance is said to have been achieved or practised, when directors, management and staff align their interest and activities with those of the business owners. What is Strategic HR Management? HR function exists primarily to execute activities in an organisation to attract, develop retain well motivated staff and to help create a harmonious working environment. Drive to transform HR These activities generally have been transactional in nature and are considered as mere traditional administrative cost centres. Therefore HR s contribution to the achievement of organisational goals and eventually the company s bottom line could not be established firmly. Since the 1990s there has been a drive to transform the function to a more business-oriented approach dedicated to adding value to the operations of the institution. By this shift in focus and orientation, the HR function strives to assume a Strategic Partner role. 3
4 As a Strategic Business Partner, HR seeks to Enhance employees understanding of company strategy and their role in executing it Boost the overall skill level of the workforce, especially those functions that add the most direct value to the origination. Improve the impact of HR and learning initiatives on overall business results. Consider outsourcing administrative HR activities Enhance the leadership, business and management skills of senior HR professionals. Achieving Good Corporate Governance through Strategic HR Management Several approaches and options are available to directors and managers in serving the best interest of the principals. Through the Strategic HR the right systems and processes could be put in place to ensure that the best talents are attracted; and the One of them is a company deciding to pursue a resource-based approach in achieving a competitive advantage. human capital developed in a manner in which the capabilities of the organisation would remain distinctive. 4
5 This strategic option will require the organisation to leverage on its core competence to gain a competitive edge. It is in this regard that the Strategic role of HR Management becomes very important. Developing and having distinctive human capabilities and the effective policies and systems that support the practice of good corporate governance will go a long way to enable top management serve the interest of their principals. Achieving Good Corporate Governance through Strategic HR Management- the case of VRA These initiatives include the following: A number of initiatives have been implemented with top management support to transform the HR function and improve organisational effectiveness to enhance the overall human resource capacity of the Authority for the achievement of corporate strategic goals/objectives. Implemented HRMIS (Human Resources Management Information System) resulting among others, in the automation of certain HR administrative activities Decentralised the HR function resulting in the creation of HR field offices (HR Area Offices). 5
6 Pursuing Management/Technician Trainee programme with the view to having in place at all times the right numbers of capable employees Assuming the Chair of Engineering at KNUST (Kwame Nkrumah University of Science & Technology) to ensure that VRA s strategic interest in terms of equipping students with the right competencies is catered for. Established VRA Training School (now being transformed into an Engineering Centre of Excellence) to train and retrain Engineers and Technicians to build the distinctive competence the Authority desires. Developed a Scheme of Service which enables employees to know the desired competences and what has to be attained at every stage of one s career as well as what the Authority has to equip its employees with. Currently, the Authority is implementing/revamping the following systems: Institutionalised quarterly Consultative Meetings between VRA Management and In-house Staff representatives (Unionised and Senior Staff Representatives) to discuss issues of mutual interest in a transparent manner with the view of promoting a healthy industrial atmosphere and overall productivity. Reward Management System. The Authority is implementing a Job Evaluation project. The process will enhance employee role clarification and specifically ensure pay equity- equal work with equal pay. Performance Management System- The overall objective is to institutionalise a Performance- driven culture 6
7 Institutionalised Best Worker/Team Award policy. The key objective is to among others, engender and/or reward Innovation and Risk-taking among staff, which is very paramount in an intensely competitive, globalised and knowledge-based economy. Team Work- Promoting and rewarding effective Team Work will go a long way in building cohesive teams which impacts positively in Unit, Sectional and overall business goals/objectives. Institutionalised top team s engagement with HR Department every September to review and consider HR strategic initiatives to ensure proper alignment with overall corporate strategy. Conclusion: With these approaches, it is hoped that, the people issues which are estimated to be at the core of all corporate strategic objectives could be effectively addressed. Considering the issues of globalisation, knowledge-based economy, intense competition and war for talent, against the background of increased demand for good corporate governance, it important that HR functions of African Utilities are transformed into Strategic Business Partners. 7
8 Such a transition will position the HR function to proactively embark on innovative policies and systems that will go a long way to attract and build up the right and capable corps of management staff and officers who will appreciate how to align their interest to those of their principals and other stakeholder groups and thereby promote good corporate governance. Thank you for your kind Attention MERCI 8
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