Progressing the Governance Standards Role of HR

Article Published by Rachna Mukherjee in

NHRD Network Journal 12(4) 339 ̄343, 2019 © 2019 National HRD Network, Gurgaon Reprints and permissions: in.sagepub.com/journals permissions India DOI: 10.1177/2631454119873155 journals.sagepub.com/home/nhr 

Abstract To have a robust governance standard become a practice in an organisation requires both a lucid stating of the principles and code of conduct along with creating a culture where a respect for these principles is acknowledged and positively reinforced. The human resources team plays a critical role in this scenario by offering a cogent professional conduct template as well as fostering a sustained culture, reflective of this, given the interventions which HR can facilitate across business units and different sets of professional segments. 

Keywords Cogent professional conduct templates, sustained culture, lucid CoC, change through emotional appeal, DNA of an organisation, ethical culture, principles of responsibility 

Theme Will formulating a code of conduct (CoC) be enough or is there anything that needs to be done more to progress the governance standards? Can culture be at the heart of corporate governance? How so? 

For any change to become embraced widely and also reflect in altered human behaviour, can be a long drawn and complex process. The critical thing, however, is the knowledge that behavioural change has to be inspired through an emotional appeal. This applies to corporate governance standards as well. I believe firmly that organisations must adopt a two-pronged strategy to build corporate governance into the DNA of an organisation. One is clearly replicating a CoC and building it into policy while the other is about creating a culture where acceptance of corporate governance norms become a way of life gradually. Clearly setting up a CoC is just a first step from where we have to build a commitment from leaders to frontline managers down the administrative chain to demonstrate the CoC expectations in their behaviour. It is here that the human resources (HR) function in an organisation plays a critical role. 

Multinational organisation like ours and others too are constantly interacting with our stakeholders all around the world. Our borders are constantly expanding, our environment is changing, and our business activities and corporate responsibilities keep on multiplying. Our challenge is to live up to the trust our customers and other stakeholders place in us. To achieve this, it is imperative to have a strong corporate governance in place consisting of rules, processes and applicable laws to protect the interest of the organisation and interests of company’s stakeholders, including investors, customers, suppliers, government regulators, environment, employees and the management.

HR plays a critical role in formulating policies around corporate governance and implementing these. This is a critical function given that we need to ensure the policy covers and stays relevant to current and next 1–2 years’ requirements. The policy needs to be kept simple and easy to adhere to, and one that connects across all geographies. Moreover, HR needs to ensure that the policy creates and supports a culture of speed, trust and collaboration. Internal employee communication too needs to have personalised element, which connects across the organisation to share and communicate expectations of corporate governance. 

CoC is a tool and just the starting point in identifying and defining organisational responsibility towards both internal and external stakeholders. There is more that is required to support a framework of governance standards. 

Externally the evolved Company Act is playing a good role in better corporate governance. In fact, the HR functions have been further streamlined and made robust through this and this supports better governance. The 2013 Act, through its provisions like those related to independent director, key managerial personnel, appointment of board and corporate sustainability, has empowered HR professionals to implement best practices within their organisations. Some of the aspects which are facilitating good governance. 

Organisations can do well if they successfully incorporate into their culture some of the following points which can set the movement for imprinting this in an organisation’s DNA as mentioned earlier. 

An Ethical Culture 

An ethical culture needs to be at the heart of corporate governance. HR function in organisations needs to act as facilitator and provide leadership by becoming role models. The HR function can create a model template of governance and also be early adopters themselves in creating greater uptake for these practices internally. 

It is also critical that leaders create a shared vision for the organisation with ethics at centre—we have done this at Schneider Electric through our principles of responsibility (POR). Post this it is important to inculcate ethical values among people by creating more awareness and driving employee participation in this acknowledgement. It is also important to formulate people policies and processes that promotes desired behaviour and trust in the organisation. 

This will need to be further strengthened by creating organisational processes and systems to support employees for driving an ethical culture. This can be further supported by the evolving role of HR professional and leader as integrity officer or ethics advisor. 

Finally, it is also important to promote and reward a robust whistleblowing management system which keeps the professional security of the individuals primary, post an event of whistleblowing. At the same time to allow this culture to be respected it remains critical to allow action to be taken on the episode/activity revealed once whistleblowing has happened. 

Robust Hiring Process 

A robust hiring process is critical in recruiting individuals with a right cultural fit given that recruitment is an entry point to the organisation. It is important to support this with background verification of our potential employees. People of undesired behavioural traits may put an entire organisation’s efforts at corporate governance at stake and this makes it important for hiring to be extremely thorough. It makes great business sense to filter future leaders through the prism of CoC. Along with creating this pipeline it is important for organisations to be able to develop the ability to assess potential risks in this space. 

Leadership Development 

Leaders are the brand ambassadors for an organisation and they need to embody the ethical practices. It is important for organisations to develop a mechanism of screening and grooming leaders with right ethical behaviour and leadership expectations. It goes without saying that organisations need to devote considerably more effort and attention to assess the honesty and integrity of decision makers. This can be supported by building organisational capability to take risk of termination or stop promotion of employees not adhering to ethical standards. 

Above all it is critical to keep the understanding about CoC going by continuously creating deeper awareness and understanding of ethics and consequences of non-compliances. 

Recognition 

Culture becomes more real, for those who are part of an organisation, when you acknowledge and reward behaviour which reflects the ethical core of an organisation. Therefore, acknowledging such behaviour assures that such behaviour is reiterated. 

So clearly while governance guidelines and imperatives are a good parameter, the CoC sets the direction, guides an organisation and its employees, on who we are and what we stand for. At the same time CoC cannot address every situation an employee faces at work, such as good judgement, shared responsibility and making ethical choice, which is all in line with the fact that CoC is critical for creating and sustaining a right culture which is vital for employees to exhibit the aforementioned behavioural expectations. 

Consistent push from the top, supported by right tone from the middle and leaders walking the talk, also makes employees believe and adhere to the CoC expectations. To achieve the above synergy across the organisational geography HR and other corporate functions play a key role in ensuring leaders, managers are trained to act like a coach and not as a manager, act like counsellor and not as a traffic warden to their respective teams, so that when in doubt employees do not hesitate to reach out for guidance. While the Companies Act 2013 has played a significant role in providing framework and improving corporate governance practices in India at large, HR can play even bigger role in making it an integrated part of organisational culture by creating organisation-wide awareness and deeper understanding and by deploying corporate governance-aligned people practices. 

Corporate governance infrastructure is like an iceberg: only around 10 per cent or lesser of it is visible. The culture is the hidden iceberg mass under the surface. The piece that is in plain sight includes values, strategies, vision, procedures and policies. However, it is the larger part under the surface that really drives the iceberg. This is what underpins the visible part. This is the unwritten cultural dynamic; the values, perceptions, traditions, beliefs and shared assumptions. 

Some of the major corporates which faced major regulatory and reputational challenges had the best of defined governance infrastructure, however, what they missed out is that 90 per cent. That is where it is critical to have culture be at the heart of governance, to know the pulse across the organisation, and what that we need to do to keep the culture across the company to be in sync with the corporate governance expectations. 

Declaration of Conflicting Interests 

The author declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article. 

Funding 

The author received no financial support for the research, authorship and/or publication of this article. 

Author’s Bio sketch 

Currently the Chief Human Resources Officer of Schneider Electric, India, Rachna Mukherjee has worked extensively in the areas of talent management, career/succession planning, organisation capability, change management, leadership development, employee engagement, compensation and organisation design. She also has a rich experience of managing HR operations which enhances her ability to evolve and implement long-term transformational initiatives. 

Prior to joining Schneider Electric, she was Vice President HR at Aircel Ltd. She has managed HR for the organisation through its exponential growth phase of doubling the employee base in a short span, she has driven the people agenda for the launch of an additional 13 circle operations and had led various strategic HR initiatives during the most dynamic phase of the organisation. 

She carries a diverse experience of over 25 years. She is a certified executive and life coach from International Coach Federation and certified to conduct a series of leadership and employee development interventions by organisations like Hay, Gallup, DDI, Covey Institute, etc., and is an achievement motivation trainer. 

She has played key strategic roles in organisations such as Microsoft, IBM, Escotel Mobile Communications, NIC and Blue Star, Hewlett-Packard. She is a recipient of the Businessworld Woman HR Leader of the Year award, 2016 and the HR Leadership Award, 2010. 

She is an Electronics and Electrical Engineer from BITS, Pilani and after an initial contribution to engineering roles, she moved to human resources. 

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