Provide an insight into the relative strengths and weaknesses of Essay

Provide an insight into the relative strengths and weaknesses of internal and external recruitment - Essay Example sed to legally get hold of an adequate number of qualified individuals at the right place and time so that the people and the organization can select each other in their interests. This means that the recruitment process gives the organization a number of potentially qualified job candidates from which employers can make well judged selection to fill available jobs (Dessler, 2002). Recruitment might be carried out through internal or external sources. In instances when internal recruitment does not generate the number or quality of staff needed, the organization has to recruit from external sources (Community for human resource management, 2008). Internal recruitment is recruitment which takes place in the organization. It is the hunt for in-house personnel who have the skills and attitudes to accomplish the requirements needed and to facilitate the organization attain its goals.  Internal vacancies can be promoted within the business through staff notice boards, intranets (website whose viewing is limited to the organizations members), in-house magazines, newsletters and staff meetings. In case of internal recruitment, employees are transferred from one department to another based on their competence and knowledge. The can also be promoted from one department to another with additional benefits and greater responsibility according to his or her competence and skill. This can be done through job postings which is advertising a vacant position to employees and mentioning its requirements. Upgrading or demotions are another example of internal recruitment. Retired and retrenched employees may also be recruited once again if there is a scarcity of competent personnel or the work load increases. Recruitment of such individuals saves time and costs of the organization as they are previously conscious of the organizational set up and the regulations. The dependents and relatives of deceased employees and disabled employees are also employed by numerous organizations

Analysis of Relational Technology Tool Research Paper

Analysis of Relational Technology Tool - Research Paper Example These aspects are covered with an eye towards being able to understand the achievement of the function of Facebook as a relational technology; the application of Facebook to one aspect of computer-mediated communication or CMC; critiquing how Facebook supports the achievement of the goals of CMC; and making recommendations on better means of accomplishing the goals related to CMC (Lord, 2003; Barnes, 2002). Facebook touts itself as being in the business of creating products that provide utility value to advertisers, developers and end-users, through the Facebook platform. That platform is a social media platform that end-users utilize to be able to connect and interact with their families and friends, as well as to know more about the world through the news and the shared information from friends and created pages that are made possible through their being posted on the social media platform. Developers have a stake in making use of the platform to create applications that leverage t he user base and the technical and social media strength of the platform. Advertisers on the other hand, as the third leg of the ecosystem after users and developers, can leverage the large user base of Facebook and the social nature of their interactions to reach large targeted audiences for their products and services (Google, 2013). The end-user focused products are many and have been well-developed and evolved after many years of use by millions of users around the world. Those products are made available to users on the Facebook platform, which in turn can be accessed from a host of devices, from personal computers to tablets to smart phones by the largest providers of devices in the world, from Apple to Android devices to other operating system platforms and form factors. The key end-user products include Timeline, News Feed, Places, Pages, and the photo uploading service. There is also an email and a chat facility to complement the other forms of sharing and communication on the platform. News Feed is a personalized platform for the sharing of information, news and status posts from friends, from various Pages, and from other parties that have presence on Facebook. Pages are user-created Facebook pages that cater to various content and interests providers and enthusiasts, and include Fan pages for artists, pages for news and media organizations, official pages of artists and public figures, and the like. The scale of the Pages product is demonstrated in the stat which says that as of the second quarter of 2012, about 42 million pages exist on Facebook, that have ten or more Likes. Likes is a Facebook feature that allows users to tag posts and Pages that they like. The photo service is another end-user product that allows users to upload, share and archive digital images on Facebook. The Places product, meanwhile, allows users to share their locations and the places that they visit to friends and family. The tagging functionality in the Photos app allows for another layer of social sharing of photos that include information on the users who are in the photos. This is a social way of annotating and sharing the photos (Reuters, 2013). II. History of the

Transformational leadership Essay Example | Topics and Well Written Essays - 2000 words - 1

Transformational leadership - Essay Example 38). The transactional leadership theory involves exchange between labour and rewards while the transformational leadership theory is mainly based on placing concern for intellectual stimulation, employees and offering vision to a group (Bass, Avolio and Atwater 2006, p. 99). James Macgregor Burns, who was a leadership expert, introduced transformational leadership theory concept. According to him, transformational leadership is manifested in a situation where a leaders and followers lead to the advancement of one another in motivation and morality (Bass and Riggio 2006, p. 64). A transformational leader uses different mechanisms to improve performance, morale and motivation of his followers. The mechanisms include being a good role model to followers which inspires them, having a connection to the followers’ self-identity, striving to understand weakness and strength of the followers and challenging followers to have more ownership of the business(Bass, Avolio and Atwater 2006, p, 94). Transformational leaders, foster moral values of loyalty, honesty, and fairness and at the same time they preserve end values of equality, justice and respect to human rights (Yates 2012, p.53). Transformational leaders have strong character and vision. This power helps them inspire their followers to change the perception, motivations and expectations to work toward the set purpose (Yukl 2009, p.28). The transformational leadership theory is based on the leadership trait;character and ability to bring about change through energized vision, articulation and challenging goals. For a leader to be considered transformational, he must be idealized in the sense that he is a moral exemplar of striving toward benefits of an organization, a team or a community (Sanders, Hopkins, and Geroy 2013, p. 21-31). The impact that the leader has on his followers’ performance and motivation is what determines

2,000 word Conflict Analysis and Research Proposal

2,000 word Conflict Analysis and - Research Proposal Example To many, natural resources are a vital resource for development and seems as the sole sure path to poverty reduction and economic growth. The increased awareness of the correlation between natural resources, security, and conflict continues to serve as reinforcement for the perception that natural resources are now a security issue (Bannon and Collier 2003 ). While appreciating that there are other drivers, this proposal suggests a detailed research to establish the interrelationship between distribution of economic resources and conflict. A succinct understanding of this relationship is considered necessary especially when formulating and implementing policies to mitigate the risk of conflict whether within a country or region. Limited knowledge of the correlation has resulted into misaligned policies and strategies that fail to achieve their objectives on prevention of conflicts related to natural resources distribution. The contemporary society is concerned that tension and conflicts continue to persist despite the formulation and implementation of conflict prevention policies in various world regions and countries. Much has been done to combat conflicts although researchers have shown that tensions and threat of violence are still high. An understanding of the correlation between conflicts and various drivers is considered as a vital step towards sustainable conflict prevention strategies and policies (Odhiambo 2011). It is necessary that the society adopt strategies that comprehensively address regional conflicts regardless of the dynamics of the contemporary world. All aspects of life are experiencing fast changes largely because of globalization. This research proposal in an attempt to establish the linkage between natural economic resources and conflicts presents a succinct literature review, research methodology, and possible results in subsequent sections. The literature refers to earlier re search studies to give insight on how different regions and

Why are informants necessary to effectively combat organized crime Essay

Why are informants necessary to effectively combat organized crime - Essay Example To gain this information, designated authorities have recourse to tried and tested methods. These methods include physical and technological surveillance, infiltration of the organization by undercover agents, and last, but not the least, the use of informants. Informants used against organized crime are usually members of these criminal organizations, who decide to talk to the authorities for a variety of personal and financial reasons. Critics have often criticized the use of informants: it is believed that most informants are unreliable because they work for selfish motives, either to gain revenge on their parent organization, or in search of incentives like money and exemption from charges and punishment. Since the whole process of using informants is confidential, critics fear the abuse of the system, whereby criminals go scot free despite heinous activities because of their cooperation with the authorities in netting criminal organizations. According to critics, informants tend to blur the lines between what is lawful and what is not. But despite these objections, there are reasons why authorities continue to use intelligence from informants, and we will now discuss why despite having other options like technical and physical surveillance and undercover operations, police and other authorities continue to use informants. Technological and physical surveillance is often unable to capture the entirety of the organization, as the members use coded communication. Moroever to initially establish surveillance especially in a suspects private space, the authorities must be able to obtain proof of criminal activity in the form of advance reliable intelligence. This is where the informants come in handy, because a reliable informer is able to provide a translation for the inner codes of a criminal organization, as well as supply tangible proof against a organized crime suspect to be brought under surveillance.

Indigenous Tradition Essay Example for Free

Indigenous Tradition Essay In the past people have mistaken about their tradition Indigenous originality or occurring naturally (country, region etc) To be indigenous kinship (relation to one another) and location(connection of particular place) Indigenous religion beliefs, experience and practices concerning non-falsifiable realities of people who have kinship and location Syncretism: Syncretism merging of elements from different religions. Eg : north American tradition have been influenced by Christianity, some African rituals are influences by Islam. * Change occurs everywhere. * Traditions are less authentic (accurate) than thousands year ago Indigenous can be found anywhere: * Anishinaubae: drumming ceremony in Toronto * Yoruba: Funeral rites in London * Maori: Purification ritual in opera house Sydney Australia Misconceptions * Common to Indigenous traditions is colonialism * Oglala (Indigenous community) – a theorist explained them as â€Å"warriors without weapons basically they were incapable to adapting a new economy lifestyle they focused on how to make them â€Å"modern Indians† * Outsider lack insider knowledge. * Scholars often used terms such as fetish, myth, mana, taboo to explain Indigenous traditions. * Eg â€Å" Indigenous stories are called myth where the bible is considered to be true. Primitive Cultures that are unchanged from the beginning primitive Christians, who believed in god and their tradition, had superiority and began to spread their religion to who didn’t know about gospel Indigenous traditions are tend to think more primitive Due to non-literate * But writing to not better than oral speaking * Mayan did use writing * Most Indigenous people are very literate. Indigenous tradition are tend to think more primitive – consider everything to be sacred (untrue) * Eg : Navajo : ceremony that transforms normal house into a scared place. So everything such as eating, sleeping is considered to be sacred. * Australian aborigine knows where to pray(know the difference between sacred and non sacred mountains) Primitive term is now disagreeing by many scoloars Mohawk and Cree (Dr Clare Brant) Mohawk: Indigenous traditions who give more food to their guest to show their wealth. Cree: Indigenous tradition who eat all the food offered to show scarcity. These two traditions did not go well together and this shows that Indigenous traditions are different from each other. Another point is that we see other cultures according to our own cultures. Gender roles: * Male: hunting and warfare * Female: healing and food preparation * Maori carvers were men and weavers were women. Bunu men frow cotton and women turn it into clothes. * Sometimes the roles switch just like other traditions * Usually religions practices are different for men and woman too. Power of speech Oral speaking is very imp for Indigenous traditions things are passed down oraly. Many people think oral primitive (untrue). Both Quran and Bible was passed down orally before written into text Stories : After life : * Kewa: a man finds a tunnel where his dead people wre living together and they gave them many things and asks him not to speak of it. When he goes and tell everyone about the tunnel, he breaks the promise and when he returns the tunnel is gone. * Anishinaubae : young man fiance died, and he go on a journey to find her and when he found her , he returns home heartbroken, keeping his promise. * These stories tell us about importance of relationships tell us about how we should live than about dying Writing stores often â€Å"fixed in time†. Trickster: * Considered as â€Å"culture heroes† because they are the central figures in many stores * Usually shape shift usually into animals * Can change genders sometime biological and sometime just clothes changing * Outer form is reflected into infidelity * They can appear as fools, selfish, kind, scandalous etc. * Usually driven by self interest alone * Trickster stores show us how we should behave and how we should not * The stories often explain the origins of world and connect to a community more deeply. * Embodies the extremes of humanity: human weakness and strength Practice (rituals). Indigenous tradition rituals are very similar to our traditions * Rituals remind us on what is imp in our life. * In religious terms, rituals, communicate some ways with gods, ancestor and spirits. * Rituals are roots in the human needs and relationship Rituals : * Every rituals varies * Usually involves food Muslim and Jews have specific food eating habits * Many Buddhist set food portions aside for ancestors * Anishinaubae put small amount of food for the spirits * Some rituals are more complicated * Such as marriage, death, birth * Sometimes these rituals mark transformation and sometimes they help to bring the transformation about. * Indigenous tradition rituals serve in some ways to recreate some aspects of the world, order and life Journey: * Going on a journey/quest: rites of passage * Journey to a new place is where a transformation occurs. * The person returns home with physical change, such as tattoo, scar or a body part to symbolize their new self. * Pondos: moved into a special hut to become sacred healers- if they go into town before they must be covered in white * White usually symbolize the color of transformation in Africa * Anishinaubae vision quest – yong man travels far away from home only with water and be completely alone. Then late he become a â€Å"adult man† and comes home with food and the ritual is complete . Sacrifice Mel Gibson: sacrifices in Indigenous traditions are vey common Bear sacrifice: raise a young cub, and raise it for two day and kill it. Head is emptied and filled with flowers and then the animal is cooked and eaten. They think that the bear is the gold’s spirit and they see it as freeing the spirit. Sun dance : dance till days and community provide support. Some sun dance involves sacrifice . the pole and lodge are buil to show the creation of the world Nuer : sacrifice ox for healing. Xhosa : when a woman fall ill the community gathers and kill a cow and do many rituals. This is due their thinking that the ancestor or spirit is angry with the women. * above rituals shows the involvement of community even though there is sacrifice involved. * The rituals ultimately brings people together * Sacrifice like rituals create order and meaning * Those rituals join people to the past and respond to current situation Cultural Expression What you see is not always what you get Art in Indigenous traditions is aout relationship objects are coonected to people Weaving : * Intertwine and connect * Weavers work together , helping one another , passing knowledge. * Shows bonds among people Maori Tradition : * All weavers are female * A girl is said all about weaving more said more discouraged if people saw true commitment then they let the girl into whare pora(caretakers of the weaving) * Whare pora have rules no sex before dying, no food allowed during weaving, special garment should be weaved during the day and not strangets can view the weaving * Traditional colors : black, red and white * Sacred thread is sewed on all garments to show the bond Underlying cloth : * Clothing declare who we are and how we fit into social fabric * Has two side : can hide much as it reveals and help us create a public face * Lady gaga : he masks and clothes hide part of her but also reveals her identity that she wishes to show * Special clothes are associated with imp rituals * Bunu : believes that the special clothes are kind of womb, enveloping the body as like a fetus is being born. Clothing only wears it does not die old cloth is replaces by new, as old spirits is reborn Spirit basket : * Oldest arts * In pomo community men makes the heavy basket for hunting and fishing * Women were responsible for religious baskets. * Mable mckey : was a traditional healer in pomo community and famous basket weaver in the world. Masks : * Masks are used in imp rituals wedding , funerals, hunting celebration etc * Masks are ment to ring spirit into the community lesser deities (gods) * Mask represent certain animals does not mean they worship the animal * Epa mask in Yoruba community extremely heavy show the strength require to dance with the mask and enter the adult hood with responsibility. * Carvers are usualy male Totem poles : * Very specific to each communities * Function of totem poles also varies in each tradition. * Meaning varies serve as a supporting structure or grave makers and other as a symbol for power * Most also tell stories such as historical, achievements and religious * Grizzly bear at the base holding a human represents self-preservation or survival. Moko * Maori carvings are less likely to be displayed outside the original physical context * Moko tattoos * In the beginning the women were only allowed tattoos around their lips and chin where men can have tattoos all over their face * Moko story remind the Maori people their ancestor and importance of meeting ones obligation and treating one another with respect Ancestoral House. * Marae Maori religious and social home. Site of wedding , funeral, celebration. * Authority is held by community elders where they use the space to pass n traditions, stories and arts, carving, weaving. * If the artist when wrong painting the place, they could be put to death. * Location is very imp it must be located in a place where the previous generation carried out the religious and social activities. * Whare Whakairo physical form which represents the body of the ancestor * The building is divided into body parts of the ancestor Three points and Shrine : * Some traditions are very plain, harder for an outsider to see * Three issues : * Most rituals are performed outside * Think bout the function of religious structures that are used in the rituals * What you see is not often what you get * Mbari shrine : represents the founder of the community, a great healer and was forced to flee because they were attacked by another community. Elder stands her to protects the shrine all the time. * The guard signify the change modern development Hogans * Navajo Hogan traditional living space as well as the site for many rituals. * It is the site for daily activities and some are religious and some are not * Before new Hogan is occupied a song is performed. * Known as Blessing way ceremony four divining earth, mountain woman, water woman, corn woman also the song speaks everyday things * According to them world is structure – Hogan All these things symbolizes: * Link btw past and present * Btw community and place * Btw our world and world of spirits Colonialism * Colonialism process where people from one place maintain a settlement in another and to the effects of people who were already there. * Changes include – subjugation or removal , new laws, social practices and new economy. * Power and profit are factors that drive colonialism. * Religion is also one of the reason Colombus : * He destroyed a community Arawaks * He wanted to tell him where the gold was people who gave him gold were left alive and people who didn’t were killed(by cutting hands) * Then he realized that the most valuable are the people, so he sent them back to Europe by the boat land. Genocides : * 20 million African were taken as slave and only 11 million returned * 96% od aboriginals were dead in Australia * factors of depopulation : military action, torture, starvation, suicide and slavery. * More aboriginals are killed when the Americans want more land Masters of continent : * As settler population growed the indigenous population reduced less friendly for land * Terra nullius no ones land was the phrase that European settlers used no owner ship primitive – they do not count as people Conversion : * Many converted to different religion due to colonialism * In Indonesia indigenous tradition is not recognized by lay so all are counted as muslim Loss of religion : * Europeans tried to convert them into chistianity rarely worked * Europeans used military strengeth and religion â€Å"our people is tronger because our god is stronger â€Å" * Missionaries. * Also sometimes the colonial government made the indigenous religion illegal * Eg : potlatch and sundance was made illegal ? Die to the felf harm and economic hardship is potlatch(poverty) * Colonialism lead to patriarchy The potlatch : * Feast that are hosted by a family and hosting family presents the guests with gifts * Demonstrate hospitality and redistributing wealth. Loss of language : * Colonialism language disappeared forever * 20 languages extinct * when communities died, the languages died with them * children’s were forbidden to speak their own languages â€Å"Stolen generation† Loss of Land: * Many religious and indigenous land were taken and was destroyed * Two problems that non-indigenous people had: * Very common belief, no specific belief and are mostly about practice * Religion such as Christians can pray anywhere but indigenous people had to pray at a specific site Identity : (the sympols of indeginous people in sports) * Cleveland Indians play at Atlanta braves : it’s a reminder of ongoing colonialism that has been taken from the indigenous people. * Indigenous oriented names : â€Å"eskimo pie† to market the products evoke a primitive stereotype that is best suited for the product.

Corporate governance Essay Example for Free

Corporate governance Essay Corporate governance is concerned with the structures and systems of control by which managers are held accountable to those who have a legitimate stake in an organization. It has become an increasingly important issue for organizations for three main reasons. The separation of ownership and management control of organizations (which is now the norm except with very small businesses) means that most organizations operate within a hierarchy, or chain, of governance. This chain represents those groups that influence an organization through their involvement in either ownership or management of an organization. Increased accountability to wider stakeholder interests has also come to be increasingly advocated; in particular the argument that corporations need to be more visibly accountable and/or responsive, not only to ‘owners’ and ‘managers’ in the governance chain but to wider social interest Corporate scandals since the late 1990s have increased public debate about how different parties in the governance chain should interact and influence each other. Most notable here is the relationship between shareholders and the boards of businesses, but an equivalent issue in the public sector is the relationship between government or public funding bodies and public sector organizations. As the key purpose of Corporate governance drive the benefit of shareholder of the company all members of corporate governance model responsible and accountable for driving this primary objective. 1.1 Five Golden Rules of Corporate Governance And best corporate governance practice is not simply about a battle between distant, disloyal institutional shareholders and greedy directors but about the ethos of the organization and fulfilling its clearly agreed goals. 5 golden rules of Corporate Governance of successful organization are: 1. Ethics: a clearly ethical basis to the business 2. Align Business Goals: appropriate goals, arrived at through the creation of a suitable stakeholder decision making model 3. Strategic management: an effective strategy process which incorporates stakeholder value 4. Organization: an organization suitably structured to effect good corporate governance 5. Reporting: reporting systems structured to provide transparency and accountability 2 Objectives of study Objective of this case study is to understand and critically examine flaws, failure of Corporate Governance on Satyam Computer’s strategic decisions. Also analyze what are the areas those can be influenced by proper Corporate Governance. This case also helps understanding Governments roles to tackle firms or intervene in firm’s functionality in the interest of internal and external stakeholders. Not only were there failures at the regulatory level, but also at the executive level. With no express code for corporate governance in India, the company failed to follow the industry standard best practices and as a result, collapsed. This study would be useful in identifying the different kind of failures in a family owned business like Satyam and to policy makers in designing and implementing corporate governance frameworks for professionally managed as well as family managed businesses like Satyam. This case also reveals how wrong decisions can damage entire organization and dent the image of company. This case also focuses certain legal issues related to roles and responsibilities of Chairman and other top management including critical role of independent directors of organization. This Case Study focuses laws and gaps in the Indian context. 3 Historical Evolution of the company Satyam was incorporated on June 24, 1987 as a private limited company providing software development and consulting services based out of Hyderabad, Andhra Pradesh. Ramalinga Raju and his brother Rama Raju were the promoters of the company. Before starting Satyam these duo were involved in other businesses like construction and textiles. This company was started with 20 employees 1991, this company went in for IPO where it was oversubscribed by 17 times. Same year it could bag clients like John Deere co which is fortune 500 company. This is the first time it adopted offshoring model. 1993, Satyam formed joint ventures with clients like D B and also with GE. In 1996 Satyam started its on shore offices in US and Japan. And its first development center in New Jersey, 1998. By 1999 it had operations in 30 countries and was assessed SEI CMM Level 5, one of the very few companies to get this accreditation by then. In 2000, Satyam grew by 10000 employees and got listed in NASDAQ ( National Association of Securities Dealers Automated Quotations) in 2001. 2004 Satyam was providing services in 45 countries with employee base of 15000. At that time Company was operating in various verticals with 18 development centers. Company crossed 1Billion revenues by 2006. Satyam’s revenues grew to 2 billion by 2008 with a net income of 417mn. Gained 186 of fortune 500 customers. Sailing in the industry with 46000 employees by March 2008 with operations across 66 countries. By September 2008 it recorded revenue of 28.19Bn. 3.1 Corporate Governance Practice at Satyam To explain the level of commitment and ethics to society it was mentioned by both inside and outside members of Satyam that on the day of Ramalinga Raju father’s cremation he attended shareholders meeting. Company’s ethics and level commitment were stressed in many annual reports. Corporate Governance was driven by its core values Associate Delight Investor Delight Customer Delight Pursuit of Excellence Company stated that† it believes that corporate governance practices provide an important framework to help the board of directors to fulfill its responsibilities† Main duties of the board were to set strategic direction to the company and leading the organization in the right direction there by ensuring long term interest of investor and other stakeholders of the company. Source: Satyam Computer Services, Report on Corporate Governance 2006-07 For independent functioning, the board comprised of both executive and non-executive members. Board also comprised several committees like Investor Grievances committee Compensation Committee Audit Committee The board was governed by code of conduct, which specified that all employees, directors needed to carry out their duties legally, honestly and ethically. It also specified all clauses that avoid any code of conflict etc.., Company’s Whistle Blower policy was also in place. According to experts though sound policies were in place none of the directors were objecting Raju’ s decisions even though they are against the interest of investor. It continued till the time when Raju was planning to acquire Maytas where the biz of Target Company was not aligning to Satyam and also those companies are promoted by Ramalinga Raju’s family members. 3.2 Role and Powers of Independent Directors (clause 49 of SEBI) SEBI had constituted a Committee on Corporate Governance under the chairmanship of N R Narayana Murthy to improve standards of corporate governance in India. SEBI introduced some major amendments based on the report on this committee on 26th August, 2003, in clause 49 of its listing agreement. Applicability of Clause 49 All companies which were required to comply with the requirement of the erstwhile clause 49 i.e. all listed entities having a paid up share capital of Rs 3 crores and above or net worth of Rs 25 crores or more at any time in the history of the entity, are required to comply with the requirement of this clause. This clause does not apply to other listed entities, which are not companies, but body corporates, incorporated under other statutes. Clause 49 will apply to these institutions as long as it does not violate their respective statutes, guidelines or directives. Clause 49 of the SEBI’s listing agreement relates to Independent Directors. Clause 49 Corporate Governance The company agrees to comply with the following provisions: I. Board of Directors (A) Composition of Board (i) The Board of directors of the company shall have an optimum combination of executive22 and non-executive23 directors with not less than fifty percent of the board of directors comprising of non-execu tive directors. (ii) Where the Chairman of the Board is a non-executive director, at least one-third of the Board should comprise of independent directors and in case he is an executive director, at least half of the Board should comprise of independent directors. (iii) For the purpose of the sub-clause (ii), the expression ‘independent director’ shall mean a non-executive director of the company who: a. Apart from receiving director‘s remuneration, does not have any material pecuniary relationships or transactions with the company, its promoters, its directors, its senior management or its holding company, its subsidiaries and associates which may affect independence of the director; b. Is not related to promoters or persons occupying management positions at the board level or at one level below the boardx` c. Has not been an executive of the company in the immediately preceding three financial years; d. Is not a partner or an executive or was not partner or an executive during the preceding three years, of any of the following: 1. The statutory audit firm or the internal audit firm that is associated with the company, and 2. The legal firm(s) and consulting firm(s) that have a material association with the company. e. Is not a material supplier, service provider or customer or a lessor or lessee of the company, which may affect independence of the director; and f. Is not a substantial shareholder of the company i.e. owning two percent or more of the block of voting shares. OTHER DEFINITIONS The Department of Company Affairs (DCA) had appointed a Committee headed by Mr. Naresh Chandra along with the distinct professionals from various fields. Apart from this, the Kumaramangalam Report also has suggestions about Independent Directors. Some definitions on Independent Directors. THE CADBURY REPORT (1992) Apart from their directors‘ fees and shareholdings, they should be independent of management and free from any business or other relationship which could materially interfere with the exercise of their independent judgmentâ€â€". THE KUMARAMANGALAM REPORT (1998) ―Independent directors are those directors who apart from receiving director‘s remuneration do not have any other material pecuniary relationship or transactions with the company, its promoters, its management or its subsidiaries, which in the judgment of the board may affect their independence of judgment THE NARESH CHANDRA REPORT (2003) Apart from receiving director‘s remuneration, does not have any other material pecuniary relationships or transactions with the company, its promoters and senior management.â€â€" It is significant to mention hear that the Naresh Chandra Committee report has opined that the recommendations made by the Kumaramangalam Committee in relation to independent directors are not precise and cannot fulfill the requirement of the independency as compared to the International best-in-class definitions and other pragmatic factors.25 An independent director is characterized by the following principle features: COMPANIES ACT, 1956 INDEPENDENT DIRECTORS Under the Companies Act,1956 the powers and duties of directors has evolved under interpretation of various Sections such as 291, 297, 299, 397, 398, 408, 629A, to name a few which have recognised and upheld directors‘ fiduciary duties to shareholders, to act with due care, skill and good faith. Sections 297 and 299, for example, are intended to eliminate possibility of conflict of interest. Unfortunately, the Act does not envisage a proper remedial regime, providing for rescission of underlying transactions, compensation for corporate and stakeholder losses, disgorgement of ill-gotten gains etc. Theoretically, some of these reliefs can be agitated for before the Company Law Board – but courts are hesitant to pass such drastic orders, in cases of such large, reputed companies ROLE OF INDEPENDENT DIRECTOR TOWARDS SHAREHOLDERS Corporate Governance principles all over and listing requirements assign tasks that have a potential for conflict of interest to independent directors, examples of these are integrity of financial and non-financial reporting, review of related party transactions, nomination of board members and key executives remuneration. The shareholders, especially the minority shareholders, look to independent directors providing transparency in respect of the disclosures in the working of the company as well as providing balance towards resolving conflict areas. In evaluating the board‘s or management decisions in respect of employees, creditors and other suppliers of major service providers, independent directors have a significant role in protecting the stakeholders interests. One of the mandatory requirements of audit committee is to look into the reasons for default in payments to deposit holders, debentures, non-payment of declared dividend and creditors. Further they are required to review the functioning of the ―Whistle Blower mechanismâ€â€" and related party transactions. These, essentially, safeguard the interests of the stakeholders 4 Major strategic decisions and its consequence December 16th 2008, Chairman Ramalinga Raju in a surprise move announced intent to acquire Maytas Properties and Maytas construction companies for a whopping 1.6Bn. While it is evident that these two companies are promoted by Ramalinga Raju’ s family in the industry circles it was not clear why should a IT services company focus on infra and property business. As the decisions was opposed by investors and clear indication of market fluctuation made Ramalinga Raju to revert his decision in 12 hours. Share prices plunges by 55% on concerns about Satyam’s corporate governance. In a surprise move, the World Bank announced on December 23, 2008 that Satyam has been barred from business with World Bank for eight years for providing Bank staff with â€Å"improper benefits† and charged with data theft and bribing the staff. Share prices fell another 14% to the lowest in over 4 years. The lone independent director since 1991, US academician Mangalam Srinivasan, announced resignation followed by the resignation of three more independent directors on December 28 i.e. Vinod K Dham (famously known as father of the Pentium and an ex Intel employee), M Rammohan Rao (Dean of the renowned Indian School of Business) and Krishna Palepu (professor at Harvard Business School)6. At last, on January 7, 2009, B. Ramalinga Raju announced confession of over Rs. 7800 crore financial fraud and he resigned as chairman of Satyam. A week after Satyam founder B Ramalinga Raju’ s scandalous confession, Satyam’s auditors Price Waterhouse finally admitted that its audit report was wrong as it was based on wrong financial statements provided by the Satyam’s management’s On January 22, 2009, Satyam’s CFO Srinivas Vadlamani confessed to having inflated the number of employees by 10,000 Satyam share price have seen sharp decline within hours of the outburst of the incident and further deteriorated after Ramalinga Raju’s confession Source: http://akpinsight-ijcbs.webs.com 5 Implementation of strategic decision On 30th Sep 2008, Satyam reported that it had cash reserves of 1.2Bn and on December 16th company expressed intent of acquiring Maytas Properties and Maytas Constructions for 1.6Bn. While Maytas infra a public listed company operating for two decades Maytas properties s only 6 months old which declared a revenue of 7.37Bn and net profit of 370 mn. On December 16th 2008 Satyam board approved acquisition of Maytas. The cash reserve to be used by Satyam to buy 51% of equity stake in Maytas infra for 1.3Bn USD and for Maytas properties 300 mn USD. Satyam planning to acquire 31% of the holding of the Raju family in Maytas Infra and another 20% through open offer to shareholders. The promoters held 36.64% equity stake in Maytas infra . Satyam planning to pay 475 Rs per Share which was 1.25% less than closing value December 16th and open offer made at 525 rs from the existing Maytas infra shareholders. After approval from board Ramalinga Raju announced this as a strategic move to de-risk core business by bootstrapping a new business vertical. He also called out that this would de-risk the recessional impacts on the current vertical of core business. Announcement however trigger negative reaction from industry, investors and stock markets. Satyam’s stock got severe beating on December 16;.The ADR fell from 12.55 to 5.70 after this announcement . On Bombay Stock Exchange the stock fell from 226 to 158 rs. It went down further to 134 on December 24th 2008. The decision attracted lot of criticism that promoters who has only 8.74% equity stake in the company were being allowed by the board to transfer a considerable amount of money from Satyam to Maytas where Ramalinga Raju’ s family own more stake. Analysts called that this is act of siphon to move cash from Satyam into a place where Raju’ s family has more stake. Experts also called that if board is convinced with the deal then it is their responsibility to inform major investment institutions which is a good sign of proper corporate governance. Valuation of Maytas was not transparent and this was not even informed to investors in advance. Investors called this process as act of misuse of Satyam funds and it’s a nepotism. Registrar of Companies asked Satyam to submit minutes of board meeting for validity and review held on December 16th 2008. However Satyam could not provide minutes of meeting in the said deadline given by RoC. These reactions compelled Satyam to roll back the decision within 12 hours .These accusations lead to few international issues where the long battle between British Virgin Island Based Upaid system and Raju and Satyam CFO. There are three cases breach of contract, forgery filed by filed by UPaid and one disparagement filed by Satyam. On December 23 2008 World Bank announced that it will bar Satyam to take any of its contracts for next 8 years due to improper invoice and benefit to employees. It was reported that Satyam sold its preferential shares to World Bank CIO. Before Maytas controversy got over DSP-Merlynch announced that it is terminating its advisory agreement with Satyam. In its communication it said considering various strategic options it had terminated its advisory agreement also quoted that it was to their understanding that there are accounting irregularities which prompted them above decision. Analysts said that this move compelled Raju to confess as SEBI asked DSP-Merlynch asking why it had to withdraw the agreement. 6 Merits/Flaws of implementation Following are the Governance Flaws noticed in the case of Satyam computer Services Limited 6.1 Unethical Conduct It is evident that founder of the company wanted to make money any which way by avoiding taxes, cooking books , creating false payrolls and pay offs. Shareholders, employees and clients realized steady diet of (A)Satyam. He was not following the spirit behind its name. Along with his brother Rama Raju who is his also managing director of the company disguised all this from company’s board , senior managers and auditors for several years. Confession revealed the fraudulent and unethical behavior of the duo who bagged many awards and rewards for his best corporate governance including prestigious Golden Peacock award. Both CEO and CFO charged for putting self-interests ahead of company’s interests. 6.2 A case of insider trading Both central and state investigation agencies and also audit firms revealed and established that promoters indulged in the nastiest kind of insider trading of company’s shares to raise money for building large land banks. It was established that money raised by Ramalinga Raju and Rama Raju along with his relatives used to buy lands in 330 binami companies. 6.3 Case of False Books and Bogus Accounts The Serious Fraud Investigation Office (SFIO), 23 a multi-disciplinary investigating arm of the Ministry of Corporate Affairs, set up in 2003 with officials from various law enforcement agencies, was asked to investigate the fudging of accounts as admitted by B. Ramalinga Raju. the consent of the board was unanimously accorded after which Raju proposed the merger of MIL and MPL to the shareholders, which came in for stiff resistant, and issue of corporate governance was raised.† A couple of weeks later, Ramalinga Raju dropped a bombshell by sending a letter of admission to SEBI and the board of directors that he had fudged the accounts of Satyam and that the balance sheet as on September 30, 2008 carried an inflated (non-existent) cash and bank balances of Rs 5040 crore, non-existent interest of Rs 376 crore and understated liability of Rs 1230 crore Source: http://www.applied-corporate-governance.com/best-corporate-governance-practice.html 6.4 Lax Board The Satyam Board was composed of ‘chairman-friendly’ directors who failed to question managements strategy and use of leverage in recasting the company; they were also extremely slow to act when it was already clear that the company was in financial distress. The glue that held the board members together was Ramalinga Raju. Each of the board members were there on his personal invitation and (that) made them ineffective. The Board ignored, or failed to act on, critical information related to financial wrongdoings before the company ultimately collapsed. It was only when Ramalinga Raju in the December, 2008 announced a $1.6 billion bid for two Maytas companies i.e. Maytas Infra and Maytas Properties, and while the share market reacted very strongly against the bid and prices plunged by 55 % on concerns about Satyam’s corporate governance, that some of the independent directors came into action by announcing their withdrawal from the Board 6.5 Unconvinced Role of Independent Directors The Satyam episode has brought out the failure of the present corporate governance structure that hinges on the independent directors, who are supposed to bring objectivity to the oversight function of the board and improve its effectiveness. They serve as watchdogs over management, which involves keeping their eyes and ears open at Board deliberations with critical eye raising queries when decisions scent wrong. Stakeholders place high expectations on them but the Satyam’s case reveals such expectations are misplaced. Six of the nine directors on Satyam’s Board were independent directors including US academician Mangalam Srinivasan (the independent director since 1991), Vinod K. Dham (famously known as father of the Pentium and an ex Intel employee), M Rammohan Rao (Dean of Indian School of Business), US Raju (former director of IIT Delhi), T.R. Prasad (former Cabinet Secretary) and Krishna Palepu (professor at Harvard Business School). They were men of standing reputation. To avoid any controversy, the two founder directors did not participate in the decision making process for the reason that the provisions of the Companies Act and SEBI regulations mandate presence of only disinterested directors in board meeting where the agenda of such a nature is discussed. This naturally causes suspicion on the role performed by the independent directors present in that meeting. What concerns everyone is that those independent directors allowed themselves to be party to the mysterious designs of the promoter directors. It is hard to believe that such eminent and experienced personalities could not discover the well-planned massive fraud and manipulations. 6.6 Questionable Role of Audit Firm/Committee The true role of audit committee in prà ©cis is to ensure transparency in the company, that financial disclosures and financial statements provide a correct, sufficient and creditable picture and that, cases of frauds, irregularities, failure of internal control system within the organization, were minimized, which the committee failed to carry out. The timely action on the information supplied by 18 a whistleblower to the chairman and members of the audit committee (an e-mail dated December 18, 2008 by Jose Abraham), could serve as an SOS to the company, but, they chose to keep silent and did not report the matter to the shareholders or the regulatory authorities. The Board members on audit committee who failed to perform their duties alertly be therefore tried out under the provisions of the Securities Contracts (Regulation) Act, 1956 (an unimaginable fine extendable to rupees 25 crore by also including imprisonment for a term, which may extent to 10 years). 6.7 Suspicious Role of Rating Agencies Credit rating agencies have been consistently accused of their lax attitude in assessing issuers and giving misleading ratings without thorough analysis, as has been the case of Enron and now in Satyam, they failed to warn market participants about the deteriorating condition of company. On December 2, 2001, Enron Corporation, the USA’s 7th largest corporation declared bankruptcy when it was rated investment grade by all the credit rating agencies even four days before its bankruptcy. None of the watchdogs barked, including the credit rating agencies, which had greater access to Enron’s books. In the case of Satyam, credit rating agencies have been heavily criticized as regards their role and for the accuracy of their ratings. The rating agencies were allowed to look into company’s books for making assessments but they never investigated the financial condition of Satyam. The rating agencies displayed lack of due diligence in their coverage and assessment of Satyam. They based their analysis on fraudulently prepared and audited financial statements and thereby failed to warn investors about Satyam’s deteriorating condition. 6.8 Questionable Role of Banks The ICAI Probe Panel has hit out at banks for not doing due diligence on Satyam Software Services Ltd before giving it loans. While sanctioning short term loans why not the banks posed any question as to why the company which was supposedly cash rich as per the financial statements was taking loans from them. The Panel wondered why the government put Deepak Parikh on its Board despite his HDFC group being a major creditor to the company. The banks that gave loans to Satyam during 2000-08 despite the company claiming huge surpluses were HDFC Bank (Rs 530 Crore, Citibank (223.87 Crore), Citicorp Finance (Rs222.28 Crore), ICICI Bank (Rs 40 Crore), and BNP Paribas (Rs 20 Crore) totaling Rs 122.161 Crore. 6.9 Fake Audit PricewaterhouseCoopers (PwC)’s audit firm, Price Waterhouse, was in the auditor for Satyam and have been auditing their accounts since 2000-01. The fraudulent role played by the PricewaterhouseCoopers (PwC) in the failure of Satyam matches the role played by Arthur Anderson in the collapse of Enron. S Goplakrishnan and S Talluri, partners of PwC according to the SFIO findings, had admitted they did not come across any case or instance of fraud by the company. However, Ramalinga Raju admission of having fudged the accounts for several years put the role of these statutory auditors on the dock. The SFIO report stated that the statutory auditors instead of using an independent testing mechanism used Satyam’s investigative tools and thereby compromised on reporting standards.