MBA402 Governance Ethics and Sustainability

Prepare a risk assessment report on the investments seminar company using the Risk Exposure Calculator and specifically address:
A. Pressure points due to growth
i) pressure for performance
ii) rate of expansion
iii) inexperience of key employees
B. Pressure points due to culture
i) rewards for entrepreneurial risk taking
ii) executive resistance to bad news
iii) level of internal competition
C. Pressure points due to information management
i) transaction complexity and velocity
ii) gaps in diagnostic performance
iii) degree of decentralised decision making

This paper provides an analysis of the various scores associated with risks the organization faces due to its expansion and success. It concerns itself with pressures emanating from the growth of the company, culture and information management (Simons 2014). The major argument of this paper is that Property Millionaires has failed to efficiently and effectively manage the various pressures it is facing, due to its successes.

Growth Pressure Points:

Pressure for Performance

From the case study, it is possible to assert that the pressure for performance is very high, and this has resulted to the emergence of unethical behaviors that are a threat to the existence of the company; hence the score for this pressure is 5. It is important to note that a company that experiences growth normally attracts the attention of its employees and the market that it operates under (Vom et al,. 2015). In this case study, Property Millionaires has increased in value and it is making extensive growth, as a result it has caught the attention of its managers and employers. To keep up with the growth, the company has hired a large number of consultants, and some of them are not well-qualified, to handle the business model of the company (Eden and Ackermann 2013). However, because compensation is based on the performance of the consultants, there is a lot of pressure from these consultants to work hard and achieve positive results (Simons 2014).

Furthermore, the decision by regional managers to have a special treatment for high ranking consultants is a major factor that is responsible for increasing the rates of competition amongst consultants, who go to an extent of using unethical means for purposes of attracting new customers for the organization (Carroll and Buchholtz 2014). For instance, customers complained that they were treated well before becoming customers of the organization, but after agreeing to become customers, the rates of service was poor and unacceptable (Jennex, Smolnik and Croasdell 2014). This has emerged because of the high pressure to succeed that is placed on consultants, who will use all means in their possession, including unethical means for purposes of succeeding.                                 

Rate of Expansion

The score for this section is 5, because the company has not managed to properly develop new resources to help in its expansion. The company has grown to a medium sized company and it now has more than 100 members of staff, hence the need of acquiring new resources that can help in its expansion (Simons 2014). However, the company has failed to carefully plan for the acquisition of these new resources, and this includes new members of staff. The result of this failure is the employment of less skilled workers and consultants, who are unethical in the manner which they carry out the objectives of the company (Goetsch and Davis 2014).

Furthermore, because of the inability of the company to plan carefully for its rate of expansion, the managers of the organization have a limited access to data of its employees that depicts their performance. On this note, the managers only focus on the sales figures provided by consultants and their monthly reports. This is unacceptable, and exposes the company to poor managerial decisions, regarding the quality of staff they have (Smith, Gonin and Besharov 2013). On this note, the inefficiencies that occur because of the rates of expansion are very high.    

Inexperience of key employees

The score for the inexperience of these employees is 5, and this is because their inexperience exposes the company to the dangers of a decline in its operations. For example, the actions of inexperienced consultants have led to an increase in the number of unsatisfied customers, who complain of poor services from the employees of the organization (Simons 2014). Consultants are some important members of the organization, and this is because they are responsible for generating the sales of the company (Rice 2013). However, some of them are inexperienced, and are only driven with the preferential treatment the regional managers give successful consultants. This is why the after sales services offered by consultants is poor, resulting to complaints from their customers. Poor coordination amongst the senior members of staff is another problem that is brought about due to inexperience, and this normally results to a high rate of failure for the emergence of new seminars.               

Culture Pressure Points:

Rewards for entrepreneurial risk taking

The score for risk taking initiative for this company would range at 1. This is because the entrepreneurial risk taking activities of the company does not expose it to the dangers of a decline. For instance, the company sets a very high standard for the consultants of the company to achieve, in regards to the number of sales they have to make (Simons 2014). By creating these high targets, and developing a reward system for high performers, the company is encouraging its consultants to take risks. The senior management also has a group for risk taking, and this group is responsible for coming up with new seminars that can be sold. Despite the high rates of failure, this is an entrepreneurial risk taking initiative (Ferrell and Fraedrich 2015).          

Executive resistance to bad news     

The leaders of Property Millionaires do not encourage people to give them bad news. This is because the executives are surrounded by yes men, who fail to criticize them or tell them the truth, when something bad happens to the organization (Simons 2014). It is important to note that failure to get the right information; however bad it is, may lead to the failure of the management of an organization, and possible termination of their contracts (Hill, Jones and Schilling 2014). A good example of this situation is the manager of Kmart, Mr. Joseph Antonini, who did not value bad news, and surrounded himself with yes men. It is important to note that the most important assets of an organization are people who are telling the truth, and speaking about the obstacles and the imminent dangers facing the company. On this note, the company will get a score of 5, because their resistance to bad news is very high.

Level of Internal Competition:

The score for this level of pressure is 3 because it only affects a section of the workers, namely, the consultants. It is important to denote that consultants view the preferential treatment given to other employers who perform well as a zero sum game; hence, they use every means for purposes of accessing such kind of benefits. On this note, the competition and rivalry amongst consultants is ruthless, and it negatively affects the manner which they interact with their customers, to the negative. However, the level of competition amongst the senior managers and the regional managers is very low, and they do not have any incentive to make them vigorously compete with one another.          

Information Management Pressure Points

Transaction Complexity and Velocity

The risks associated with transaction complexity and velocities are high, basically because of limited control that the regional managers and senior managers have towards other junior officers. For example, the regional managers do not have an access to the necessary tools and resources that can enable them to monitor the performance of consultants who are working under them. This makes them to rely basically on the results of the consultants, as opposed to identifying the methods that consultants have used to achieve the results. Furthermore, this inability by the managers to effectively monitor the performance of consultants is because of the increase in the number of employees, and their inability to understand the complex nature of employee relations (Bak, et al 2013). Additionally, the creativity of the senior management is limited to individual tasks assigned to the senior management so that they can come up with innovative seminars and products for the company. However, this is not efficient because of the high rates of failure that characterizes such initiatives. On this note the score for this section is 4.   

Gaps in diagnostic performance

The best method of calculating this score is the analysis of the any feelings of frustration by the management of the organization. This is because of the difficulty and the incapability of getting the right data that can help in making decisions. This situation is evident amongst the regional managers who are not able to get performance data for their consultants; instead, they rely on seminar sales data for purposes of determining the performance of their consultants. This situation frustrates these managers and affects their incapability to work effectively and efficiently. On this note, this section will receive a score of 3, basically because it is one department that is affected by the problem, as opposed to the other departments of consultants and senior managers.

Decentralization of decision making  

The company is highly decentralized, and regional managers are allowed to make decisions concerning the welfare and performance consultants (Snell, Morris and Bohlander 2015). However, these managers are not working to the interests of the organization because of the kind of decisions they are making and the process they use to make these decisions. For instance, the regional managers are surrounded by yes men, who are not able to give them the actual state of the company, and this limits their effectiveness to develop policies that will help the organization. Moreover, decentralization within the senior management is high. Senior managers have the autonomy of independently developing new seminars, but this is not working for the organization because there are high rates of failure. On this note, the score risk for this section is 5.

Conclusion

In conclusion, the total score of the risk calculator is very high, which stands at 81. This means that the company is unable to effectively handle its success, and this may result to the decline of the company if proper policies are not enacted for purposes of reducing or mitigating the identified risks.

Reference List

Bak, C.A., Vogt, L.H., George, W.R. and Greentree, I.R., 2013. Management by team. Logistics Information Management.

Carroll, A. and Buchholtz, A., 2014. Business and society: Ethics, sustainability, and stakeholder management. Nelson Education.

Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management. Sage.

Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases. Nelson Education.

Goetsch, D.L. and Davis, S.B., 2014. Quality management for organizational excellence. Upper Saddle River, NJ: pearson.

Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.

Jennex, M.E., Smolnik, S. and Croasdell, D., 2014, January. Knowledge management success in practice. In System Sciences (HICSS), 2014 47th Hawaii International Conference on (pp. 3615-3624). IEEE.   

Rice, A.L., 2013. The enterprise and its environment: A system theory of management organization (Vol. 10). Routledge.

Simons, R. 2014. How Risky Is Your Company? Retrieved June 01, 2017, from https://hbr.org/1999/05/how-risky-is-your-company

Smith, W.K., Gonin, M. and Besharov, M.L., 2013. Managing social-business tensions: A review and research agenda for social enterprise. Business Ethics Quarterly, 23(03), pp.407-442.

Snell, S.A., Morris, S.S. and Bohlander, G.W., 2015. Managing human resources. Nelson Education.

Vom Brocke, J., Schmiedel, T., Recker, J., Trkman, P., Mertens, W. and Viaene, S., 2014. Ten principles of good business process management. Business Process Management Journal, 20(4), pp.530-548.