Describe about the Corporate Governance for Corporate Business Boards.
Introduction
Corporate governance is a structure of regulations and procedures to direct and control the business operations of organizations. One such regulation is appointment of women on corporate boards. However, this regulation created a big challenge on terms of gender diversity in Australian Boards (Carroll & Carson, 2015). The present report argues on the critical issues on gender diversity on corporate boards that may hamper in meeting the target of Australian Institute of Company Directors (AICD). The assignment is presented by following the analysis and assessment of evidence of gender diversity in Woolworths Limited, a company listed in ASX 200. There would be an assessment of gender diversity issues that affects the performance of organization’s business along with the recommendations on taking initiative on gender diversity policies.
Company’s Background
Woolworths Limited, Australian listed company is a second largest company by revenue amounted to A$59 billion and profit of around A$ 1.2 billion in the current financial year 2016. The company’s corporate governance practices and framework represents the business constitution, directors and management, disclosure policy, policy on diversity, risk management, board charter and such other important policies (Woolworths, 2016).
Gender diversity is a system under which company represents equal proportion of male and female employees as their workforce (Bhattacharya et al., 2016). In this regard, Woolworths limited have taken measures to have a diverse workforce to encourage the employees’ outlook as well as the business environment. However, the company experiences several issues on gender diversification that affects the productivity and business performance.
Respect in the workplace: Teamwork and mutual respect are two essential components of a favorable diversified organization. It is important to accept the individual differences to create sound work environment to develop the productivity and performance (Honoré et al., 2015). Considering this issue management of Woolworths Limited worked to build and foster positive relationships among team members with the group of key stakeholders. The company has employed more than 53.5% women workforce as per the current details and the company is also working on increasing the women leadership in the organization. This diversification is one of the reasons for the company to improve its overall performance in recent years.
Conflicting issues: One of the major issues of gender diversity is issues on racism, lack of respect and discrimination that creates conflicts among the team members of the company. Most of the companies are male dominating and therefore these conflicting issues arise on change in the workforce or appointment of women employees in the workforce that eventually hampers the company’s performance (Marinova et al., 2015). However, Woolworths Limited’s workforce on employing more than 53.5% of women employees and 38.6% of women managers has improved the business performance. Such improvement was possible due to development of cultural understanding and creation of appropriate business protocols and policies in the organization.
Communication: Another issue exists between the employees affecting the performance of the organization is communication issue. It occurs when there are language differences or lack of understanding among the members of the organization. The Woolworth Company identified this issue and the management had taken steps to resolve it by conducting training sessions, monitoring the performance, direct consultation with the members to review the problems. Such initiative by the company has helped in becoming the largest retailer in Australia with second highest revenue (Cumming et al., 2015).
As the company was experiencing growth phase in the financial year 2004, it planned to increase the focus on gender diversity to create the workforce parity between men and women. Additionally, as per the requirements of Australian Government Board and Australian Institute of Company Directors, appointment of women employees and leaders has become mandatory. It has been observed since 2010 that the women have high performance from different cultural background and high boardroom experience in several growing industrial sectors (Liao et al., 2015). Considering such efficiency in the women aspirants, the Australian board has set standards to recruit women employees on corporate board that would enhance the business performance as well as development of country.
In order to maintain the requirements of AICD, Woolworths Limited included its policies on gender diversity in the corporate governance procedures by incorporating policies like flexible work structure and parental leaves (Rao & Tilt, 2015). The company was the first to incorporate paid parental leave in Australia, which was accessed by around 2,278 employees in the year 2013. Further, in the year 2007 to 2011 CEO of the company focused on building women’s role in leadership with respect to the talent in different sectors and background to bring the considerations for senior roles. Such step has been taken to improve and develop the women roles to enhance the business performance, which has been around 27% in the year 2011. In order to determine the requirements and responsibility to bring change in the corporate boards, it is important to think rationally (Scheim & Bauer, 2015).
Gender equality in an organization determines the contribution of people’s complete potential for the benefit at economical, social, political and cultural level. Gender parity at corporate board is important to improve the business performance by following the governance policies, business decisions and financial requirements. Considering the fact, Woolworths limited is currently employed 202,000 out of which more than 50% are women employees and more than 30% at higher level as senior employees. Such diversification represents huge improvement in performance in the business activities recording second highest sales in the current financial years (Vasilescu et al., 2015).
Currently, competing motivations are apparent with respect to gender diversity on corporate boards as well as at lower levels. The company as both part- time and casual work has employed employment for workers with disability, older workers and indigenous employees. However, Woolworths Limited had to experience certain issues like harassment, generation gap, gender biasness and disabilities (Quintana-García & Benavides-Velasco, 2016). The company had introduced the policies on diversity by conducting necessary trainings, education sessions, comfortable work infrastructure and appropriate equipments.
Therefore, it can be said that the organizations should maintain the gender diversity in conducting the business functions. Such diversification assists the organizations to improve the business performance and maintain the sustainable growth in the current competitive industries. Accordingly, Woolworths Limited should initiate its gender diversity policies by monitoring the metrics. The company can evaluate the average earnings of men workers and women workers at each level along with the relative percentage. Evaluation of promotional percentage can also be done by Woolworths Limited to enable the assessment of success of diversity policy. Managing the supply chain is another initiative the company can undertake in its gender diversity policy to make sure that there is parity in senior level workforce. Such initiative assists the business organization to create the reputation and performance in the current competitive economy where women employees are considered to be more competent. The company can introduce certain privileges for older and disabled employees at workplace to fulfill their basic requirements that motivate them to perform at their highest capacity.
Conclusion
As the Australian government board taking initiative to incorporate gender diversity in the organizations not only at employment level but also at corporate level, the organizational management are also responsible for the same. In case of women employment, social pressure with respect to family responsibility is one of the major reasons that hamper their productivity and objectives. Hence, the organization should take the initiative to provide such benefits and education that there should be parity in workforce in each of the level and sector that would enhance the business performance.
Introduction
Whistleblower policy has been a common and critical element in the organizational corporate governance framework as well as in the system of internal control. It is more regular in the public sector organizations rather than in private sector organizations that becomes a part of corporate fraud and misrepresentation of financial reports (Puri et al., 2016). Lack of best practices on whistleblower policy in the companies may result in investment risk and hamper the business performance. The following report has been prepared to identify the potential risk from the whistle blower policy on the companies and on the concerned officials. The report would also focus on presenting the recommendations for best practice standards to minimize such risk to be adopted by the public sector organizations.
Whistle Blower
Whistle Blower is an individual or a group of individuals who discloses the information or details of the organization that is considered to be illicit, incorrect or unethical either in public or private sectors. However, act of whistle blowing is more common in public listed companies that are done by internal or external persons connected with the organization (Goel & Ramesh, 2016).
Recognition of public value from the act of whistle blowing is increasing since 50 years and thereby many countries and states have been forming statutes and laws to protect the whistle blowers as well to minimize the risk involved in the companies. Some major risks that involved with the act are trust, retaliation, break in chain of control and enterprise repercussions. Such risks may result in the organizational business performance and reputation that affects the profitability and growth. Therefore, whistle blower policy is required by the companies to maintain legal compliances, ethics of business operations and internal code of conduct compliance (Hope, 2016).
With the constant rise in issues from the act of whistle blowing, the government board and corporation statute have taken steps to resolve such issues by introducing best practices in the whistleblower practices (Lewis & Vandekerckhove, 2016). Several acts and legislations have been introduced to protect and minimize the risk involved with whistle blowers. Sarbanes- Oxley Act, one of the popular acts introduced by the government board under corporate governance framework to protect the public interest and investors. The act mandated the organizations to establish systems to allow unidentified reporting or disclosure by the employees to protect the investors’ interest through true and fair disclosure of organizational information (Anderson et al., International Perspectives. Handbook of Academic Integrity).
The Australian government in several states has legislated whistle blower policies focusing more on listed companies by incorporating code of conduct on directors as well as on senior executives. In case of Wesfarmers, one scandal with respect to the disclosure of inflated revenue amount of departmental store. It was observed that the company had reported its income by inflating around $2.1 million during the six months revenue generation report whereas the earnings of overall group were inflated by 1.1% (Tahir et al., 2016). Accordingly, the corporation law and government board have incorporated policies on protecting the identity and confidentiality for the purpose of true and fair disclosure of information. It has been made mandatory on part of individuals or an organization that discloses any wrongdoings should be given protection on disclosing the identity. However, such disclosures made by the person or organization should be authorized by law and should be required to undertake for further investigation (Gomes, 2016).
Another best practice on the whistleblower policy is protecting the files and records. It has been made compulsory for the authorities to retain the investigated files, records and documents under stringent security. It was ensured by the board that release of any information in violation of the policy would be considered as serious matter under the disciplinary procedures of Wesfarmers (Turpan, 2016). Apart from that, the companies are required to have best practices in whistleblower policy with respect to the fairness for adequate disclosures and reporting. Employees or contractors of companies who make reports or discloses information in good faith would be required to report their superiors of their respective team that includes harassment, dismissal, disciplinary action, demotion or any other unfavorable behavior (Holmes et al., 2016). The companies are responsible to safeguard the employees who report any misconduct in the form of retribution of allowance for anonymous reporting. For instance, in case of Commonwealth Bank employees reported for misconduct within the organization which was overlooked and led to unfair representation in the reports for the use of members and investors (Goel & Ramesh, 2016).
The companies are required to follow best practice in whistleblower policy by making certain that the workers or staffs of the organization are able to report by using external means like helpline or emails. The companies should incorporate internal controls in the business operations to prevent the prospect risks or any damage. The responsibilities to scrutinize and formalization of procedures should be maintained to track the reporting issues by internal members or external members (Elhai & Frueh, 2016).
Whistle blowing act is one of the major issues in corporate governance that listed companies are experiencing. In order to resolve the related issues companies have been directed to follow the whistleblower policy to protect the future risk and damage. According to the requirements of Accounting Board and Corporations Law, the companies are required to disclose such corporate governance policies in the financial report for the benefit of investors and companies. It is recommended to the companies to maintain the confidentiality with respect to the information as well as to protect the whistleblowers. The companies are required to make it mandate that the reporting should be made in written form in accordance with the compliance of law. All the disclosures and reporting by the employees, contractors or external members should report the subject matter in writing form to the concerned official. On such receipt, the officials are required to take initiative on the investigation process to check the viability of the reported matter. The whistleblower policy should contain the process of thorough investigation of any reported matters to safeguard the companies’ potential risk and for the benefit of stakeholders.
Additionally, there should be adequate communication channels for the purpose of reporting misconduct and its viability. There should be appropriate communication for conducting the investigation process, timing, points of the issues to be checked and the areas to be dealt with. Moreover, the policy should also incorporate the need of conduction sessions on direct communication with the organizational members to identify the issues and guidance for the business performance by maintaining the transparency and fair accountability. The company should establish the requisite code of conduct for leadership, senior management and executives, directors along with the lower level employees to operate the business in true and fair way.
Conclusion
Considering the above discussion, it can be concluded that the requirement for good corporate governance for the companies is essential. The government of Australia has adequately formed several legislations and acts to be followed by the listed companies to manage risk and corporate issues. It is significant for the companies to prepare and present the financial information by maintaining the transparency and adequate disclosures. The companies are required to disclose the policy on corporate governance for the purpose of sustainability, growth and profit maximization. Some of the largest companies of Australia like, Wesfarmers, Commonwealth Banks etc. have experienced unfavorable issues from the detrimental disclosures made by internal members. Although such disclosures were made in good faith as well as for the public interest, there must be appropriate procedure and disclosures. Therefore, the listed companies should adopt the best practices on whistleblower policy to safeguard the business risk and public interest.
Reference List
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