HRM Department of British Airways (BA)

HRM Department of British Airways (BA) The following paper seeks to identify the human resource management department of the British Air ways. It shows the key HR activities of the British airways with reference to the two models of human resource. Moreover, it also evaluates and analyses the various HR planning and development programs implemented by the British airways. Finally the paper concludes by highlighting how the human resource is indicated and monitored. The report based on a case study and the majority of the information is taken from the case study. SUMMARY In 19th century British Airways is the worlds largest international airline and one of the most successful organizations in the airline business. British Airways (BA) was created by the merger between BOAC and BEA in 1974. BA was not always been quite much successful. The company was going in loss and BA had serious difficulties retaining customers in a competitive international airline industry. In 1980 BA recorded significant losses and there was not much profit to meet the running expenses of the organization. As a matter of fact British Airways delayered their bureaucratic management staffs that were mostly Air force retired officers and replaced them by managers having experience in the service industry. For the achievement of success BA launched many programmes to come out of the organisations loss which changes the culture and environment of the company. These programmes were successful and many customers were attracted towards the airline, which resulted British Airways one o f the worlds leading airline. HRM ACTIVITIES Although the British airways are seen to have implemented numerous strategies to allow human resource development the following are the three key areas where development is most significantly seen. Training and development Reward management Performance appraisal TRAINING AND DEVELOPMENT British Airways has decided a significant investment in training and development that would improve the organization image of Helpfulness. On the basis of research BA found out that customer are satisfied and dissatisfied with friendly and unfriendly, caring and uncaring behavior of staff. As a result of these research findings, BA faced the task of designing and facilitating a training programme that would enable a total change in values and attitudes across the organization, particularly for staff that were exposed to customer contact. BA arranges several training and development programme for both new and old staff. These programme made much change in the behavior of the staff and due to which many customers were attracted towards this airline. British Airline recruited more staff, provide training to the new and developed the old staff for their excellent customer service. it can be clearly identifies that implementing these training programs prove to be highly essential for the organization to attain this objective of increasing the goodwill that the British airways had from the side of the customers. These programs also prove important to improve the revenue and sought to reduce the overall cost that the organization had. (Dessler, 2008) However, at the same time it is also important to note the fact that the success that British airline was not only and solely due to an increasing employee training but there were several other factors which were also important and contributed to the increasing revenue levels. One of the factors included improved legal and government conditions along with technological changes.BA has encouraged individual learning by providing wide employee access to two major learning programs. The first program is based upon principles of open learning; it can finally lead to an MBA and provides a number of progressive stages and qualifications. The completion of each stage gives access to the next qualification. The MBA awarded by the University of Bath. The second program Top Flight provides a series of Academies which are a number of development steps, designed to allow an individual to progress to an executive position. REWARD MANAGEMENT British Airline was motivating people with good remuneration package and rewards. They moving towards individually determined remuneration as well as both intrinsic and extrinsic benefits. They were giving standardized pay and also individual performance pay. The main proportion of salaried staff earnings is based upon pay rates which are governed by a job evaluation grading system. There is also a company -wide performance related bonus scheme paid to all employees and there have been offers of free and discounted shares. BA has also introduced an opportunity for all employees to purchase tax free shares through a trust using their company performance bonus. BA pays standardized salary as well as individual performance pay. They know that if employees are satisfied they will give the best effort for the company success; employees are start thinking that they are the part of company. So, it is clear that through the training Development programme and good remuneration packages staffs provide the high quality customer services and would be more committed to the company. Employees are more committed toward company for their remuneration package and rewards. And they go ahead to achieve the organization goal. PERFORMANCE APPARASIAL Performance appraisal measures the qualitative and quantitative aspects of job performance. An appraisal evaluates not only the employees performance but also his potential for development. The primary objectives of an appraisal are to assess past performance, to identify training needs, to set and agree on future objectives and standards, and to facilitate the achievement of these goals. Individual employee development is a part of a broader concern that BA has developed for the individual employee .As a part of the overall concern with organization culture, BAs philosophy has focused much more attention upon individual performance and this has led to the induction of a companywide -appraisal scheme. The main purpose of this scheme was to improve the relationship between reward and performance and this has reflected in a linked element of performance related pay. British airway has introduced performance related payments. Thus the more efficiently each of the employees works, the more likely it is for the organization to pay the individual worker a certain amount of payments. Moreover, there have been numerous and increasing companywide appraisal schemes introduced by the organization. Thus the harder and more the employee works, the more likely is it for the employee to earn a greater reward in the organization. Moreover, the amount of employees receiving remunerations on an individual basis is increasing at a radical rate at the organization. For instance the administrative staff at the British airways has also started being paid on the basis of their performance. (Armstrong, 2007) HRM MODELS MACTHING MODEL HARVARD MODEL MATCHING MODEL This model states that the HR systems and the organisation structure should be managed in such a way that is similar with the organisational strategy. This is the hard HRM which is interested only in making money or profit. It focussed on individual and organisational performance and concentrates on managing human assets to achieve strategic goals. It explained that there is human resource cycle that consists of generic processes like organisational structure, mission and strategy, human resource management, selection, performance, appraisal, rewards and development. It is based upon strategic control, organisational structure systems for managing people. It requires that human resource strategies have a tight fit to overall of the business. Mission and strategy Economic forces Cultural forces Organizational structure Human resource management MISSION AND STRATEGY: Mission means the specific target that the company wants to reach and strategy is the way through the company can reach their target. The mission of British Airways is to be the best and most successful airline in the world and the strategy is by providing high quality of customer service through resource planning which could not be easily duplicated. ORGANISATIONAL STRUCTURE: This means all the required things that needed to achieve the target. BA launched some programmes for their staff like putting people first, customer first campaign, managing people first, etc. They gave more powers to the line managers to take quick decisions and also break down bureaucracy. They also provide some learning programmes like MBA and series of academies for their staff. HUMAN RESOURCE MANAGEMENT SYSTEM: This is related to the recruitment of new staff. BA replaced some managers which were Air Force retired persons with the staff with analytical skills or the intellectual capacity rather than management experience in the service industries. HARVARD MODEL This model was developed by Beer et al in 1984. This is the soft model which aims at enhancing the commitment, quality and flexibility of employees. Soft model is also known as high commitment management. Here more responsibilities are given to the line managers for ensuring the alignment of competitive strategy and HR policies. This model is based upon individual influence, work systems, rewards and human resource flow; and concentrate upon outcomes for people. Its main components are work system, human resources flow, rewards, stakeholder interests, situational factors, HRM policies choices, HR outcomes, long term consequences. Stakeholder interests Shareholders Management Employee groups Government community unions HRM policy choices Employee influence Human resource flow Reward system Work system HR outcomes Commitment Competence cost-effectiveness Long-term consequences Individual well-being Organizational effectiveness Societal well-being Situational factors Workforce characteristics Business strategy and conditions Management philosophy Labor market Unions Task technology laws and societal values In Harvard model, extra powers and authorities are given to the line managers to fulfill organisations objective. This incorporate recruitment, selection, development and redundancy for the people in the organisation. Managers have to ensure putting right employee at right place and in right time. To motivate productivity, Harvard Model suggested some rewards system to the employees, which include pay, bonus, free and discounted share, holidays, health insurance, empowerment, etc. This model includes long term consequences which refer to individual well beings. These incorporate individual interest, organisational competencies, and the need of the society and community as a whole. In this model, stakeholders are those persons who have interest or shares in the organisation. Situational factor includes workforce, labour markets, union representation, laws, business environment, technology and work system; these issues lead to the HRM policy choices of employee influence. Work system r efers to the efficiency and productivity of work force to meet the organisational goal. For work to be done effectively, efficient communication channels and correct technology are needed. For this purpose, British Airways gave more powers and authorities to the line managers, so that there should not be any kind of delay and they can take quick decisions. HR Planning and Development Methods Firstly British Airline tends to recruit on the basis of analytical skill and intellectual capacity rather than management experience in a service industry. They are always tried to ensure that staff would provide a consistent high quality service to customers an achieving efficient flight operations. Many managers had also joined the company from Royal Air Force. They recruit the perfect person and place them on exact position. Secondly, British Airline setup several training programs for both new and old staff. Such as Customer First Campaign to meet the customer needs. Putting People First which was two day programme aimed at almost 20000 staff that had significant customer contact. This program was designed to persuade participants to examine their own existing values towards their passengers and where necessary to replace them with more helpful and supportive ones. Managing People first a one week residential training course. The programme was specifically designed to breakdown the bureaucracy. The bureaucracy had developed underlying values of order, rationality, dependability and system control. Finally British Airline pays good remuneration to employees and also gives both intrinsic and extrinsic rewards. They plan to motivate people as well as make their assets. BA offers free and discounted shares. BA has also introduced a novel scheme which gives an opportunity for all employees to purchase tax-free shares through a trust using their company performance bonus. BA has encouraged individual learning by providing wide employee access to two major learning programs. The first program is based upon principles of open learning; it can finally lead to an MBA and provides a number of progressive stages and qualifications. The completion of each stage gives access to the next qualification. The MBA awarded by the University of Bath. The second program Top Flight provides a series of Academies which are a number of development steps, designed to allow an individual to progress to an executive position. Evaluation: British Airlines corporative objective is To be the best and most successful airline in the world. So to achieve this objective it makes huge investment on human resources. It recruits highly skill and intellectual people. BA replaces them with more helpful and supportive ones. It provides training on the basis of different skills. It developed employees as more customer friendly, knowledgeable and efficient. They form trade union for welfare or participation of line staff on strategic plan of the company. BA pays standardized salary as well as individual performance pay. They know that if employees are satisfied they will give the best effort for the company success; employees are start thinking that they are the part of company. So, it is clear that through the training Development programme and good remuneration packages staffs provide the high quality customer services and would be more committed to the company. And they go ahead to achieve the organization goal. HR Performances of British Airways In seventies BA performances were disappointing, When BA had serious difficulties retaining customer in competitive international airline industry. In 1980 BA recorded significant losses. Before 1990 BA found negative attitude from passengers in a research. Customers were dissatisfied with customer BAs customer services. For this reason BA redesign and restructure its Human Resources. BA makes huge investment on HR planning and HR performances. It setup many training and development program for line staffs and managers. It is hard to say how much impact the programme has had; it is commonly understood in training circles it is difficult to measure the value of training. However, British Airline believes that this programme has been successful, that a significant cultural change has been achieved at all levels of the organization, and that this cultural change has made a significant contribution to the steady improvement in the business performance. An extensive market research shown that customer have developed more positive attitudes towards service that they now receive as compared with the predominance of negative attitudes that were recorded in similar surveys conducted earlier in the 1990s. These satisfied customers must have an important factor in supporting BAs performance improve improvement. So its easily identified that with this HR planning and development, BA increases their HR performance that lead to the improvement of the organizations performance. On the other hand BA employees now more happy with remuneration and rewards. They are getting opportunities to learn through different training and qualification of MBA degree awarded by the University of Bath after competition of management training. They are getting basic pay as well as individual performance pay and scheme that benefited them more than the before. Through the trade union employees can participate on organization strategic decision. They can raise their voice against any critical issue of the company. That makes the employees happier. Employee turnover are less now than before .Employees are satisfied with their job description, responsibilities and working environment. Employees absenteeism is reduced significantly. They are now highly committed to the company success. Ways to improve HR performances It is very difficult to suggest BA. Because they are the worlds largest passenger airlines company in the world and they have many intellectual people for hunting innovation idea and planning every moment. In spite of this practical situation some ways of improvement are described below: British airlines significant development is that they made a small HR strategy and planning department with some specialist people in the UK. It can be suggesting that if they integrated more people with this department and also spread not only in Europe, but also other continents where they are earning more. As a result same cultural people will provide customer service to their own customers. They can easily share their feeling and fulfill the needs of customer. Employee would be happy to serve same people as like they are. British airline can run different talent hunt programme for recruit their best fitted people. They can go to the college and university and pick up the best student; those are very keen to learn and have creative ideas for the future excellent service both customer service and flight operation. BA can launch more training and development programme after certain time to compete with the competitors and updated technological knowledge. They have to push their employee towards extrinsic rewards to see happier. CONCLUSION Thus as highlighted by this paper, the British airways successfully manages the human resources department by an increasing amount of planning and organization. They also launched some learning programmes for the employees to do MBA and to reach at executive position. They mainly concentrated upon the improvement of delivering good customer service so that they can attract more customers and gain more profit; with this they want to become the worlds most successful airline. At the end, I can say that it is crucial to use both soft and hard HRM in order to meet the organisational business requirement and to remain worlds most successful airline.

How cultural beliefs and social forces are shaping the use of technology Essay

David Wigder, who has significant experience as an Environmental Engineer (2007) wrote that marketers have historically faced an uphill battle when it comes to marketing eco-friendly goods. Simply put, it is difficult to influence consumer purchase behavior without first impacting attitudes and values. These values, however, take a concerted effort over a long period of time to change. As a result, corporate marketers tend to stay clear of awareness and education communications, preferring to target consumers lower in the purchase-funnel who are already predisposed to green messaging. The reason for this is self-evident: when it comes to green, acquisition campaigns have higher and more immediate financial returns than awareness campaigns (Wigder, 2007). Yet, for marketers, the opportunity exists to influence environmentally friendly behavior without necessarily shifting attitudes. This effect has been subject of academic investigation including a study conducted by Professors John Thogersen and Folke Olander of the Aarhus School of Business (Denmark) examining the relationship between â€Å"value priorities† and â€Å"environmentally-friendly consumer behavior. † (Wigder, 2007) As part of this study, Thogersen and Olander examined the impact of recycling on the values and behaviors of Danish consumers over the course of one year. (â€Å"Human Values and the Emergence of a Sustainable Consumption Pattern: A Panel Study,† Journal of Economic Psychology, 2002). The results of such investigation reveal several key findings that green marketers should consider: †¢ First, the study reconfirmed that values drive behavior (while the converse relationship was not found to be statistically significant). While not surprising, this result confirms that marketers face an uphill battle if they are to influence environmentally friendly behavior without first addressing values. †¢ Second, the study found that values are very stable and are difficult to impact in the â€Å"short and medium term. † †¢ Finally, behavior change, the authors concluded, is hindered not only by values but by â€Å"behavioral inertia, created by forces [such as established habits] that are independent of – or at least not related in a simple way to – values†. (Dobson, 2007) Yet significantly for marketers, the study also suggests that for those that already hold environmentally friendly values, environmentally friendly behavior can evolve over time if consumers are provided the opportunity to engage in this behavior. Thogersen and Olander concluded that â€Å"when new opportunities for environmentally-friendly behaviour are offered, consumers holding ‘environmentally-friendly values’ adjust their behaviour to be more consistent with their values. † This finding implies that consumers who hold green values will demonstrate greener behavior if presented with relevant products or services (Wigder, 2007). Andrew Dobson wrote in an article called The Politics of Global Warming (2007), that in his review of the idea and practice of sustainable consumption, Tim Jackson points out that â€Å"the rhetoric of ‘consumer sovereignty’ and ‘hands-off’ governance is inaccurate and unhelpful† (see â€Å"Motivating Sustainable Consumption,† SDRN: Briefing 1). This is because consumption decisions take place within a cultural and institutional context which constitute the rules of the game, and which part determine the consumer decisions that people make. So when the iPod mini comes along hard on the heels of the only marginally larger original iPod, the social and economic context is geared to getting consumers to buy it (Dobson, 2007). In this context, as Jackson went on, â€Å"policies based on information and price signals have had only limited success in changing unsustainable behaviors†. Yet these are exactly the policies the government seems determined to pursue – policies that, moreover, contribute to reproducing the pro-individual context that is part cause of our environmental problems. â€Å"The dominant cultural model in 21st-century society is individualist†, wrote Tim Jackson. â€Å"But this is only one form of social organization and there is evidence to suggest that it may not be sufficient to address the social complexity of pro-environmental behavioral change. † But, policy-makers will say, policies based on price signals work with the grain of self-interest and are therefore realistic rather than aspirational as far as models of human motivation are concerned. Wrong. There is a growing body of social-science evidence to suggest that the self-interest model is actually a poor predictor of environmental attitudes and behavior (Dobson, 2007). For instance, in their survey of 4,000 individuals in four separate counties in Sweden, Simon Matti and Christer Berglund conclude that as far as pro-environment behavior is concerned, â€Å"people are guided by other motives and values than the traditional economic rationality of the consumer †¦ they feel a moral obligation to sort waste in order to contribute to a better environment† (see â€Å"Citizen and consumer: the dual role of individuals in environmental policy†, Environmental Policies, 15/4, 2006). More striking still, their research strongly suggests that policies designed to appeal to the individual as consumer rather than as citizen â€Å"crowd out†, or reduce, â€Å"the sense of moral obligation† in favor of pro-environmental activity. Once again, the preferred form of government policy both reinforces the frames of mind and conduct that contribute to environmental unsustainability and simultaneously undermines the habits and practices that inform much pro-environmental behavior. This double-whammy is a serious obstacle to dealing with climate change – and indeed with any other problem which requires pro-social responses (Dobson, 2007). The fact that these results were garnered in Sweden may itself be significant. This is because a further piece of social-science research suggests that collectivist, social-welfare societies are a better incubator of pro-environmental behavior than individualist ones where welfare is looked on with suspicion. â€Å"Those who place a high value on the welfare of others and on a collective approach to solving social problems are more likely to be willing to support environmental policies than those who do not†, writes finds Sharon Witherspoon (see â€Å"Democracy, the environment and public opinion in Europe†, in W Lafferty & J Meadowcroft, eds. , Democracy and the Environment: problems and prospects (Edward Elgar, 1996). All of this suggests that addressing climate change is both more difficult and easier than the executive summaries swirling across the desks of government ministers and newspaper front-pages portray. It is more difficult, because the drivers of unsustainable attitudes and behavior are deeper and more structural than supporters of liberal capitalism can afford to believe. Yet it is also easier, because resistance to those drivers is expressed on a daily basis by the actions of tens of millions of citizens around the world as they strive to do the right thing, not for any gain for themselves or fear of fiscal punishment, but because it’s the right thing to do (Dobson, 2007). Governments assume that people don’t behave like that, and design policy accordingly. Social-science research suggests two things: first, that people do behave like this, and second, that government policy which fails to understand as much will not only be ineffective but – in a move that converts tragedy into farce – will undermine the very motivations for the behavior which it should be encouraging. Conclusion (A Vision for the Future) By the end of the next decade, as surmised by David Friedman of the Union of Concerned Scientists, most passenger cars and trucks in the United States could be full of hybrid electric vehicles. But, it is also clear that this all-new GREEN lifestyle that people are promoting depends a lot on cultural beliefs or tenets (as shown above). Yes, buying habits are changing, public transportation may all become hybrids, the car industry might abandon gasoline engines forever, etc. but hybrid technology, lifestyle changes, and living â€Å"green† cannot provide the precise politics that global change needs. It’s reasonable to assert that sound social science is part of the whole puzzle. R E F E R E N C E S 1. Hybrid Cars. (2006). TechFaq. Retrieved April 16, 2007, from http:// www. tech faq. com/hybrid-cars. shtml 2. Donaldson-Evans, C. (2006, July 10). Gas-electric hybrids just keep going and going. Retrieved April 16, 2007 from http://www. foxnews. com/story/0,2933,202414,00. html 3. Wigder, D. (2007, March 31). How many green marketers does it take to change a light bulb? Retrieved April 16, 2007 from http://marketinggreen. wordpress. com/tag/consumer-behaviors-and-beliefs/ 4. Dobson, A. (2007, March 29). A politics of global warming: the social-science resource. Retrieved April 16, 2007 from http://www. opendemocracy. net/globalization-climate_change_debate/politics_4486. jsp 5. Friedman, D. (2003). A New Road: the Technology and Potential of Hybrid Vehicles. Massachusetts: UCS Publications. 6. Thogersen, J. and Olander, Folke. (2002). Human Values and the Emergence of a Sustainable Consumption Pattern: A Panel Study. Journal of Economic Psychology, 23 (5), 605-630.

How Poverty in Zimbabwe Has Changed over Time? Essay

Poverty can be understood as the inability to meet a variety of basic needs and entitlements, through a lack of income, access to resources or empowerment. Poverty at a national scale is complex and is caused by an array of factors including many generated within the country but also others that are caused by external factors (figure 1). I will examine the internal and external causes of poverty in the landlocked Southern Africa state of Zimbabwe (figure 3). In the last century Zimbabwe has experienced massive economic and social change. Once Africa’s 2nd biggest economy, it is now ranked 15th(figure 3). Overall Zimbabwe ranks 173rd in the world in terms of HDI (Human Development Index), 153rd in the world for GDP and ranked 5th in the world for the lowest life expectancy[1], indicating significant poverty especially when compared to the relative developmental success of other southern Africa states (figure 5). When considering levels of development, countries can be placed on Rostow Stages of Economic Development[2], the majority of countries move up the stages from experiencing economic growth. However Zimbabwe has slipped back down the Stages of Development; early 1970 it was experiencing ‘take off’ & ‘acceleration’ however in recent years it is now at ‘pre-development’ (see figure 4), a ‘step back’ in economic growth development. An external cause of poverty in Zimbabwe is the geographic position. They are a landlocked country; they have no access to the seas for trading, limited border crossings and they are dependent on other countries for trade (figure 6). This leads to huge transport costs and inadequate infrastructure, on average a country which is landlocked experiences 60% less volume of trade plus it limits their economic growth and this external factor is a major cause of poverty[4]. Also, Zimbabwe has experienced severe drought in the past few years, it only has 8.32%[5] arable land and climate change is threatening to lessen their available land further. Arguably, these effects are already being observed in regions of Zimbabwe as the physical climate of the country has changed largely over the last three decades with the worst drought being experienced in 1991. However in recent years failure of the 2004-2008 rains reduced crop production by an estimated 95%, this has impacted heavily on Zimbabwe’s productivity, reducing both commercial trade to earn income and subsistence poverty. In years of severe drought the GDP growth was negative indicating a shrinking economy (figure 8), such unreliability of production limits their growth (figure 5). The unreliability of their economy stems from the external factors which also lead to national scale poverty through a lack of income, and an inability to meet basic food security needs which Maslow includes at the very base of his Hierarchy Of Needs (appendix 2), therefore pushing huge sections of society into poverty. Despite this geographical and climate disadvantage, I feel that poverty in Zimbabwe was serverly exacerbated as a result of political policy, this internal factor has had greater effect on the extent and depth of poverty experienced. In 2000 Robert Mugabe seized thousands of white-owned farms in an ongoing and violent campaign to reclaim what they say was stolen by settlers[6]. The land reform had a massive impact on Zimbabwe’s food production; in 2005 they were ranked 177th out of 182 compared to South Africa (Zimbabwe neighbouring country) who are 82nd (figure 3). This portrays a massive problem as South Africa share the same climate and land features but are completely in the opposite spectrum in terms of food production. The land reform in 2000 led to the breaking up of farms, two thirds of the farms were given to ordinary people on low-incomes. The remaining one-third included civil servants (16.5%), former workers on white-owned farms (6.7%), business people (4.8%) and members of the security services (3.7%)[7] (figure 6). Arguably, these effects have been caused due to the loss of the commercial white farmers, they knew how to produce high yields along with the high quality and most importantly they knew how to add value to their goods. I believe the impact of the land reforms is evident in the food crisis 2007-08 due to the land seizures, in some areas crop production reduced by 95%. Not only did Zimbabwe lose a large section of its agriculture sector, it diminished its community cohesion and provision of services throughout communities across the country (appendix 1). It lost its community support network and witnessed a mass exodus of its economically active society, causing intellectuals to le ave the country causing brain a drain and further undermining income earning potential. The land reform campaign in 2000 was also thought to have contributed to the AIDS epidemic; over 33% of the population are HIV positive (3rd largest in the world). As farming communities were disrupted, the economy deteriorated and many doctors left the country causing reduced access to healthcare. Many farmers were forced to move to different areas and in some cases families were separated, this resulted in sexual networks developing and an increase in the risk of HIV transmission. In 2009 the HIV prevalence in adults aged 15-49 was 14.3% causing the most economically active age group to have limited income earning opportunity as illness made work more difficult to continue causing income poverty (appendix 1).This is compared to South Africa where 15-49 prevalence was only 7% in 2009. Foreign companies are also reticent to invest in a country with such an unreliable workforce, again causing GDP limitations and national level poverty. But internally controlled land reforms would never have been needed but for the external factor of the apartheid regime established by Ian Smith who was president of Rhodesia (Zimbabwe) from 1964. Britain who had colonised parts of central Africa, wanted to keep hold of Rhodesia (Zimbabwe) because it was known as the bread basket of Africa, they believed it had great potential[8]. However Ian Smith declared independence under white minority rule, sparking international outrage and economic sanctions. Additionally he completely radicalised the farming community when he introduced apartheid. He evicted the numerous black farmers and put the fewer white famers in control of the huge hectares of land because they were commercial farmers and knew how to produce high quality and high yields[9]. This led to a division between poor blacks and wealthy white people causing inequality and an increase in relative poverty. This eventually led to civil war and resulting in Ian Smith being over thrown by the British Government in 1979; Robert Mugabe was elected as the new prime minster in 1980. His chaotic attempt to eradicate the apartheid regime ultimately ended up in a land redistribution campaign, which began in 2000 and caused an exodus of white farmers, crippled the economy, and ushered in widespread shortages of basic commodities. The economy of the Zimbabwe shrunk by 154.4 (figure 8). Although it could be argued that this is an internal factor as governance is part of the domestic jurisdiction of the country meaning that changes and alterations to policy and leadership should be internally controlled, in the case of Zimbabwe, these factors cannot be separated. Governance in Zimbabwe was controlled externally via colonial rule, and even after the decline of colonialism, for a significant period, the leader of Zimbabwe was externally decided and was the case of the appointment of Mugabe. It is undeniable that the internal governance of the country under Mugabe has been of paramount importance with regard to affecting poverty in Zimbabwe on a national scale such as failure to act despite everything going wrong, for denial of HIV, and ignoring of land reforms impacts on productivity, lack of free speech so intellectuals leave causing brain drain. His reign can be summarised as; life expectancy in fell from 62 years in 1990 to 36 in 2006[10]. He has been accused of policy myopia many times. From all the information and statistics described in this report it can be concluded that internal factors have had the most devastating effect on Zimbabwe as a whole, such as the land reforms which led to a spiral of decline for the country, especially as it could have been avoided. The devastation of the land reforms is still being felt in certain parts of Zimbabwe today; the loss of intellectual people will be the hardest to recover from for Zimbabwe. They are the group of people what will promote economic growth and re-stabilise the economy. They attract investment from Trans National Companies for their knowledge and their enterprise; they act as a multiplier effect for an economy. However this will take generations to re build. External factors of poverty such as their geographic location and climate have had impacts such as restricting them in trade and production. But comparison with neighbouring countries such as South Africa indicates they significantly outperform Zimbabwe. This leads us to believe internal factors have had a great impact on causing poverty in Zimbabwe (figure 4). However, as has been shown it is impossible to separate internal and external factors completely as they feed into one another. A challenging collection of external factors such as climate, location and in particular colonial legacy under Ian Smith, created a situation where poverty was a real danger. However post-colonial, strong and positive governance could have reduced poverty. Unfortunately in Zimbabwe, Mugabe’s regime exacerbated the poverty situation. Once in poverty, you’re in a vicious cycle of decline (poverty trap[11]). The poverty you’re in prevents you from getting out, it counteracts you from taking positive actions[12]. As a result of high unemployment figures and a spiral of decline for the economy, those who had been educated left the country in hope for a prosperous future. This can be referred to as the ‘brain drain’[13]. ———————– [1] Zimbabwe facts https://www.cia.gov/library/publications/the-world-factbook/geos/zi.html [2] http://www.talktalk.co.uk/reference/encyclopaedia/hutchinson/m0097893.html [3] http://hdrstats.undp.org/countries/data_sheets/cty_ds_NAM.html [4] http://www.palgrave-journals.com/ces/journal/v45/n4/full/8100031a.html [5] http://www.wordtravels.com/Travelguide/Countries/Zimbabwe/Climate [6] http://www.bbc.co.uk/news/world-africa-14113618 [7] http://www.bbc.co.uk/news/world-africa-11764004 [8] http://www.bbc.co.uk/news/world-africa-14113618 [9] http://www.bbc.co.uk/news/world-africa-15919538 [10] http://www.nytimes.com/2009/01/23/opinion/23iht-edmugabe.1.19632133.html [11] http://tutor2u.net/economics/content/topics/poverty/measuring_poverty.htm [12] http://www.unmillenniumproject.org/documents/BPEAEndingAfricasPovertyTrapFINAL.pdf [13] http://www.globalissues.org/article/599/brain-drain-of-workers-from-poor-to-rich-countries

Business Essays - Corporate Governance - Free Essay Example

Sample details Pages: 11 Words: 3315 Downloads: 9 Date added: 2017/06/26 Category Management Essay Type Analytical essay Did you like this example? Corporate Governance Executive Summary The main goal of the report is to evaluate the current corporate governance of a certain organization. In this report, the company that has given emphasis is a food retailing company which operates in UK. This company has been able to have effective corporate governance. However, there are still issues that should be given attention in order to ensure that the company is implementing effective corporate governance. The report includes the analysis of the corporate governance structure of the company as well as the issues concerning the board of the organisation. Furthermore, this report also analyses the positive and the negative aspects of the corporate governance implemented in the organisation.All in all it can be concluded that the company has been able to have as strong and systematic corporate governance to ensure quality output. Late in the 1980s, it became apparent that a fundamental shift in the power relationship between a firm’s shareholder s and its professional managers was taking place. Shareholders increased their control over the firm’s professional managers, demanding that managers respond more quickly to poor financial performance and to changes in the competitive environment. Stockholders were becoming increasingly dissatisfied with management’s slowness and the ineffectiveness of their actions in trying to adapt to new environmental conditions. Many stockholders became convinced that management did not keep the shareholders’ interests in mind while developing and implementing new strategies. Numerous stories have appeared in the business press chronicling the efforts of shareholders to exert control over corporate management. Fortune magazine’s January 11, 1993, issue featured a cover story by T. Stewart titled â€Å"The King Is Dead,† proclaiming the death of the imperial corporate presidency (Chaganti Sherman, 1998). An increasing number of chief executive officers have been forced to relinquish control of their organizations to others who will more quickly implement massive corporate change. According to Stapledon (1996), corporate governance can be defined as a system that is used in order to direct and control companies. As a matter of fact, this idea applies to all business sectors all throughout the world such as the banking institutions, financial corporations and other types of businesses such as the retailing industry. In particular, corporate governance refers to the examination of the control of a company as utilized by its directors. In accordance to theory, the directors of public companies are held responsible for their action by their shareholders (Davies, 1999). On the other hand, the authority of the shareholders to influence the behavior of the company directors is limited in practice and is rarely exercised. This then provides directors of considerable power to take action as they see fit. However, this is not always the case as it appears to be relatively different form that of the government in which the action of the officials is slightly restrained by certain actions of the people it governs. Corporate governance, as a term, has come to imply good, in the non-moral as well as the moral sense. Its non-moral applications include efficient decision making, appropriate resource allocation, strategic planning, and so on (Monks Minow, 2001). Nonetheless, in its moral sense good corporate governance has come to be seen as promoting an ethical climate that is both morally appropriate in itself, and consequentially appropriate in that ethical behavior in business is reflected in desirable commercial outcomes (Francis, 2000). Thus, the links here are with due diligence, directors duties, and the general tightening of corporate responsibility. Corporate governance should set a proper example of good intent, and provide for those lower in corporate hierarchies the clear message that it is â€Å"do as I d o† as well as â€Å"do as I say† (Francis, 2000). Middle and lower management find it hard to be ethical when it seems that the top of the corporate hierarchy have no commitment. The message of sincerity will always filter down, and no amount of deception will foster the view that a board is ethical when it plainly is not. Additionally, the commitment to ethical corporate governance by a board will enhance the prospects of an ethical infrastructure within the organization. That ethical infrastructure is a manifestation of the commitment, a means of preventing and resolving ethical problems, and an impressive demonstration of sincerity. Primarily, the objective of this paper is to analyse the corporate governance implemented in the company. Herein, the company that will be given emphasis is a food retailing company. Overview of the Company Kay (1995) stated that food retailing in Britain is dominated by six chains and that the oldest and largest is the company t hat will be analysed in this report. The founder started the company by establishing its first grocery store in south London over a century ago, and the family tradition and the philosophy of good quality products at competitive prices have remained central to the firm ever since. Conservatively managed, the company came to the stock market only in 1973 and since then has expanded steadily from its loyal, and mostly southern, customer base. Founded in the year 1869 in London, John and his wife established their first shop, a dairy business in an area called Drury Lane. Because of the fact that Drury Lane was considered as one of the underdeveloped areas in the city back then, the shop managed to gain recognition in the area as it had products that were inexpensive despite the fact that they were of high-quality. Due to the business’ resounding success, two more shops later on opened at other streets. In the year 1882, the firm already had four shops that were in operati on. But this didn’t stop the owner from further expanding his business. Hence, he unveiled his plans to have a storehouse in a town in northwest London in order to accommodate his growing number of supplies. At the same time, it was in this place that the first brand product of the company, namely bacon kilns, was made. Consequently, it was in the same year that the company opened its first branch in a town called Croydon. Unlike the other towns, Croydon was prosperous. And so, the shop here sold superior quality products. Not to mention, it looked much better than the previous shops that had opened. From here on, Sainsbury would continue to grow. At present, this food retailing has been able to hold on to the lead in the market. As a matter of fact, the company is pretty much advanced in many aspects, especially with regards to technology and of course, its fresh products. The company was the first to be able to use scanning and computerized stock control technology. In a ddition, it had implemented certain techniques such as sales-based ordering. All-in-all, these factors contributed greatly to the company’s competitive advantage that it is currently enjoying. Not to mention, its computerized energy management has helped bring down the consumption of energy. Moving on, the firm has a wide range of products. In fact, during the year 1994, its number of products multiplied more than twice its original number. And as of the moment, the business continues to pride itself with its specialty in fresh foods such as fruits, breads and low-fat milks. Even up to now, their customers continue to demand for even better products which the company efficiently responds to. The corporation is now mainly concentrated on their business in the UK (United Kingdom). This includes the supermarkets, the bank and its recently acquired stores which sells bells. Moreover, the company now has other products which are not food-associated such as home equipment, be auty products, clothing apparel and other general merchandise. As of March 2004, figures indicate that the firm is operating at least 583 supermarkets and it also has 50 banking centers which are housed in the stores themselves and as a result, the workforce has ballooned to about 153,000 people. Nature and Style of Governance It can be said that the company has a very good framework that has been established in order to deal with different corporate matters. In fact, there is usually a properly structured program that is further reinforced by company policies and other procedures for the proper guidance of the directors in their daily duties. Consequently, the company has a clear reference guide to its business operations and corporate governance. The Board of Directors which oversee the businesses and the decision-making routines as well as the financial aspect of things, keeps watch. In addition, this includes the maintenance of the standards with regards to corporate go vernance in the corporation’s different sectors. The Board is made up of ten directors; two are executive while six are non-executive. Because of this, there is a fair division of responsibilities and other tasks among them. And while the non-executive directors are independent from the others, they are still able to contribute their experience and knowledge during Board discussions. Without a doubt, The Board is in-charge of caring for the company’s operations, assets, and its shareholders. All-in-all, the board aims to work with these factors in the hopes of maximizing performance. Because of this, it is The Board that is responsible for the finalization of budgets and strategic plans. And in order to ensure the firm’s competent operations, The Board conducts a monthly review of the company’s businesses in relation to its financial movements. Furthermore, there is a company law that obliges The Board of Directors to carefully prepare each year, a financial report that would have to be accurate and reliable reflecting the true state of the company. All things considered, The Board of Directors is the one that is responsible for the proper safekeeping of accounting statements and to ensure that these records are precise and truthful. In addition, the board is in-charge of guarding the company’s other assets as well as making the necessary steps in order to prevent complications such as fraud and other types of risks. Aside from the board of directors, the company also has other committees as part of their corporate governance. Just like the board, other committees have a well-established reference guide which also discusses their duties and their scope of authority within the corporation.Composed typically of independent directors who are non-executive, the remuneration committee handles the outline for the company’s remuneration policy which would eventually be reviewed by the board. Moreover, this group is a lso responsible for the various remuneration packages that are given to executive directors. On the other hand, there is also a nomination committee which is also made up of mostly non-executive directors. The responsibility of this group is to recommend to The Board on which people should be appointed as directors. Finally, there is also a group known as the audit committee. Compared to the other two, the members of this committee is purely composed of non-executive directors. This group’s duty is to make proper recommendations with regards to the company’s accounting policies as well as overseeing financial control within the corporation (Sternberg, 1998) . For this reason, the committee usually receives and reviews financial reports and other statements delivered to them. Then, they make a comprehensive report before they submit it to The Board. Of course, there is also the group’s evaluation of the risks involved which has always been done to assist with the company’s next business move, and have further control of the corporation’s different operations. Issues Concerning the Board The board of directors is responsible for ensuring that the organization always has the best business performance and corporate governance. However, there are several issues that concern the board. One of which is in terms of the level of skill and care expected of the directors, specifically the non-executive directors. All non-executives should take note of the following comments in the Report, which could well foreshadow the approach of a court: â€Å"It must be recognised that non-executive directors may bring different skills to a board, some quite specialised, and that such persons may have limited accounting experience. However, accounting is not so complicated that such directors should be excused responsibility for the accounts. Accounting issues can be clearly explained so as to be understood by sensible laymen. If accoun ts are gone through carefully, explaining significant items in them, laymen should be able to ask pertinent questions and make informed judgments thereon. If, after all this, the layman cannot understand the companys accounts, then he ought not to be a director of that company. Often it is the director with little accounting experience whose common sense may lead him to question what those with accountancy experience may let pass. The accountings issues in respect of which some make criticisms were nearly all ones which involved no accounting complexity and what was acceptable and what was not should have been obvious to any reasonable director possessed of the facts who sensibly applied his mind to the issue. In most instances, those directors who decided to adopt the accounting were in a better position than the auditors to determine whether the treatment applied was acceptable or not. Those directors were thus not entitled to suspend their own independent judgment and rely upo n the fact that the auditors failed to prevent them from adopting an unacceptable course. Another issue that concerns the Board is in terms of inadequate financial information. There are time that some of the members of the board, never prepared or presented to the Board any consolidated budgets or managements accounts which brought together the budgets and results of all the divisions in the Group. The absence of consolidated management accounts facilitated the practice of unacceptable year end adjustments being made by the accountant directors, unbeknown to most of the other directors, to create extra reported profits. In the last few years, the first the board as a whole knew of the results to be published was when the preliminary or interim announcement was circulated for information at the close of the board meeting that invariably occurred the day prior to announcement. In effect, the board as a whole never discussed the details of the results or what lay behind them. Th e main boards lack of understanding of the composition of the reported results was an extraordinary state of affairs which no director should ever have tolerated. Positive Aspects of Governance The Board has been able to attain complete control of all matters regarding the company. Their self-perseverance and obligation to their duties and finally, their obedience to the company laws all contribute to the development of the corporation. As such, The Board constantly believes that all the data pertaining to financial information and other facts regarding to their operations that are currently being used is reliable. The Board’s authority is clearly recognized within the company. And because of this, it is able to have a solid grip on the corporation’s actual operations, stakeholders and its financial concerns. Needless to say, because of the corporation’s proper structure and its commitment to the stakeholders and to the community as well, the board of dire ctors has proven that it can efficiently handle both its ethical and legal responsibilities. Furthermore, the company is currently maintaining good relations and open communications with its investors. As a matter of fact, shareholders are regularly invited by the corporation whenever there are gatherings to discuss trade updates. Moreover, whenever there is an annual general meeting, investors get the chance to meet The Board members themselves. And of course, for private investors, they can also access the company’s website for various shareholder services. Undoubtedly, the company has good consideration for all of its stakeholders; past, present and future. There definitely seems to be a very well planned framework in the firm’s corporate division. It has good policies and procedures with regards to financial matters and operational concerns. Its procedure of assessing the different kinds of situations that come up is certainly a good move on their part. Not to m ention, they have maintained good relations with their stakeholders. And finally, The Board’s authority is unsurpassed. Clearly, these facts prove the strength of the company’s corporate governance structure. Negative Aspects The weakness on this case however, is the fact that it cannot always be assured that there are no losses or other errors which may result from mistakes and inconsistencies by one of the committees or employees involved. In addition, having diverse populations, there can be a possibility of having internal problems between members who have different culture and beliefs. In addition, some problems occur in terms of giving value to the companies’ shareholders. There are times that the shareholder is not given the enough information about the status of the company, specifically that shareholder which have a small part in the business. This happens when the board of directors does not give value to their shareholders. Other negative aspect s include the imperfection of financial reporting procedures which may definitely result in ineffective corporate governance. Recommendation Corporate governance is said to be one of the most important aspects to be considered in an industry. Hence, it is recommended that the company should be able to determine the most appropriate and effective corporate governance structure and approach so as to ensure that the business will adhere to all social responsibilities, legal and ethical aspects. In addition it is also recommended that this food retailing industry should give value not only to its customers and employees but most especially to the shareholders who have trusted the company and its capabilities. The company must be able to align carefully their corporate governance approach with its organizational objectives. Conclusion Corporate governance is a process which is concerned about how corporations are managed, how managers are governed, what questions face by b oards of directors and the accountability a corporation has to shareholders. In this case, it can be seen that the food retailing industry has been able to implement effective corporate governance which guides the organization to become more competitive in the marketplace. Accordingly the issues concerning the board include the level of skill and care expected of the directors and inadequate financial information. In order for the organization to address the issue, the members of the board are trying to create a resolution for these issues. In terms of positive aspects, the members of the company have been able to contribute well in ensuring competitive performance of the company. The board of directors of this organization ensures that all their actions are legal and adheres to business ethics. In addition, they also ensure that their social responsibility is also incorporated with their accountabilities. Although the company has positive aspects, it also has its negative asp ects. One of which adheres to the notion that, because of the mistakes and inconsistencies of the individual involved, it cannot always be assured that there will be no losses or errors that will occur. In ability to handle diversities and differences is also a negative aspect that can be attached with the company’s corporate governance practice. Lastly, inability to ensure shareholder value is another negative aspect of the company. It is said that the shareholder is regarded as the central stakeholder of each industry. It can be concluded that in order for the company to have a competitive business performance, the company must start from within, from its corporate governance. Reference Chaganti, R., Sherman, H. (1998). Corporate Governance and the Timeliness of Change: Reorientation in 100 American Firms. Westport, CT: Quorum Books. Davies, A. (1999). A strategic approach to corporate governance. London: Gower Publishing Limited. Francis, R. (2000). Ethics and Corporate Governance: An Australian Handbook. Sydney, N.S.W.: University of New South Wales Press. Kay, J. (1995). Foundations of Corporate Success: How Business Strategies Add Value. Oxford: Oxford University Press. Monks, R.A.G. and Minow, N. (2001). Corporate governance. 2nd ed. Oxford: Blackwell Publishes Ltd. Stapledon, G. (1996). Institutional Shareholders and Corporate Governance. Oxford: Clarendon Press. Sternberg, E. (1998). Corporate governance: accountability in the marketplace. London: The Institute of Economic Affairs. Don’t waste time! Our writers will create an original "Business Essays Corporate Governance" essay for you Create order