MBA402 Governance, Ethics and Sustainability Case Study 2 Sample

MBA402 Governance, Ethics and Sustainability Case Study 2

Assessment Description

Analyse a short Case Study document and prepare a short, written report.

A thorough understanding of how a company’s Code of Ethics must be worded to effectively communicate behavioural expectations is an essential managerial competency.

The Learning Outcomes you will demonstrate in performing this assessment include:

1: Evaluate the success (or lack thereof) of an organisation's governance responsibilities

2: Analyse the legal and regulatory environment in Australia with a view to understanding its impact on business strategy

3: Analyse the role of the board in the assessment of strategy and risk, and the way in which this expertise can be better utilised

4: Apply corporate sustainability practices in a real‐world example and examine their appropriateness in a variety of contexts

Instructions

1. Read the Case Study document which will be made available to you on Monday, Week 7 in MyKBS under the Assessments tab.

2. Prepare a short, written report answering the questions in the Case Study.

3. Include at least five academic references from academic journals and textbooks, as well as full details of informational sources you consulted as part of your assignment research.

Please refer to the assessment marking guide contained in the Case Study document to assist you in completing all the assessment criteria.

Case study

Morton Returns (widely known as MR) is a land remediation company, founded in 1990 by brothers Joseph and Andrew Morton. From humble beginnings at the fringes of the WA mining industry, the company has expanded to operations across all Australian states and territories. MR relies heavily upon the services of consultants and contractors.

Nine months ago, the company formed an official relationship with the mining company OreCorp, to further expand its operations across Australasia. The previously family- dominated company recently expanded and restructured its Board of Directors in line with ASX CGC (2019) recommendations, in preparation for stock market listing within 4= months. However, many Executive roles are still occupied by family members.

You are an intern in the Human Resource Management (HRM) unit, reporting directly to the Head of HR, Deb Chaudhary. You love your work and the variety of tasks landing on your desk each week. As part of your induction into your role, you briefly researched the land remediation industry:

https://www.environment.vic.gov.au/sustainability/victoria-unearthed/about contamination/remediation-and-clean-up
https://enva.com/case-studies/contaminated-soil-treatment-methods

Recently, MR has been in the news for all the wrong reasons, becoming the focus of three potential scandals:

(1) An employee with disability has filed a complaint, alleging that MR failed to comply with the Disability Discrimination Act. The complaint mentions failure to observe reasonable workplace adjustments, including wheelchair access. The complainant alleges that MR management failed to protect him from systemic bullying and harassment in the workplace. He references humiliating initiation ceremonies and practical jokes played on him, by other staff members.

(2) Despite submitting a competitive and technically sound tender, MR lost the contract for a series of small but lucrative land reclamation projects with the Queensland Government Department of Environment and Science. This poses a setback for MR’s goal of expanding its Queensland operations. The MR Board has been informed that the trusted consultant who authored the MR tender, may own shares in the rival company that won the tender.

(3) A recent company audit discovered that one of the WA contractors working to clean land for MR, has been exaggerating their expenses, regularly claiming for twice the personnel and workhours used on recent land reclamations.

Ethics Committee

Recently, the MR Board of Directors created an Ethics Committee, charged with writing a Code of Ethics in preparation for the company’s stock market listing.

The first meeting of the Ethics Committee raised a series of questions, generating action points for next month’s meeting. The task of answering those questions has fallen to HR. Deb Chaudhary made a start researching online links, until she was urgently called to Western Australia to deal with scandal (3).

Deb knows you are studying MBA at KBS and possess the necessary research and writing skills to work her rough notes and online research links into a series of short answers to the Board’s questions. She has asked you to finish the task. You have two weeks to return the completed template (separately supplied) to the company Secretary.

Deb’s template is based on the action points memo, copied below. While Deb thinks her proposed links are sufficient to answer most of the questions, she encourages you to include a few additional informational sources at your discretion. Deb has instructed you to at least use some of the references she provided.
Deb’s notes remind you that the members of the Board Ethics Committee are time-poor. All replies to the Ethics Committee questions are capped at 300 words each, or a total of 1,500 words across the 4 main questions. However, you may take up to 600 words to answer Question 2.
Full details of all web links and other sources consulted should be provided in a

References List at the end of the Answer Template.

Solution

The ‘Should we?’ test assists in the determination of the right course of action in a workplace. The major focus of the concerned test is taking rights actions and confirming the same with the stakeholders (Commonwealth Bank, 2023). The acceptance of the decisions by the stakeholders requires an organisation to stand by them, irrespective of circumstances. The importance of the test lies in determining whether the decisions and actions taken are ethical and will benefit the stakeholders and the broader community. The selected test is highly complex and requires constant evaluation of decisions and consecutive actions. However, such a test is necessary for addressing ethical complexities and can help in making ethical choices in the workplace.

The scandal involving Morton Returns (MR) falls under the no stage of the 'should we?' test. The concern stage emphasises that no proper actions and compliance have taken place in MR. For instance, the appropriate non-discrimination strategy has not been taken for disabled persons. The management's decisions lacked efficacy and hampered the stakeholders and employees for MBA assignment expert.

A simpler one-stage test that can be applied to understanding the scandal of MR is the 'newspaper test'. The concerned test was developed by Warren Buffet, an American billionaire and philanthropist. The sole attention of the test is to judge every action beyond such legal standards (Popomaronis, 2019).

The scandal in MR has resulted from the absence of safeguarding disabled human resources from discrimination, harassment and bullying. The ‘newspaper test’ can allow the concerned organisation to determine the implications of the humiliating action. The test highlights the consequences of publishing an organisational scandal on the brand's reputation, recognition and stakeholders. Therefore, the concerned test needs to be applied in MR to assess the consequences of discriminatory practice. The application of the test will create regret among the employees engaged in harassing and bullying the disabled workforce when such an instance is published in the newspaper.

1. Some factors act as norms in a company that a family runs. The importance of proper management is often affected by nepotism and that leads to a negative impact on the entire firm. Nepotism is seen to have a damaging effect on many organisations, and it is seen as a disease that gradually gulps the foundation of any kind of firm (Venglovicova, 2023). Adding to this, diminished or declined innovation, a toxic culture and diminished performance eventually result from paying more heed to nepotism and this is damaging to the success of a company. On the other hand, nepotism is prone to destroy the positive work environment in an establishment, along with demoralising the employees. At the same time, nepotism or prejudiced favouritism tends to decrease the productivity and creativity of a firm and corrode the work quality of every department (Proctor, 2023). On the other hand, loyalty is important in a family-run business to steer clear of any negative effects on the firm's finances and other aspects. Adding to this, honest, open, and frequent communication among the members helps a family business flourish as there is a commitment among the people working there together (Sorenson and Milbrandt, 2023). As per the case study, Morton Returns is a family business where the family members occupy the executive roles. Although loyalty is maintained in the family business, some changes are still required to let other employees have a fair chance of getting promoted to executive positions in the firm. As per some specific laws or norms, there are two different variables of nepotism: preferential policy and nepotistic association (Kaushal and Ghalawat, 2021). Thus, the HR of the firm, Mr Deb Chaudhary, needs to focus on this matter of nepotism and try to provide fair chances to all the employees so that the productivity of the company is not affected.

2. The development of a situation when the aim and concern of two or more people are not compatible is known as a conflict of interest (Pathak, 2023). The case study involves scandals reported by employees of Moton Returns, including cases of bullying and harassment. The business activities that need to be discussed in the code for conflict of interest include disclosing the materialistic interest of an individual and the interest of the immediate family members of an individual. The Australian Public Service (APS) ensures that the personal interest of a person does not conflict with any individual's interest. The material interest of an individual deals with activities such as informing the agency holding security clearance if the personal circumstances of an employee change. Moreover, the code must mention to whom the employee must address to avoid conflict of interest. Apart from these, details regarding procurement and recruitment must be addressed, which involves codes for employee promotion and details of appointment to statutory positions (Australian Public Service Commission., 2022). Besides these, other material interests which must be described in the code of conflict involve codes for reviewing fines and penalties made to an employee by an agency. Moreover, the code must involve selecting employees to become committee members or board members by voting. This helps in making the employees feel prioritised for working for an agency. Furthermore, the code for conflict of interest must involve a detailed description of the roles and responsibilities of employees and must mention the probity concerns of the agency. Moreover, the code must involve the disclosure of financial interests such as shareholdings, directorship and other financial responsibilities such as real estate and self-managed superannuation funds (Australian Public Service Commission., 2022). Apart from these, the code must involve rules for obtaining consent of immediate family members of employees before gathering personal details of employees' family members. This makes the code comply with the Privacy Act 1988 which comes under Australian Privacy principles. Moreover, the code must comply with the Archives Act 1983 which involves conducting audits for internal control circumstances in an agency. Moreover, scandals related to shareholding by a trusted consultant of MR holds shares in MR's rival company. Problems related to exaggerated expenses by Mr company due to lack of proper finance management. Moreover, there are cases of humiliation and exaggerated employee work hours due to bad operation management.

Harassment refers to the situation where an employee feels threatened by the behaviours of others within the same work culture. Often, it has been seen that due to harassment, employees start to feel demotivated, and eventually, this negative behaviour ruins the overall job experience (Online Diversity, 2023). Harassment can be done by anyone within a certain organisation, such as a supervisor, colleague, client, consumer, vendor and many more. At the same time in major cases, employees prefer to keep silent as they do not have any idea regarding how to respond. On the other hand, coworkers often offer harassment unintentionally, as they often tend to lighten up the mood by making up jokes. However, as the jokes continue in carrying personal intel of an individual or any disabilities of them, it turns into harassment. However, discrimination is a completely different concept from harassment. Discrimination refers to unequal behaviour toward others, as certain factors affect the viewpoints of many people. Disability discrimination is the worst kind of behaviour that can occur within any organisational culture. In major cases, it has been seen that people having disabilities receive different behaviours, lesser favours and opportunities from the organisation and their coworkers as well (Australian Human Rights, 2022). This factor is also known as direct discrimination. There are several similarities between harassment and discrimination. It can be said both of these behaviours occur due to biased and unethical viewpoints toward others. In both cases, victims face severe emotional damage, which eventually causes anxiety, depression, job dissatisfaction and many more. However, the slightest difference between these two factors is harassment often tends to take place without anyone's attention. At the same time, discrimination is completely intentional, as people decide to see others as different and inferior (Hebl, Cheng and Ng, 2020). As an example, if a group of people is making an obvious joke about the failure of one of their colleagues, it can be considered harassment. At the same time, if a group of people is offering biased behaviour to certain people and providing fewer opportunities without any concrete evidence, then it is an act of discrimination. However, both of these behaviours are unacceptable within a workplace, as they create a negative working environment and influence lesser productivity. More importantly, both the organisation and the employees must remember that every individual has reached that position through their capabilities. Therefore, they do not deserve any setbacks from others.

The term corruption encompasses the abuse of entrusted power to achieve private benefits. Corruption mainly causes inequality, economic discrimination, environmental crises and others (Transparency, 2020). For instance, mining companies often excavate excessive materials from under the ground which causes increased profitability. However, it has a severe impact on the ecological balance. Therefore, these business operations can be termed as corruption to retain private benefits.

On the other hand, fraud is an operation which is associated with the benefit and intention to hamper others. Fraud is a behavioural intention for a set of individuals that is set to increase gradually with time. For instance, business scams have become more common in recent times in terms of customers or employees scamming the business value out of money. Considering the case study, the scenario related to land remediation deals and its failure due to consultant's fraud and providing benefit to the rival company.

Hence, reduced transparency and lack of business ethics trigger cases such as corruption and fraud, resulting in monetary loss for the affected party (Ravichandran, 2023). On the other hand, corruption and fraud are combined to a certain limit. As an example, bribery is a fraud operation to a certain limit where it becomes the system, and a certain number of stakeholders start to believe the same as a corrupted process to achieve the desired goal. Therefore, it can be stated that accumulated fraud instances and continuation of the same for a long time tend to be corruption. Additionally, corruption and fraud are differentiated with the evaluation of social costs. For Instance, corruption causes a loss of trust and reduced participation in the social development and reliability of the government as well. Therefore, corruption is completely different from fraud in terms of a wider range which needs to be mitigated effectively by MR to retain its business transparency.

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Hebl, M., Cheng, S.K. & Ng, L.C., 2020 Modern discrimination in organizations, Annual Review of Organizational Psychology and Organizational Behavior, Vol. 7, pp.257-282. DOI: https://doi.org/10.1146/annurev-orgpsych-012119-044948

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