Corporate Governance and the UK Banks' Performance - Dissertation Example

Download file to see previous pages In the same way, those that paid less suffered frequent cases of employee turnover in the forms of resignation and unannounced quitting of positions. Literature has indeed shown that when companies put in proactive efforts through the standardization of remuneration as suggested by the UK corporate governance code to retain their employees, there is a superlative impact that this would have on company performance (Iedema and Poppe, 2001).

First and foremost, it will be noted that companies with long-serving employees can be assured of a human resource base that is in tune with the organizational culture in place at the workplace (National Technical Information Services, 1987). Subsequently, the rhythm of customer participation will be easily read by such employees, who would in turn offer services and products that meet customer specifications.

In the long run, customers who have their specifications met will become satisfied with the service received and will want to continue doing business with the bank. Another factor that links employee retention to bank performance is that employees who have worked among themselves for a long get along quickly and better. Oftentimes, when new employees would have to come in who will be coached and guided as to how to deliver service, the rates of productivity of such employees, will not be as effective as those who can work independently or with limited support (Ilies and Scott, 2006). Meanwhile, the levels of productivity recorded by banks can be translated directly into tangible fiscal growth.

Chapter 1: Introduction
1.1 Research background
Undoubtedly, the degree of the collapses brought about by the Financial Crisis across the world as well as the ramification for the entire global economy is documented in many other places. Consequently, many would want to know whether the failure is a result of poor corporate governance or not. As a response to isolated cases such as the Marconi collapse in 2001 in the UK, many would argue that it was not a failure of corporate governance because the destruction was mainly after a misguided strategy and not a collective failure on the side of the board. Therefore, some would argue that the crisis was more of a perfect storm and not corporate governance within the universal banking industry that the boards were not expected to forecast or react to.

Such arguments appear to be misplaced. With this in mind, failure in the UK after the Enron scandals to reform corporate governance in the UK is nowhere near the view expressed by many.

1.2 Research rationale
it is critical to rediscover the main reasons for corporate governance. According to the Financial Reporting Council (FRC) Combine Code, the criticalness of corporate governance is that it should chip in to enhance company performance by aiding a board to complete its duties in the best interest of everyone involved including the shareholders. The consequence could be poor performance or vulnerability if this is ignored. Good governance is expected to smooth the progress of effective, efficient, and entrepreneurial supervision that can deliver shareholder value over the long term (Tirole, 2001, p. 94). This view is clear in the OECD’s Principle of Corporate Governance which outlines the usefulness of corporate governance. ...Download file to see next pages Read More