Corporate accountability and business performance

By Andrew Rohanaraj
The issues on performance and organisational performance have received much attention since the early 1990s. Performance refers to the need for organisations to be efficient producers of outputs that are relevant to the needs of stakeholders—this is the principal measure of their effectiveness. The ability to define, measure, and evaluate performance is an essential condition for its improvement.

Business transparency and accountability are prerequisites for improving employee participation of any organisation. They are the necessary complement to greater openness on the part of the company that could make the employee educated and satisfied of the organisational culture.

Corporate accountability
It is a fact that, businesses all over the world have moved to new ground - downsizing, flattening, empowering, team working, liberating, knowledge basing, networking, quality imbuing, continuously improving, process mapping, transforming, and reengineering. For some companies the gains have proved remarkable. For many others, however, the bewildering array of current success formulas, both theoretical and practical, seem overwhelming or foolish as they fail to accomplish the promised results. To our minds, what all the fads and bandwagon programs fail to address is that one essential ingredient is missing from the mix: the fact that results come from people who accept accountability for achieving them. Accountability. Without it, no program can succeed; with it, any program can accomplish even more than its promoters promise.

Accountability is the single most effective method for improving individual and team performance and is an essential part of the High Performance Business system. According to Edward Locke, professor at the of University of Maryland, “ establishing “accountable” goals was the most powerful strategy an organisation could implement, that could improve the overall performance of the organisation by 16 per cent .
We have seen it over and over again. Whether it is a company on the most admired list or an organisation languishing and on the brink of failure, performance invariably improves when people take greater accountability and ownership for results. Only when people in organisations escape the deadly trap of victimisation and begin to ascend the steps to individual accountability can they claim their own destinies and the future of their enterprises.

Corporate responsibility
A great deal of discussion has taken place on the topic of corporate responsibility, on companies recognising their own interests within the framework of sustainable development. A significant number of companies have indeed made impressive efforts to operate and develop products according to ethical and environmental principles, a fact deserving widespread recognition and appreciation. Whether this trend toward corporate responsibility is due to enlightened management, customer demand, or public pressure, the basic idea is for a company to voluntarily “do the right thing.” The aim of the concept is to convince companies -- from small, family businesses to transnational corporations -- that sustainability and ethical conduct are in the interests of business.

Economic globalisation
The concept of corporate accountability, on the other hand, refers to the legal obligation of a company to do the right thing. The aim of corporate accountability is to be ensure a company’s products and operations are in the interests of society and thus not harmful. This concept addresses the problem of those companies which refuse to act responsibly; it also addresses those situations in which companies and employees are held prisoner by the competitive demands of the economic system and forced to choose the bottom line. Corporate accountability is especially relevant to the current situation of increasing economic globalisation and the unique position of transnational corporations, which in many cases are legally accountable to no one. Just as individuals in society require both morals and laws to guide their behaviour, responsibility and accountability are both necessary to guide corporate conduct. While corporate responsibility is behaviour that is encouraged, corporate accountability is behaviour that is required. Thus, corporate responsibility is a choice of business; corporate accountability is an obligation of government and civil society

Some businesses recognising themselves as members of a global community, are indeed moving towards greater social and environmental responsibility and sincerely attempting to follow voluntary codes of conduct; however, this is only part of what is needed. There remains a critical need for governments and communities to monitor, assess and, when necessary, hold liable companies neglecting or ignoring the social and environmental consequences of their behaviour. Such liability is not only important to society and environment, but also helps provide a level playing field for those companies sincerely trying to be responsible. Even among companies embracing voluntary social and environmental codes, transparent public reporting is minimal, with best practices publicised and bad practices shrouded in silence.

A quick look at the situation in Asian countries will show us exactly where we stand in transparency and accountability. How many of our organisations are embracing the social and environmental safety measures voluntarily ? An actual count would show that the numbers are very few. One reason for this lack could be attributed to the general public who hardly make any noise about the wrong doings of these bigger organisations who are ignoring corporate social responsibility and corporate accountability.

In the Sri Lankan scenario, it is imperative that general public and other regulatory organisations pay more attention into developing a culture of transparent reporting and making the organisations more accountable for their activities.
One of the ways in which businesses should be accountable to society is how they produce their products and provide their services. “Clean production” is a concept sometimes reduced to mean only eco-efficiency; however, efficiency is just one aspect of clean production.

Major questions arise as to whether or not a company’s production process or products result in harm to society or environment. Since society should expect companies to engage in clean production processes and produce clean products, government and civil society need mechanisms to resolve questions as to what kind of production and products are clean and ecologically sustainable.

The last decade of economic globalisation have provided businesses, particularly large multinational corporations, with new and more favorable opportunities, where economic investments easily can be done over the frontiers. Following these developments both the number of transnational corporations has drastically increased and the social and environmental impacts of their operations have gained in their global dimensions of consequence. This scenario requires the development of a framework of duties and obligations ensuring that these powerful and influential economic players must fulfill and follow. Corporate social responsibility and corporate accountability should be the two most important factors that should be included in the framework developed for the purpose that makes general public to be aware of the activities of these global and influential organisations.


Marks & Spencer selects Global Park as outlet store

By Quintus Perera
Marks & Spencer (M&S), a British centered, global garment giant has selected for the first time in Asia, Sri Lanka’s Global Park – Global Transportation and Logistics (Pvt) Ltd (GTL) as their outlet store division to pick, pack and ship operations of garments from Bangladesh, India and Sri Lanka.
M&S has a vast number of garment factories in the Indian sub-continent and GTL functions as its sole warehouse provider.

The launch took place last week at GTL Katunayake and to grace the occasion there were Dr Sarath Amunugama, Minister of Enterprises Development and Investment Promotion, Prof Lakshman R Watawala, Chairman, BOI and Ravi Karunanayake MP and CEO, GTL.

Speaking at the occasion Dr Amunugama said that being a small country Sri Lanka cannot think big, but in this highly competitive world, the country must identify and take advantage of its strengths, such as the location – only a very few countries could offer such a vast expanse of land so close to the international airport with all the modern facilities. He said if such land is available in Singapore or in Hong Kong there would be multi-billion projects. He said “So we have to capitalize these advantages”. He said that our people are also another strength as they are not second to any people anywhere in the world. The hub status in the region is also another advantage that could be exploited.

Global Park is a 400,000 sq ft purpose built state-of- the- art warehousing complex conveniently located a few kilometers from the Katunayake International Airport with equal easy access to the Colombo Port. It operates as one stop shop for end to end logistics by providing regional and global facilities in transportation combined with local value added logistic services.
GTL also offers a huge Garment on Hangers (GOH) facility for over two million garments, the largest in the country, combined with the most modern vacuum packing plant, finishing and consolidating services.


Forum for Chartered Institutes in Sri Lanka takes ground

March 26,2007 marked a landmark event with the formal inauguration of the Forum of Chartered Institutes in Sri Lanka (FCI), bringing together under one umbrella eight well recognised branches of UK institutes incorporated by Royal Charter and including those constituted under an Act of Parliament in Sri Lanka.
Addressing the inauguration ceremony, Chief Guest UK High Commissioner Dominick Chilcott urged the private sector to make peace their business and noted that the government and LTTE were in an “unwinnable war.”

He added that the business community should make a concerted effort to realise its full potential through the use of the world market to integrate the two economies rather than just “muddling through” the process. This is the first time that chartered institutes have come together to form a body that would disseminate specialist knowledge among its members and promote integration among institutions that would lead to mutual understanding of the challenges faced and contributions that could assist the different organisations to focus on common traits and grow together. The High Commissioner called for “wise counsel and good sense” of the FCI and other civil societies to provide a voice that was “worth listening to” when the government formulates economic policies and laws “so that the government stewardship of the economy could be guided by your advice ..” Chilcott stressed that a strong code of conduct and a level playing field must be created for the economy to flourish. He called on civil society to assist in creating the right environment for successful peace talks and maintained that at some point in the near future, “the penny would drop on both parties involved in the conflict, the government and the LTTE to realise that the ongoing conflict was a no-win for both parties.

He urged businesses to take advantage of their geographic proximity to India to use the “economic miracle taking place on Sri Lanka’s doorstep” to draw greater economic development into Sri Lanka.


Fitch rates the securitised notes of Peoples Leasing

Fitch Ratings has assigned a National rating of ‘A-(lka)’ (A minus (lka)) to the Lease Backed Trust Certificates (LBTCs) amounting to a total of LKR411.1 million, issued by Peoples Leasing Trust Thirty Two (PLT32). The rating is for the timely payment of interest and capital on the LBTCs.

PLT32 is a special purpose vehicle created for the sole purpose of this transaction and is managed by Deutsche Bank A.G., Colombo Branch. The trust has issued 64 LBTCs amounting to a face value of LKR311.1m on 20 March 2007, while the remaining 36 LBTC’s (of face value LKR100m) are to be issued on 10 April 2007. The capital and interest on the notes will be redeemed by way of bullet payments as per a predefined schedule, with the final payout scheduled for 18 March 2011. The notes have a mix of fixed and floating interest rates depending on investor preference. The LBTCs are serviced by cash flows from a pool predominantly consisting of vehicle lease contracts which were originated by Peoples Leasing Company Limited (PLC, rated ‘A-(lka)’ (A minus(lka))). The receivables and rights on the lease contracts (which amounted to an aggregate principal outstanding of LKR529.8m as at the pool cut-off date of 31 January 2007) have been pledged to PLT32. PLC will continue to service these assets.


Sri Lanka grows by 7.7 percent in 2006

(LBO) – Sri Lanka grew by a blistering 7.7 percent in 2006, which is the highest on record, the country’s statistics office said Thursday. The Department of Census and Statistics said agriculture grew by 6.1 percent, industry by 8.4 percent and services by 7.8 percent.
“We are encouraged to see that all sectors performed well,” Director General of Census and Statistics Suranjana Vidyaratne said.

Gross Domestic Product (GDP) numbers calculated by the Central Bank of Sri Lanka is due on Friday.
The Central Bank which uses a different data set with a higher weight on the lagging agriculture sector usually comes out with slightly lower numbers.


Phenomenal lighting at reasonable price

Phenominal Trading Company at 50, Fisrt Cross Street, Colombo 11 is renowned as an establishment that has won the confidence of customers for a long time for supplying exquisite electrical fittings and accessories of very high standard at reasonable prices.

Crystal lamps, pendant lamps, ceiling mounted lamps, guest room lamps, table lams, mirror lamps wall lamps, pedestal fans, ceiling fans and other household electrical equipment to name a few. Electrical equipment needed for the kitchen is available whole sale and retail and can be selected according to your choice at Phenominal Trading Company. All items are imported from Singapore, China, Italy and other countries with one year guarantee.


CMA Sri Lanka and ICWAI sign an MoU

Society for Certified Management Accountants of Sri Lanka (CMA) signed a Memorandum of Understanding (MoU) with the Institute of Cost & Works Accountants of India (ICWAI) in January at Hyderabad at the conclusion of their 48 th National Cost Convention 2007. The agreement was signed on half of CMA by its President Prof Lakshman R Watawala and of ICWAI by its President Dhananjay Joshi and its immediate past President P Mohanty. Prof Watawala (in dark suit) and Joshi displaying the MoU


JKH exits restaurant business

The John Keells Group exited the restaurant business with the sale of Keells Restaurants (Private) Limited and Crescat Restaurants (Private) Limited, holders of the Pizza Hut and Delifrance franchises respectively, to Gamma Pizzakraft Overseas (Private) Limited, the company announced.
The parent company of Gamma Pizzakraft is presently the franchise holder for multiple Pizza Hut franchises in the National Capital Region of Delhi in India.








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