Example Answers to Questions on OCED Principles


The OCED principles of the corporate governance stress the significance for the corporate governance of the markets for the corporate control functioning in a transparent and an efficient manner. The OCED principles promotes the policies that are designed in order to attain the very highest sustainable economic growth and also an increasing standard of living and also increasing employment opportunities in the member countries, while still maintaining its financial stability, and therefore contribute to the overall development of the international economy. This is very useful to the member countries and to the entire world (Cottrell & Ranking, 2000).

The policies are also designed to contribute to the sound trade and industry expansion in the member countries and also the non-member countries in the procedure of the economic development. The policies also contribute positively to the expansion of the global trade on non-discriminatory, multilateral basis in accordance with global obligations and duties. The OECD ministers have expanded the agenda of the corporate governance and also offer very specific guidance for regulatory and legislative initiatives in all the non OECD and OECD countries. These principles are taken seriously especially by the Financial Stability Forum such that they have designated these principles to be among the twelve main standards for the sound the systems of finances (Frynas, 2005).

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The principles offer the basis for a wide programme of cooperation and working together between non-OECD and OECD countries and also underpin the component of corporate governance of the IMF/World Bank especially on the ROSC (Reports on the Observance of Codes and Standards). These principles allow the policy makers to be aware of the positive contribution that is made by good and needed corporate governance offers to the investment, financial market stability, and also economic growth. The principles also explain well that enhanced good corporate governance adds much to their competitiveness (Guera, 2002).

The OECD principles are known to be living instruments that offer non-binding standards and also desired practices and also offer guidance on the ways of implementation. These principles also give a forum for any existing dialogue and also exchange of different experiences among all countries worldwide (Drutman & Cray, 2004).

The SOX (Sarbanes Oxley Act) of 2002 is a set of corporate governance principles which is a well recommended to all corporations. I can therefore recommend these principles to the mining company because they are set by SEC (Securities and Exchange Commission). It is known to be a legislation with which prosecution is an outcome of failure to its compliance. It can help to improve the confidence of investors especially in the financial markets of the corporation (ASE, 2003). It aims at aligning the interests of the management to the shareholders. This helps to protect the stakeholders especially the shareholders. The Nasdaq, AMEX, and NYSE need most of the directors to be more independent. The meaning of an independent director is a person whose only nontrivial familial, financial, or professional connection to the entire corporation; the executive officers among CEO, and chairman are her or his directorship (Akabzaa, 2000).

The Combined Code of 2003 was formed in the United Kingdom after Hampel Committee which had been set up to evaluate the existing arrangements on the corporate governance on a global level. This committee was expected to make relevant recommendations and also design a certain code for the enlisted companies. The committee came up with the Combined Code and is applicable to all the registered companies.

Question 2: corporate and social responsibility initiatives

The principles of OECD helps the mining company to improve and reexamine the legal, regulatory and institutional framework for the corporate governance in each individual country, and to also offer suggestions and guidance for investors, stock exchanges, corporations and other relevant parties about their responsibility in the procedure of improving the good corporate governance. There are several initiatives that this mining company should carry out in order to fit into the principles and also to start the social and corporate responsibility. Good corporate governance ought to offer proper necessary incentives for the management and the board to pursue roles and objectives which are in the company’s interests and also its shareholders and should make possible efficient and effective monitoring (Haselip & Hilson, 2005).

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The programmes of the corporate social responsibility in the mining companies are more often inclined to spotlight on the community initiatives as their outcomes in environmental, social and economic terms are greatly felt at limited levels. Some of these incentives couple the fact that they are bringing the mining revenues and profits to the area and also offering financial compensation to the residents for the loss of land, livelihoods and housing. The company could also be involved in infrastructure such as community schools and buildings as well as building access roads (Hilson & Murck, 2001).

There are also community health initiatives that offer health services to their employees and also their families, and also equipping and building health centers and hospitals for the surrounding communities. There is also a community foundation which is explained as a fund which is generated by the entire company which is utilized for the social investment functions; these can attract attention from the external donors. The mining company can also support small local businesses and these preferential procurement policies for all the local suppliers. The mining companies could also support sustainable livelihood projects and the importance of this is to decrease the economic overdependence by the community on the particular mine and also develop sustainable and alternative employment opportunities for shareholder communities. There is also the initiative involving the micro-credit scheme regarding finances where they can give out loans which could be used to create jobs, launch new enterprises, and also help the economies to expand and also flourish. When the families are able to access the credit loans, they are able to invest depending on their priorities, for example health care, housing, school fees, or nutrition other than focusing on everyday survival and therefore people are able to plan well for their future. These micro-credit schemes can be aimed especially the women can provide opportunities to the disadvantaged groups in the local communities (Goodman & Schwartz, 2004).

Question 3

There are monetary factors and also non-monetary factors which could act as incentives or as disincentives by the large companies in an attempt to address their social responsibilities. The monetary factors which act as incentives include financial incentives, material incentives, satisfactory remuneration and possibility of the upcoming paid employment. The disincentives of the monetary factors include alterations in the tangible incentives, inconsistent remuneration, and inequitable distribution of the incentives between the different employers (Goodman & Schwartz, 2004).

The nonmonetary factors that act as incentives include community respect and recognition of the mining work; acquisition of the valued skills; personal development and growth; peer support; accomplishment; identification an job aids such as shirts, badges and uniforms; preferential treatment; status in the community; and also minimal and flexible hours clear responsibility. The non-monetary factors which act as disincentives in large companies include inadequate supervision; time constraints; excessive demands; lack of respect among the employees and employers; inadequate refresher training; and another person from a different community. These can be incentives and disincentives applicable to a community health service provider which is an international company and is concerned with the social responsibility of dealing with their clients (Drutman & Cray, 2004).

The community health provider has factors which are incentives and these include community information systems; community organizations which support the work done in the center, and also involvement of the community in the selection of the community workers. The disincentives include lack of involvement of the community in the support, training and selection; and also unsuitable selection of the community workers.

Question 4

There are various challenges that are faced by companies in the process of auditing their impact on labor, human rights and environment. Corruption and bribery is one of the main challenges. These two continues to decrease the levels of economic activity and also continues to have an adverse consequence on the poor people. Increasing cases of reporting and investigation of bribery scandals often sustained by the governments increases the reputational risks especially to the companies. These are viewed as complicit in similar irregularities. Corruption and bribery are adverse values that should not be encouraged in any company because they adversely affect the company at large. The companies as a solution should demonstrate a strategy that is proactive in order to deal with these vices (Ite, 2005).

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There is also the challenge of product responsibility where the concerns over product safety, health concerns and product quality over the use of the product are increasing daily. The companies in question are forced to take more measures in order to promote range of security and safety processes. This would help to avert the expected increase of boycotts of brands and products. These are caused by high sophistication of the customers and also the absence of trust in the power of the regulators who should protect them.

The lack of adequate funds is also another challenge and this causes negative impacts on the reexamining of the factors in the organizations. This is because the auditing may lead to the incurring of extra costs which lowers the profit margins of the company. Many companies do not have the money and capital to carry out these procedures and still maximize on their profits.

There is also the challenge of the employees. Some companies permit their employees to work for extra hours. These workers work for more than the required time and are paid on hourly wage basis and this is because the company expects them to work all these hours. Therefore the employees are left with no alternative because they do not aspire to lose their jobs. Some of the time, they are not well paid all their wages as agreed and also end up not being paid during the overtime hours. This is because they are not aware of their rights and should therefore be taught concerning their rights as employees.

There is also the challenge of child labor and forced labor which prove hard to be measured well. This is because there is the time constraint which means that there is no enough time to look into these matters in a single financial year. There is also the challenge of determining how and why the human rights are useful in the given business. These may involve the identification of the human rights that are relevant for the company. There is also a challenge in identifying opportunities to carry out their duties with other businesses in order to expand the human rights. It is also taxing to ensure that the given company does not involve itself or complicit in all human rights abuses (Hillson, 2002).

There is the challenge of determining the procedure that a company should undertake in order to avoid discrimination especially in the processed of selection of the labor force and should also promote equality and diversity in the place of work and this is very significant. The labor standards are expected to expand especially in the long term and therefore the stakeholders require communicating honestly and openly in issues regarding their challenges, successes, and also activities.