Governance, Ethics, and Sustainability Assignment Sample

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MBA402 Governance, Ethics, and Sustainability Assignment Sample

Introduction

Property Millionaires is an organisation that provides real estate mentoring services and investment seminars to common people. It works on the philosophy that everybody can turn into property millionaire if they are supported and educated in the right way. The company is rapidly growing. In this report, a risk assessment of Property Millionaires is done with the help of Risk Exposure Calculator. For that purpose, a brief discussion on various pressure points associated with high growth, such as pressure for performance, the inexperience of key employees, and the rate of expansion is done. Furthermore, pressure points associated with cultures, such as level of internal competition, resistance to bad news, and rewards for taking entrepreneurial risks are also discussed. At last, pressure points associated with the information are also talked about.

Pressure Point Due to Growth

As it is given,last year, Property Millionaires witnessed dramatically an increase in sales as a result, the company is growing its operations across the country. No doubt this is very beneficial for the organisation to grow at this stage but this brings certain pressure on the organisation as well (Ashby, et. al, 2015). These pressures are:-

I. Pressure for performance

The senior employees in the company are concerned about the exciting and intense working environment. Due to high growth, Property Millionaires attracts the attention of the market and employees. The executives within the company might set some profit and ambitious targets. The consultants are provided with some big targets with little or no guidance from the regional manager or senior management team. The company treats the star performers (those with the highest sales) with special royalty. The overall working environment within the company is highly competitive and intense (Jordan, et.al 2015). If managed properly and in a planned manner, pressure for giving high performance can bring out entrepreneurial creativity and innovation. On the other hand, this pressure of performing high can also result in unnecessary fear of losing out job or compensation. Consultants would do anything to succeed even if they have to go with unethical practices or breaching the company's policies. In the worst case, they may misguide the customers just for meeting their target expectation (Schiller&Prpich, 2014). As per the current scenario of the Property Millionaires, the company is having high risks due to a large amount of pressure for performance among consultants. On a scale of 1 to 5, the score is 4.  

II. Rate of expansion

The next pressure point related to high targeted growth of Property Millionaires is the rate of expansion of the company. This also has pros and cons. With the large growth of the company, it is expanding the operations in different regions. As a result of which mass hiring is ongoing which is beyond the hiring and induction capacity of the firm. In addition to this, the expansion is faster and the present infrastructure of the company may not be able to handle the growth. This might result in lower performance standards as in the urge of hiring more and more employees, the company may end hiring people with little or no experience in the field of sales. However, this can be curbed by proper planning strategies and distribution of organisational resources (Block, et.al, 2015). In addition to this, if the company has the right infrastructure to train the newly hired employees, then the issues associated with the newly hired employees and rapid expansion in operations of the company can be resolved. This risk is mediocre and can be handled properly just by investing in employee training, induction, and infrastructure. On a scale of 1 to 5, the score is 3.

 III. The inexperience of key employees

The main aim of Property Millionaires is to increase the sales so to generate large revenue and profits. The services are sold by consultants and the potential customers are approached by them only. It is required to hire the employees or consultants that are highly trained and well-experienced in the marketing and sales field. As the company is expanding rapidly, it has been noticed that a large number of hiring is going on within the company while waiving any background checks about the previous experience or educational qualifications (Jordan, et.al 2015). This might result in hiring employees with a poor track record. In addition to this, the new employee often lacks the required skills and expertise (Giannakis& Papadopoulos, 2016). They don’t even be able to understand the job and field in which the company deals. Poor training and inexperience employees would not be able to convince the customers to buy the service. In addition to this, it may also decrease the satisfaction of the customers (Lewis, et.al, 2012). On the scale of 1 to 5, the score is 3.

Pressure points due to culture

It is a common saying that "Success can embolden risk-takers to much; money is loose, confidence is high." A healthy organisational culture encourages entrepreneurial initiatives. However, there are certain risks associated with it (Koudstaal, et.al,2015). These are:-

I. Rewards for entrepreneurial risk-taking

It has been seen in the case of a rapidly growing organisation that these companies are more into making false promises to their clients and patrons. These commitments are sometimes impossible to fulfil. This is a part of entrepreneurial risk-taking. No doubt such risks help the company in inducing innovation and motivation but on non-fulfillment of such promises, the company might lose its customer base (Simons, 1999). This is a huge risk as the company is totally dependent on the customer base (Hopkin, 2018). In the case of Property Millionaires, the executives may be making false promises with clients in order to fulfil their targets. Hence, it can be a huge risk. Therefore, it is rated with 4 out of 5.

II. Executive resistance to bad news

There are some risks associated with the flow of information within an organisation. Usually, the flow of information is pressure. It has been noticed in a successful organisation that their senior executive are reluctant to hear negative or bad news. They want themselves to hear positive news only. For those people, they appoint people who only tell the positive things about the business and feel confident about reaching performance goals. In such an organisation, people usually believe that "boss is always right as he knows the best." This mindset is harmful for the organisation as it hinders the innovation capability of the company and limits the growth of the company (Scott, et.al, 2018). To calculate the score related to this pressure point, it is required by the managers to ask themselves how much bad news they actually come across.As the regional manager and senior management understand the consequences of expanding and recruiting in such a large extent, the risk is quite low and this won’t hamper the company much (Simons, 1999). Hence, the score for this risk is 1 out of 5.

 III. Level of internal competition

As the company’s current culture rewards the top performers that have the highest target achieved. This has resulted in the intense internal competition within the company among the employees. However, this increases the pressure on the employees to perform well throughout the year. Employees are under tremendous pressure and may put the company's assets and even reputation on stake just to improve their short-term performance. Also, in such an organisational culture, there is a poor distribution of resources, risks, and rewards (Hopkin, 2018). However, if the employee gets caught in any illicit act, he/she may end up losing the job. The organisation is also at risk of losing competitive position due to a poor reputation in the market. The pressure of earning respect and rewards from the regional manager, the employees are under the constant pressure of performing high (Simons, 1999). Hence, looking into the repercussion of the level of competition in the company, this can be considered high risk for the company as well as for employees. The risk score is 4 out of 5.

Pressure points due to information management

I. Transaction complexity and velocity

Another concerning issue is the volume and velocity of payment transactions’ complexities. With so much of sales taking place, the present IT system may not be able to handle so much traffic at once. The overloaded system may not be able to transact the money to the right account. In addition to this, there are dangers that managers may not be able to scrutinise the transaction and cross verify the payment (Hull, 2012). With the inadequate number of computer systems and overloading of existing system, the Property Millionaires may not be able to gather the user data and their personal information in a proper way. This may result in losing the potential client's information for future tracking and follow-ups. If this happens, then the company's growth may slow down (Simons, 1999). Since this can be resolved easily, therefore it can be placed at a mediocre place in terms of impact. The score is 3 out of 5.

II. Gaps in diagnostic performance

It has been noticed that a rapidly successful organisation usually have tremendous pressure on internal reporting systems that is responsible for evaluating various critical success factors, such as return on investment, sales gap, service, quality, etc. This information is crucial for preparing the organisation for any crisis situation (Ashby, et. al, 2015). The senior management is required to refer to such information when it is required the most. The rapid growth of Property Millionaires may result in poor attention of senior management. This may cause some serious issues with the organisation and its future planning due to lack of or poor management of data. The useful information would not be able to reach the decision-makers and as a consequence of which, the company won't be able to sustain the success rate (Simons, 1999). Hence, this is considered as a crucial issue. The score is 4 out of 5.

 III. Degree of decentralised decision making

This type of pressure point develops in an organisation that expands rapidly. This is because to support the pace of expansion, the local managers and supervisors are provided some sort of autonomy to make decisions (Simons, 1999). This is also called a decentralised decision-making process. Usually, the senior level management in a rapid organisation like Property Millionaires is involved in matters of goal setting, resource allocation, and performance reviews. No doubt the decentralised decision making is crucial in an organisation where rapid decision making is required, but it can put the organisation in jeopardy as the local managers lack the required experience and are less capable to respond to market demands effectively (Singh, 2016). They may end up making poor decisions and can affect the growth of the company. In the case of Property Millionaires, only regional managers, and senior management make the decisions (Simons, 1999). Such decentralization is not present at a high level. Hence, the risk due to decentralisation is low. A score of 2 out of 5 is given to it.

Conclusion

In today’s time of market instability and rapid transformation, businesses are required to figure out and analyse the potential issues that can have a disastrous impact on the business. Organisations nowadays give large emphasis oncritical projects or key business initiatives so as to avoid any risks.

From the total risk analysis and calculator, it is determined that the overall risk rating of the company is 28 out of 45. This can be considered mediocre. Hence, the company is at medium risk and it needs to reduce some sort of risks from its current functions.

References

  • Ashby, S., Palermo, T., & Power, M. (2012). Risk culture in financial organisations: An interim report.
  • Block, J., Sandner, P., & Spiegel, F. (2015). How do risk attitudes differ within the group of entrepreneurs? The role of motivation and procedural utility.  Journal of Small Business Management,  53(1), 183-206.
  • Giannakis, M., & Papadopoulos, T. (2016). Supply chain sustainability: A risk management approach.  International Journal of Production Economics,  171, 455-470.
  • Hopkin, P. (2018).  Fundamentals of risk management: understanding, evaluating and implementing effective risk management. Kogan Page Publishers.
  • Hull, J. (2012).  Risk management and financial institutions,+ Web Site(Vol. 733). John Wiley & Sons.
  • Jordan, B. D., Miller, T. W., &Dolvin, S. D. (2015).  Fundamentals of investments: valuation and management. McGraw-Hill Education.
  • Koudstaal, M., Sloof, R., & Van Praag, M. (2015). Risk, uncertainty, and entrepreneurship: Evidence from a lab-in-the-field experiment.  Management Science,  62(10), 2897-2915.
  • Lewis, M., King, F., Arnold, T., Wright, W., & Pettit, J. (2012).  S. Patent No. 7,970,701. Washington, DC: U.S. Patent and Trademark Office.
  • Loosemore, M., Raftery, J., Reilly, C., &Higgon, D. (2012).  Risk management in projects. Routledge.
  • Patterson, F. D., &Neailey, K. (2002). A risk register database system to aid the management of project risk.  International Journal of Project Management,  20(5), 365-374.
  • Schiller, F., &Prpich, G. (2014). Learning to organize risk management in organisations: what future for enterprise risk management?.  Journal of Risk Research,  17(8), 999-1017.
  • Simon, M., Houghton, S. M., & Aquino, K. (2015). Cognitive biases, risk perception, and venture formation: How individuals decide to start companies.  Journal of business venturing,  15(2), 113-134.
  • Simons, R. (1999). How risky is your company?.  Harvard business review,  77, 85-95.
  • Singh, J. V. (2016). Performance, slack, and risk taking in organizational decision making.  Academy of Management Journal,  29(3), 562-585.
  • Scott, T., Mannion, R., Davies, H., & Marshall, M. (2018).  Healthcare performance and organisational culture. CRC Press.
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