DOI: 10.36347/sjebm.2016.v03i02.004

Pages: 81-86

Human resource management and corporate governancest and side by side to determine organizational performance. Corporate governance is the exercise of power and control or influence over a legal entity. The Concept of corporate governance originated in the Private Sector as a result of corporate failures, weak management boards, overpowerful chief executives, and weak internal controls. Private sector is characterized by: lack of segregation of chairman and chief, executive roles lack of audit committee/internal audit functions weak control/override of controls. Now considered a serious issue in the public sector because of concerns about; excessive confidentiality in decision making; influence of special interests; inefficiency in public expenditure. The public sector now has a greater demand for; openness and accountability in government, with greater willingness to challenge decisions. The benefits of corporate governance include: the separation of ownership and control, alignment of the interests of the organization, shareholders, board, employees as well as the community in which the organization operates, protection of organizations as they are important to the welfare of individuals- they create jobs, generate income and income tax, they produce a wide variety of goods and services, they provide mechanisms for savings and investments. Creation of efficient organizations, environmentally and socially responsible corporate organizations, promotes competitiveness and gives confidence to investors. HRM can be involved in the corporate governance in four basic areas such as selection of leaders, designing of benefits and incentives, structuring of control systems particularly board of directors, and fixing of dysfunctional corporate structure. When all these issues are put in place, organization performance has to be definitely realized.