The development of institutional investors, and their growing Essay

The development of institutional investors, and their growing dominance as owners of modern corporations, has had a deep impact - Essay Example The concern is that deficiencies in the monitoring of institutional shareholders have led to a quality of oversight far below that which is required, being reactionary and passive in the exercise of their voting rights. They are perceived to be ineffective in challenging boards, relegating their decisions to proxy advisers or alternatively constraining management to decide in favour of short-term financial profits at the expense of more prudent long-term benefits. This study conducts an inquiry into the academic literature on the role currently played by institutional investors in corporate governance. The study may provide insight into the control and accountability procedures in the large domestic and foreign corporations, since these are the entities which cause the greatest damage in every global financial crisis. Defining corporate governance Corporate governance is ‘the system of laws, rules, and factors that control operations at a company.’2 It has developed into a major area of concern because potential conflicts of interest (otherwise known as agency problems) tend to arise among stakeholders in the corporate structure. It generally assumes the inevitability that ownership and control are separate in public corporations, where management which exercises control over operations acts as agents of the owners or shareholders. Agency problems tend to arise from two sources: (1) the differences in the goals and preferences among the stakeholders; and (2) the lack of perfect information among stakeholders about each other’s knowledge, actions, and preferences. Corporate governance consists of the set of structures that define the boundaries for firms’ operations. Among the factors influencing corporate governance are the board of directors, laws and regulations, labour contracts, the competitive environment, and the market for corporate.3 The board of directors is the significant driver of internal control in the governance of the corporation because it has the right to hire, fire, and compensate managers. The party which drives the external control mechanism of corporations, however, would be the institutional investors who own equity in the corporation. In light of the recent financial crisis, institutional investors are gaining increasing importance due to what is perceived to be the failure of the board of directors to maintain sufficient internal control over the corporation. The effectiveness of their control, however, is still a matter of debate due in part to the difficulty of isolating and identifying those changes in corporate conduct that are attributable directly to the workings of the institutional shareholders. The formulation of corporate governance guidelines is the means by which a firm may seek to reduce agency costs (the consequences of the separation of ownership and control). Agency costs come in the form in the cost of hiring management personnel, and from costs incurred due to divergenc e in the acts of management from the wishes and interests of the owners of the business. Institutional share

Manage Employee Relations Essay Example | Topics and Well Written Essays - 2250 words

Manage Employee Relations - Essay Example Employee relationship management plays a vital role in the management of issues that could impact the satisfaction of the employees, which might have a subsequent effect on the productivity of the employees and the overall organizational culture. Hence, the goal of effective employee relationship management is to enable two-way communication between the employees and the employers which ultimately plays a pivotal role in mitigating cases of conflicts among the employees. An efficient employee relationship management program encompasses all the issues and problems that may exist between the employer and the employees (Gennard, & Judge, 76). As such, the report seeks to review and discuss three aspects of employee relationship management namely employee communication strategy, employee attraction and recruitment as well as employee induction, training and development. The report also looks at how each of the above-mentioned aspects impacts on the culture, legal compliance and obligation to employees, and the management of risk, conflict, and diversity of Jim’s Cleaning Company. The costs to a business organization due to inefficient employee communication are very high. This is because inefficient communication between the management of the organization and the employees could lead to communication gap which might result in low employee morale and competence of the business. Basically, communication serves four major functions in the organization which include the following: control, motivation, emotional expression and information (Robbins, 328). Therefore, effective employee communication has a strong positive association with employee understanding, since apt, pertinent and precise communication assists in the process of comprehension of corporate strategies as well as goals by the employees (Gennard, & Judge, 2000).  Ã‚