Performance of the Corporations by

adapting the principles of Corporate

Governance post Industry 4.0

Presented By:
Rajlaxmi Das
 Agenda

• Good Governance
• Corporate Governance
• Changing board duties and responsibilities
• Role of IT as means of Good Governance
• Governance in Industry 4.0
• Importance of CG in Industry 4.0
• Corporate Governance in India- a background
 Good Governance
• GG key development concept with enlightened
citizenship & accountable governance
• Comprehensive in nature, involving people in
development process
• Development is people-oriented & people-centred
• Builds new levels of skills, knowledge and support
development
 Features of Good Governance
• According to Kautilya, these features formed part of
good governance:
 Law and order
 People considerate government
 Righteousness and judiciousness as the base of
verdict
 Corruption free authority
• The reports of the World Bank of 1989 and 1992, the Organization for
Economic Cooperation Organization Commission on Global
Governance (1995), United Nations Development Program (UNDP)
1997, have all tackled all the aspects of good governance widely.

• These concerns have been expressed in Asian development basic

report in the form of the following questions:
1. Do people fully take part in the ways of governance?
2. Are people fully educated?
3. Do people make judgments or are they allowed to hold the decision-
makers answerable?
4. Are women allowed to take part in the governance equally?
5. Have the needs of the poor and disadvantaged been met?
6. Are the human rights of the people guaranteed?
7. Are the needs & requirements of the future generation considered in
the current strategies?
8. Do people have their own governance structures?
 What is “Good” Corporate Governance?
• The system & rules to provide the agenda of the company's goals,
accountability and decisions
• Used to control and balance the interests of stakeholders of any
company
• For some, Positive development, in terms of economic development,
others, for other amenities

• According to the World Bank, good governance is "the way power is

exercised in managing a country's economic and social resources for
development." In addition, the characteristics of performance
appraisal, dedication, honest communication and mutual respect
play an important role in implementing effective corporate
governance. Corporate governance is a long-term way of life for a
company, not a one-time activity
 Some imp defs. of “Good” CG
• Most extensively used def. is "the system by which
companies are directed and controlled" (Cadbury
Committee, 1992)

• CG has also been stated as "a system of law & sound

approaches by which corporations are directed and
controlled focusing on the internal and external corporate
structures with the intention of monitoring the actions of
management and directors and thereby, mitigating agency
risks which may stem from the misdeeds of corporate
officers.” by Sifuna, Anazett Pacy (2012), in the piece
"Disclose or Abstain: The Prohibition of Insider Trading on
Trial”, published in the Journal of International Banking
Law and Regulation.
 8 Key Components of CG
1. Direction
• Provides guidance to the company, its employees and leaders
2. Independence of directors
• Presence of the majority of independent non-executive directors
will help evade bias and clashes of interest between the Board and
management
3. Effective Risk Management
• Risks can’t be avoided, so it is necessary to execute efficient tactical
risk management.
4. Organization
• A strong organization within the company is essential to the
implementation of corporate governance objectives.
 8 Key Components of CG contd.
5. Stakeholder Relations
• Every organization is accountable to each stakeholder group
6. Transparency
• Transparency in business helps the workforce to be better
equipped to understand their roles in the company & the public
trust the corporations
7. Corporate Citizenship
• Corporations are expected to include a corporate citizenship
statement on the corporate governance or investor relations web
pages, conveying the intention to work with social and
environmental responsibility
8. Self-Evaluation
• The organizations are expected to conduct regular self-
assessments to identify and alleviate problems & employ ways to
increase productivity
 Best CG Practice = Best Management Practice

• CG is ensuring a balance between the various stakeholders

of a company & the management through transparency
• This indeed is what the Cadbury recommendations and the
subsequent reports and code are all about. However, as we
express in the rest of this website, we regard this as much
too limited a view of governance, and hence of best
corporate governance practice
• Best corporate governance practice is about achieving the
stakeholders’ goal, and delivering success in an ethical way.
Hence it follows that it must entail a holistic application of
good management.
 Issues in CG
• Value-based corporate culture: For an organization to function effectively, it must
have certain ethical values like a set of beliefs, ethics and principles that do not
violate.
• A holistic view: This holistic view is an attitude which helps to manage the
institution. It needs special efforts and once adopted lead to the development of
the qualities of nobility, tolerance and empathy.
• Compliance with laws: Those companies that really need to progress, have high
ethical values ​and need to run a long-term business that adhere to them and
conform to the laws of the Securities Board of India (SEBI), the Foreign Exchange
Regulation Act, the Competition Act 2002, the Internet Laws, Banking Laws and
others.
• Disclosure, transparency and accountability: Disclosure, transparency and
accountability are an important feature of good governance. Accurate and timely
information should be divulged on such matters as financial situation, actions, etc.
Transparency is required in order for the government to trust corporate bodies
and thus has reduced corporate tax rates from 30% today versus 97% during the
late 1970s. There is a need for transparency towards institutional bodies, because
of the huge competition in the markets, customers have options that do not turn
to other corporate bodies
 Issues in CG contd.
• Corporate Governance and Human Resources Management: The role
of HRM is vital. Everyone must be treated with individual respect, and
their achievements must be recognized
• Innovation: Each corporate body must risk innovation in products and
services, and play a pivotal role in corporate governance
• Need for judicial reform: Our judicial system has become obsolete
over the years. But after a change in scenario and rapidly increasing
competition, the judiciary needs to resolve disputes quickly
• Globalization helping Indian companies become a global giant based
on good governance: In the current era of competition and because
of globalization, many of our Indian corporate bodies have become
global giants that can only be achieved because of good corporate
governance.
• Lessons Learned from Corporate Failure: In good governance,
corporate bodies need to learn from their failures and need to move
on to success
 Role of Information Technology in Good
Governance
• Delivery of services to the people at low cost
• Empowerment of people through dissemination of
information
• Openness and transparency in the working of
government
• Innovations and introduction of new ideas and
concepts in the performance by the government and
the people
• Effective linkages between citizens and the
administration
• Comprehensive monitoring and assessment of the
performance of the government
 Governance in Industry 4.0 Revolution

• Traditionally, public policy and decision-making systems, in

a linear top-down fashion, with decision-makers having
time to study any issue in detail, to develop & implement
an appropriate regulatory framework. But this approach
remains obsolete today, due to rapid pace of change &
overall scope of the impact of the Industry 4.0 Revolution
• Regulators, trying for new ways to build legislation that
preserves and protects the interests of consumers and the
general public while ensuring continued innovation and
technological development
 Importance of Governance in Industry 4.0
• It is a widespread but dangerous assumption that economic
progress will occur regardless of the shape of the
governance environment. But then, knowing how to
control them will only ensure that they happen more
effectively. 
• Governance should be visualized a form of infrastructure -
an invisible and interconnected platform of rules and
practices that allows us to make cooperation and planning
part of our economic activity and social interactions, and
without it, just like any other type of infrastructure and
economic progress does not happen.
Projected Governance for Industry 4.0 in 2030

• One of the major challenges to Governance in Industry 4.0

is to push for globally harmonized rules - which is quite
logical in an era when global companies are not interested
in dealing with dozens, if not hundreds, of different groups
of regulations
• It has been imagined that by 2030, we will have addressed
this challenge by harnessing market incentives to create
regulatory providers competing globally, thereby building a
global network of regulators for governments and
businesses alike to choose from
 Corporate Governance in India- a background
• Unlike South-East & East Asia, the CG initiative in India was
not triggered by any serious nationwide financial, banking
and economic
• Also, unlike most OECD (Organisation for Economic
Cooperation & Development) countries, the initiative in
India was driven by an industry association, the
Confederation of Indian Industry
• In Dec 1995, CII set up a task force to design a voluntary
code of corporate governance
• Between 1998 and 2000, over 25 leading companies
voluntarily followed the code: Bajaj Auto, Infosys, Dr.
Reddy’s Laboratories, Nicholas Piramal, BSES, HDFC, ICICI
and many others
Thank you