Corporate governance analysis

Describe about the Business Corporate Governance and Ethics.

Corporate governance is the practice and process based on which every business organization is controlled as well as directed. The rules of corporate governance have been made by satisfying all the stakeholders associated with the business process. The stakeholders include management, customers, suppliers, existing employees, community and government and so on. With the help of this practice, a business organization is able to run their process of business effectively. The organization has to face a disastrous consequence if the stakeholders fail to maintain corporate governance rules and regulation at the workplace.

BONDS, Australia is not exceptional to that. BONDS has faced a tremendous business failure due to some of the major issues in maintaining corporate governance rules and regulations. The board of directors of BONDS is primarily associated with the membership of corporate governance (bonds.com.au, 2016). The people who are associated with director board include CEO of the company, financial head, company secretary, general manager of the company so on. In BONDS’ group structure, the persons who were primarily associated in the board of directors at the time of corporate governance failure are as follows:

• David Bortolussi (The Chief executive Officer)
• David Muscat (Chief financial officer)
• John Grover (General Counsel and Company secretary)
• Paul Gould (General manager)
• Sandra Blackburn (Group general manager, human resource)

Before, making a business strategy or rule for governing the organization, the board of directors has to be very much concerned about the needs and desires of internal and external stakeholders. Otherwise, the company would have to face a massive mishap or collapse in business process like BONDS.

BONDS is popularly known as one of the most popular manufacturers of men’s and women’s underwear and clothing. It is primarily famous for a mid-range brand that is affordable for medium cost customers. Headquartered in Melbourne Australia, Mr. Allan BONDS has started his journey from Sydney first. Initially only Australian customers were the primary target group of BONDS (BONDSs.com.au, 2016). After that, BONDS occupied UK market as well as the market of Indonesia for enhancing the number of target group. After enhancing the market size of this company, Allen decided to reach in the global market for drawing the attention of international customers. Apart from underwear, BONDS provides varieties of clothing to the customers that include female cloths, socks, sleepwear, bras and tops and so many. This particular company has raised their heads by launching e-commerce business process as well. As a result, people from different geographical boundaries can use the products and service of this company.

Background of the company

Currently BONDS has faced a major issue because of which both the customers and the employees have faced immense dissatisfaction towards the business ethics of BONDS. As per the corporate governance rule, the board of directors this company has already set a business ethics, values and beliefs (ArAs, 2016). As per the business ethics and values, the manufacturers should always maintain product quality in order to keep a constant image in the clothing industry. Recently it has been observed that BERLEI has thrown a major threat to BONDS by increasing the product selling range. However, after conducting an effective market survey BONDS then decided to deal increase the availability of products by reducing its quality. This particular market strategy is completely against the business ethics of BONDS.

As a result, the regular customers of BONDS have showed their intense reluctance in order to use the service and products of this company. They have rather preferred to purchase the products of BERLEI. Consequently, the entire process of business has been hampered due to the rapid fall of service users. In this kind of situation, the management decided to reduce the salary structure of the employees in order to overcome the temporary crisis. This is one of the major causes of employee turnover (Brammer, Jackson & Matten, 2012). A large number of employees have decided leave the company due to unsatisfactory salary structure. Ultimately, the entire flow of business had to face a wretched consequence. 

Cost cut decision and its impact on the organization:

Cost cut is the systematic method of reducing the product cost in order to raise the profitability. While manufacturing a particular product BONDS like to segregate the manufacturing cost for a particular product in every segment categorically. For an example, in order to prepare an under garment of children, the business experts like to invest the cost for raw material, product designing, product packaging and many other aspects categorically. As a result, the organization can provide a quality product to the customers. In order to become a threat for the contemporary competitors, BONDS decided to reduce the product cost while compromising the product quality. As a result, the organization had to face a major corporate governance issue at the particular time. As a result, the service providers had to face innumerable difficulties to face the dissatisfaction of the customers. The impacts of cost cut decision are as follows:

• Decreasing the quality of products
• Receiving immense dissatisfaction from the customers’ end
• Affecting the images and reputations of the organization
• Communication gap between the service providers and the service users

Corporate governance issue in BONDS and its impact on organization

Decision of remuneration team and its impact

Having faced a serious recession on the entire business process, the remuneration team of BONDS has decided to reduce the remuneration of the employees in order to run the business process in the market. Reduction the employee remuneration is possessed with several major negative impacts that include:

• Dissatisfaction of the employees for providing effective services towards the organization
• Employee turn-over
• Feeling de-motivated to reach the business target
• Disobeying organization culture and behavior at the workplace
• Affecting the employee relation

CEO along with chairperson has actually taken the remuneration decision as well as cost cut decision at that particular time. As a result, a large number of employees had decided to leave the organization. This specific decision ultimately hampered the entire process of business more effectively.

Outline of research methodology:

After identifying the corporate governance issue, an effective research method is applied in order to deal with the issue properly (Walls, JBerrone & Phan, 2012). Research methodology is the systematic process based on which the necessary data and information are collected for accomplishing the research work. In this particular issue, positivism philosophy, deductive approach and descriptive research design have been used for collecting proper data.

Positivism philosophy is based on observation (Van den Berghe, 2012). As per the concept of this particular philosophy, positivists believe that observation is repeatable whereas phenomenon is isolated. With the help of positivism philosophy, a repeated observation can be made in order to receive an accurate data and information (Davies, 2012). In order to deal with this particular issue, a keen observation has been conducted why the employees tend to show their intense dissatisfaction for providing an effective service to reach the organizational goal. In addition, deductive approach is based on case study (Tricker, 2015). Case study is a specific method based on which the organizational issues can be identified. For this particular research, an effective case study has been made on the valid reasons of employee turnover from BONDS.

Data collection procedure is a systematic method based on which the necessary data and information are gathered for conducting the entire research successfully (Rothaermel, 2015). Data collection method is constituted with two types primarily that include primary source of data and secondary source of data (Khan, Muttakin & Siddiqui, 2013). Primary data has been collected from survey, interview, group discussion and so many. On the other hand, secondary source of data can be gathered from various books, journals, magazines and online websites and so on. In order to deal with this particular issue, secondary source of data collection technique is decided to select for accomplishing the entire research skillfully (Donaldson, 2012).

Cost-cut decision and its impact on the organization

Case study analysis has been selected in order to make an effective secondary research (governanceforstakeholders.com, 2016).  The case study is based on the impact of business ethics of BONDS. The impact of recession on the employees should be highlighted in the secondary data collection data collection procedure. On the other hand, with the help of case study analysis an in-depth overview has been provided on how BONDS had to face innumerable challenges after facing this kind of corporate governance failure (Donaldson, 2012). The impact of recession on the performance of employee has clearly mentioned in this particular case study.

Advantages and disadvantages of secondary data:

Secondary data collection procedure is possessed with both of its positive as well as negative aspects. The advantages of secondary data collection procedures are as follows:

• Time saving:

      In case of secondary data collection, the data analyst does not have to visit various organizations for acquiring knowledge and information regarding the research issue. Books and journals are the primary sources based on which data have been gathered.

• Accessibility:

Secondary data collection procedure is more accessible than primary source of data collection procedure. Organizational managers and the employees and customers are the only sources based on whom primary data can be collected. Sometimes, data analyst has to face many challenges in order to interact with the managers or the employees. Secondary data is more helpful from this perspective.

At the same time, the disadvantages of secondary data collection procedures are as follows:

• Inappropriateness of data:

Not all the online sources are reliable for providing an authentic data. Therefore, before maintaining secondary data collection procedure, the data analysts have to be assured about the authenticity of data.

• Lack of data quality:

If the data analysts fail to collect quality data from the various sources such as books, magazines and journals, the entire rhythm of research gets affected. Therefore, collecting quality data from numerous sources is one of major pathways for conducting the entire research work successfully.

The issue that BONDS has to face is truly recognizable for any business industry. The success of a business organization is highly dependent on the performance of employees. Employee turnover is undoubtedly a major issue that every business organizational managers should be concerned (Jo & Harjoto, 2012). In addition, employee turnover and lack of product quality are the major two issues, which are against corporate governance rules. That is the primary reason that this specific issue has been chosen as the research problem.

Decision of remuneration team and its impact

After conducting the entire research methodology and data collection procedure, it can be expected that the research outcome would be positive. The impact of employees’ turnover within an organization can be evaluated categorically after collecting appropriate data and information. At the same time, this research process is not devoid of some of its negative outcomes as well. The image and reputation that BONDS has gained so far would be hampered highly after conducting an effective research on it. As a result, the data analysis may have to face some major ethical as well as legal issues due to this (Kathy Rao, Tilt & Lester, 2012). Therefore, it can be expected that the data and information that would be collected about the organization should be proper and accurate.

Conclusion:

This specific study deals with the Corporate Government Issue held inside the organization due to which a large number of employees had left the organization. BONDS have already raised popularity in the clothing industry for a Variety of fashionable clothes and underwear. The ecommerce business process of BONDS has created a demand in Australian market. A large number of employees are intensely associated with the service process of BONDS. Therefore, this particular company should be concerned about their business ethics and practices so that employees do not intend to leave the service process. The chairpersons before making any business strategy should conduct an effective market survey in order to collect customer feedback.

Reference List:

ArAs, G. (2016). A handbook of corporate governance and social responsibility. CRC Press.

bonds.com.au, (2016). Buy Australia’s Best Clothing & Underwear Online – bonds. (2016). bonds.com.au. Retrieved 10 September 2016, from https://www.bonds.com.au

Brammer, S., Jackson, G., & Matten, D. (2012). Corporate social responsibility and institutional theory: New perspectives on private governance. Socio-Economic Review, 10(1), 3-28.

Davies, M. A. (2012). Best practice in corporate governance: building reputation and sustainable success. Gower Publishing, Ltd.

Donaldson, T. (2012). The epistemic fault line in corporate governance. Academy of Management Review, 37(2), 256-271.

Jo, H., & Harjoto, M. A. (2012). The causal effect of corporate governance on corporate social responsibility. Journal of business ethics, 106(1), 53-72.

Kathy Rao, K., Tilt, C. A., & Lester, L. H. (2012). Corporate governance and environmental reporting: an Australian study. Corporate Governance: The international journal of business in society, 12(2), 143-163.

Khan, A., Muttakin, M. B., & Siddiqui, J. (2013). Corporate governance and corporate social responsibility disclosures: Evidence from an emerging economy. Journal of business ethics, 114(2), 207-223.

Rothaermel, F. T. (2015). Strategic management. McGraw-Hill.

Tricker, B. (2015). Corporate governance: Principles, policies, and practices. Oxford University Press, USA.

Van den Berghe, L. (2012). International standardisation of good corporate governance: best practices for the board of directors. Springer Science & Business Media.

Walls, J. L., Berrone, P., & Phan, P. H. (2012). Corporate governance and environmental performance: is there really a link?. Strategic Management Journal, 33(8), 885-913.