By: Aisha Rashed Al Shamsi Internal Auditor in Ajman Tourism Development Department


IIA defines corporate governance as “policies, processes and structures used by an organization to direct and control its activities to achieve its objective and to protect the interests of its diverse stakeholder groups in a manner consistent with appropriate ethical standards”. The determinant key for any business success is the corporate governance and employee satisfaction. This methodology will be explained in detail in this article. First, I would like to indicate the importance of an effective corporate governance structure. Having an effective corporate governance will build a strong and profitable organization that will stay in business for long-term. Most organizations are just establishing corporate governance policies and principles to state that they are having governance in their organization. Other organizations are applying the governance framework system, but not in a correct manner.

Stakeholders and investors are concerned about their expected returns or dividend payment in the long-run,If the board of directors are not able to appoint an executive manager who will increase the company’s profit on yearly basis, there will be two options ;either changing the board of directors or change the executive manager in the organization. This frequent turnover of board of directors and CEO will gain/increase the organizational profit but only in the short-run. Unfortunately, the stakeholders, board of directors and executive managers are not focusing really on the main cause or reason for the company’s lower profit. The real reason is employee dissatisfaction. Job satisfaction is the reason why the organization is not able to gain profit in the long-run, but only in the short-run. All sectors should take into consideration how to build a strong and effective job satisfaction system as it is only through that  the organization will be able to increase their profit. The European mechanism of corporate governance indicates the relevance of corporate governance with the employee satisfaction and states that employee welfare should be considered in the ‘best interest of the company’. Establishing code of conduct, compensation system and accountability framework of all employees including executive managers and board of directors, authority for making decisions, transparency of policies and procedures in the organization are all important to gain or increase the employee satisfaction in the organization. This will in return increase the image and reputation and productivity of the organization which will in turn result in higher profit.. Head of departments should engage and allow employees to give their opinions in the policies and procedures of the department since they are the ones who have indepth knowledge of the risks and opportunities related to their work.. Moreover, transparency in management decision making  will ensure acceptance of decisions by employees.

Finally, focusing on satisfying the employees inside the organization by issuing a transparent policy and procedure, effective accountability and compensation framework will lead to an effective corporate governance of the organization which in return will increase the profit and return to the stakeholders and investors without the need to change or turnover the executive managers or board of directors on frequent basis. THIS PARA IS ALREADY SAID ON TOP