Brendan Case Study

Part 1 Significant Issues Arising from Agenda Items

Previous Board meeting minutes – WHASP future goals

In the agenda item, titled Previous Board meeting minutes, it is evident that the firm Worksite Health and Safety Professional Services Pty Ltd lacks any formal strategic planning materials. This apparent lack of corporate strategy papers is abominable in an era where corporate strategy takes precedence in any organization of its size. Strategic plans are paramount to the success of a firm, especially to “outline the strategic direction of the firm, coordinate action and assist in achieving goals” (Mazzarol 2004).

To me, personally, it seems that without a corporate strategy the firm has no definitive long term goals. Without a proper strategy document in place, the Chairman and owner Brian Stander chooses to run the business much like a small business where most often strategic decisions are “based more on pragmatic intuition than academic principles”(Ennis 1998). Moreover, it’s evident that the lack of corporate strategy has blind-sighted Brian Stander; while businesses of similar size are grasping opportunities offered by the exponential growth of social media marketing, WHASP is struggling to retain long-standing customers. It is thus imperative to implement strategic management which “seeks to coordinate and integrate the activities of the various functional areas of a business in order to achieve long-term organizational objectives” (Boundless 2014).

Questions to be asked at next Board meeting:

Why does an established firm like WHASP not have formal corporate strategy documentation?
How can the board members contribute their time and resources to help integrate strategic management decisions?
Decide whether the formulation of such documentation can help turn around the failing position of the company in its niche market.

Recommendations:

I strongly believe that the Board Strategy Day, as suggested by the CEO, should be held immediately. This platform can be used to inculcate the importance of formal corporate strategy and therefore begin work on such documentation. It is imperative that all board members are present at this meeting and are in a capacity to offer input for a critical discussion.

With the poor financial performance being faced by the organization, I am certain that Chairman Brian Stander will not be motivated to utilize valuable resources and time towards the development of corporate strategy. The firm is currently undergoing cost-cutting measures and as such the Board may not be willing to expend resources for the documentation process.

Board Succession

In the memo sent by Gail Wyatt to Chairman Brian Stander, she presses on the issue of highly skilled Board members and how they fail to contribute to effective decision making. In a Board comprised only of seven members, including the Chairman, it is highly imperative that each member brings their executive management skills to the table. However, as Gail Wyatt points out, several members are not offering substantial contributions, i.e. Pierre Joubern dares not to contradict his father-in-law Brian Stander and Adrianna Williams has missed nearly half of the recent board meetings and does not offer creative insight when she does attend a meeting.

Currently, the Board at WHASP appears to be highly incoherent as the firm struggles to stay afloat in a highly competitive market. To add value to the firm’s operations and attract investors as well as retain former ones, it is extremely important for the Board to be on the same page. Not only will a unified Board instill confidence in investors, it will also allow the members to develop creative solutions to a plethora of problems currently facing the organization.

Questions to be asked at the next Board meeting:

Do you feel that certain factors are holding you back from realizing your full potential as a contributing Board member?
Are you confident that you are giving the duties of this Board sufficient time and creating valuable contributions to its growth and progress in a highly competitive market?

Although I will put forward these questions at the next Board meeting, I feel it would be better if the first question was asked in confidence. This is because some members as mentioned before are certainly influenced by the presence of others on the Board and feel restricted in conforming to decisions that may not be in the best interest of the firm.

I expect that I may have to delve deeper into this situation because it is highly likely that members will not be easily accepting of their own shortcomings. Members must be assured that honest responses to these questions will not land them in trouble but will allow the Board to function as a more coherent unit, ready to deal with the challenges of the emerging market.

Opportunity to merge with Hong Kong based company

In the paper prepared by the CEO of WHASP, Jane Li, it is evident that the Chairman is interested in an offer to merge with the Hong Kong-based company, Power and Lay. Power and Lay operates in a similar market as WHASP and offer health and safety professional services to its clients. Given the information provided in the CEO’s letter to the directors, there are numerous factors which are opposed to the merger. First of all, it is apparent that unlike WHASP’s direct competitor, CHASP Pty Ltd, Power and Lay continues to conduct business with clients on face-to-face basis. This is crucial to note because WHASP is also considering a merger with CHASP Pty Ltd. CHASP is emerging as a market leader as it effectively utilizes the tools of social media marketing and uses virtual interactions with clients to cut down on travel costs and resources. I personally believe that a merger with CHASP will be more profitable to WHASP, as the former can combine its technology prowess with the latter’s influential, long-standing client list.

The merger with Hong Kong’s Power and Lay does not appear profitable at the time especially due to the cultural divide. The firm is already attempting to recover from a weakened financial position and such a merger will place greater pressure on its dwindling resources. To merge with an organization that has such start cultural contrasts requires both financial resources and time, none which can be currently spared by the organization.

Questions to be asked at the next Board meeting:

Which merger do you believe will be more profitable and suit our best interests? Why?
How will a merger with Power and Lay improve the bottom line at our organization?
Do you believe the organization can expend the resources required to carry out the merger with Power and Lay?

Recommendations:

I believe that a merger with a like-minded company, operating in the same market as ours will be more profitable than joining hands with the Hong Kong-based Power and Lay. It is highly recommended that the strategic documents and financial reports of CHASP Pty Ltd are examined by experts to determine whether such a merger will indeed prove profitable. It is also important for the firm to maintain friendly relationships with Power and Lay as such a partnership can lead to the firm expanding its operations in the Asia-Pacific region in the future, when financial statements have recovered.

Due to the fact that CHASP Pty Ltd is a direct competitor in the market and has attracted clients as well as employees from WHASP, the Board members may be hesitant to enter into a partnership. Moreover, if financial health of the firm continues to deteriorate, a merger may no longer be possible and instead CHASP may look into an acquisition or takeover.

New Australian anti-bullying laws and their impact on business

Due to the fact that a WHASP employee already came under fire for harassment charges, it is absolutely essential that the employees of the organization are well-informed about the changes to the anti-bullying laws in Australia. As is stated in my due diligence report, at the time of the CEO’s extermination from the company there was no ‘policy on bullying, sexual harassment or EEO/Discrimination’. There is no documentation to support that such manuals have since been developed for the organization. With the recent change in laws, it is important that the Board create manuals outlining policies against harassment and bullying and relate these to all employees, contractors, consultants, volunteers etc.

Questions to be asked at the next Board meeting:

Does the organization have a policy manual for bullying, sexual harassment and EEO?
If so, are those affected by these policies familiar with the implications in such cases?

Recommendations:

As a Board member it is my duty to bring this issue up at the next Board meeting, especially since there have been reforms in regulations. In the case that such a manual has not been developed to date, I may face stringent resistance from Board members, particularly the Chairman himself for utilizing already dwindling resources on this. However, in order to safeguard the organization’s brand, it is important that the firm has a formally document policy on bullying and harassment in case a situation similar to the one in 2011 arises again.

CEO Report

In order to regain its once prosperous position in the health and safety market, it is crucial that WHASP invest into creating an online presence. Although the initial costs of launching an e-business will be significant, the gains that the firm can gain from such a business model will be profound as exhibited by CHASP. In the long run, the organization will be able to cut down on travel costs, overhead expenses for office space rents and employee remuneration as it takes its business online. Creating an online presence is guaranteed to “impact sales and marketing efforts immediately” as the firm has the potential to expand its customer base to consumers in the international markets (Exploring E-Commerce 2015).

Questions to be asked at the next Board meeting:

Will creating an online presence really help improve the firm’s bottom line or is it all just hype?
If the organization is willing to take its business online, a strategic document should be prepared, outlining mission statement, vision and milestones in completely taking the business online.
How can WHASP utilize its current resources to establish an online business?
Discuss costs involved in establishing an effective online presence.

Recommendations:

Prior to the next Board meeting, it is suggested that Board members conduct individual research exploring the advantages and disadvantages of creating an online presence. This will allow the Board members to come prepared for the meeting and will facilitate discussion in a more constructive manner. I believe that after the members conduct research on their personal time, they will understand that the only way to improve the firm’s financial performance is to explore expansion into the virtual markets. It is expected that members will be hesitant to allocate resources, however, may understand that it is a necessity if the firm wants to continue to move forward and compete in a highly competitive marketplace.

CFO Report

The CFO’s report indicates that the firm’s cash position has deteriorated considerably since the last Board meeting due to the emergence of direct competitor, CHASP Pty Ltd. Moreover, as indicated earlier, investors are quickly losing confidence in the firm and are threatening to pull their shares which have failed to receive significant dividends since last year. To prevent investors from pulling their shares, it is absolutely crucial that the organization determine how best to restore investor confidence (Marks 2012). As WHASP is already losing clients as well as employees to its competitor, investor confidence can be key to sustaining financial health until better opportunities arise.

Questions to be asked at the next Board meeting:

How can the firm assess investor confidence levels at the current moment?
How can the Board members boost investor confidence and convince private investors to remain loyal to the firm as it works out a strategic plan for the future?
What incentives can the Board offer to investors to persuade them to continue their investments in the firm

Recommendations

In light of the aforementioned recommendations, I believe that the firm can truly gain back investor confidence if it can reveal its future plans to those investors. At its next meeting, the Board should discuss the formulation of a document targeted towards the investors which will include plans for creating an online presence and the possible merger with CHASP. The investors should also be given copies of the firms’ formal corporate strategy after it has been devised and developed as a hard copy. Moreover, the two private investors who have significant shares should be approached personally by the Chairman and any misgivings they might have can be discussed at length thereby easing tensions. I believe that the Board will welcome any discussion about restoring investor confidence and that Chairman Stander will be more than willing to conduct face-to-face discussions with them since they have invested in the firm for a long time. It may be assumed that Brian Stander has personal connections to the investors and their trust can be regained if proper documentation is presented to them.

Part 2

I will be more than honored take over as Chairman for the Risk Committee which was formerly chaired by Brian Stander himself. However, after perusing the terms and references of the Risk Committee, I have some reservations. First of all, I am not certain that the committee members, Adrianna Williams and Kevin Price are a good fit. Both of these members have other commitments allowing them to spend less than the required time as directors on WHASP’s Board. Their frequent absence from Board meetings leads me to suggest that they will not be able to participate as constructive members of the Committee. Moreover, I strongly believe that performance reviews should not be conducted on whim by committee members. Instead, the Board should promulgate when performance reviews for the committee members should be carried out. This not only adds objectivity to the appraisal process but reiterates the fact that the Risk Committee is answerable to the Board.

In the current face of competition from native CHASP Pty Ltd, the organization is liable to a series of significant risks (CPA Australia 2009). These include:

Risks posed by competitors
Risks posed by customers
Risks posed by staff
Unexpected exit of the business owner

CHASP is an organization similar to WHASP and it operates in the same markets as the latter. However, management at CHASP has grasped the opportunity for social media marketing and creating an effective and enviable online presence. Its ability to change the way clients interact with the firm have allowed it to achieve economies of scale and create a superior brand image in the market.

As mentioned in the case study, WHASP’s deteriorating financial position may be attributed to the fact that many long standing clients are no longer renewing contracts with the firm and are instead switching to service provider, CHASP. In order to mitigate this risk, it would be advisable to “lock in major customers through long-term service contracts” (CPA Australia 2009).

There is also a substantial risk posed by the employees of the organization, as CHASP employs an aggressive recruiting policy and continues to attract talented, seasoned personnel from WHASP. It is therefore essential to revise the remuneration policies and introduce incentives that will motivate highly skilled staff members to stay with the firm. These could include cash incentives as well as profit-sharing programs (CPA Australia 2009).

As mentioned in the case study, Chairman Brian Stander has been facing health issues lately that have forced members of the Board, particularly Gail Wyatt, to inquire about a succession plan. In the case of any misfortunes befalling Mr. Stander, it is imperative that the Board safeguard against disruptions to the organization and prepare a succession plan. The succession plan should be in accordance with Mr. Stander’s will. Moreover, since there is an implication that Brian’s son-in-law, Mr. Pierre, will take over, there should be an added emphasis on preparing Mr. Pierre for that role in the future.

I believe that the next Board meeting should discuss the commitment of the Risk Committee members. Members, Adrianna Williams and Kevin Price should either ensure that they will in fact all meetings of the Committee in the upcoming year or relinquish their position to other members, selected by the Board. When Committee membership has been finalized, the committee should begin assessment of risks identified herewith and how they can be effectively mitigated. The complete risk assessment should be completed within 4 months, after which the findings will be shared with Board members at a subsequent meeting. The risk posed by the competitor, CHASP is the most significant risk at the moment and effective measures must be taken to minimize the effects of this risk.

Part 3 Additional Governance Issues

Chairman Brian Standers chooses to run WHASP as a family business when it is in fact a large organization catering to a sizeable target market.
Certain Board members are eager to please the Chairman and thus are not effectively managing the affairs of the business
The Board needs to develop a mechanism by which it can measure its own performance
The performance of the CEO also needs to be evaluated objectively (Arnwine 2002).
The Board needs to incorporate new legislation about the length of tenure of key personnel (Arnwine 2002).

The Board of Directors at WHASP are not only facing external threats from competitors but are also lacking cohesion within the organization. As the firm continues to expand and enter newer markets, it is essential that the Chairman establish a strategic vision for the firm’s future. This can only be achieved by clearly marking boundaries between family relationships and official relationships. Certain Board members are greatly influenced by the Chairman and thus are making it difficult for other members such as Jane Li and Gail Wyatt to implement much needed changes to Board governance. Moreover, in the absence of a performance appraisal system for the CEO, members ignore their responsibility provide “oversight and assistance to the CEO” (Trammell 2013). The Board also needs to implement legislation as regards to tenure because not only will this allow other members to strive towards an opportunity to become the leader of the pack but it will also provide the organization with governance styles in the face of stringent competition (Arnwine 2002).

The issues in governance stem from the Chairman’s belief that the large, national organization can be managed as a small, family run business. It is therefore important that the Chairman is briefed about how such a management style is truly hurting not only the brand’s image but also its financial health. Because, I was invited to become a member on the Board, I will take this opportunity to meet Chairman Stander in confidence and discuss the aforementioned issues with him. I am certain that I will be met with cynicism, however, it is my duty as a serving Board member to make decisions which are in the best interest of the firm and its future direction.

List of References

Boundless 2014, The Importance of Strategy. Available from: < https://www.boundless.com/management/textbooks/boundless-management-textbook/strategic-management-12/strategic-management-86/the-importance-of-strategy-416-4340/>. [February 9, 2015].
CPA Australia 2009, Risk management guide for small to medium businesses. Available from: CPA Australia 2009.
Don L. Arnwine 2002, ‘Effective Governance: the roles and responsibilities of board members’, Proc (Bayl Univ Med Cent), vol. 15, issue 1, pp. 19-22.
Ennis, S 1998, ‘Marketing Planning in the Smaller Evolving Firm: Empirical Evidence and Reflections’, Irish Marketing Review, 11, no. 2, pp. 49-61.
Exploring E-Commerce, Available from: < http://www.entrepreneur.com/article/159680>. [February 11, 2015].
Marks, N 2012, How CFOs, Boards Can Regain Investor Confidence. Available from: < http://ww2.cfo.com/auditing/2012/10/how-cfos-boards-can-regain-investor-confidence/>. [February 11, 2015].
Mazzarol, T 2004, ‘Strategic Management of Small Firms: A Proposed Framework for Entrepreneurial Ventures’, in Proceedings for the 17^th Annual SEEANZ Conference 2004.
Trammell, J 2013, How Do You Evaluate CEO Performance? 6 Ways to Grade the Chief. Available from: <http://www.forbes.com/sites/joeltrammell/2013/08/18/how-do-you-evaluate-ceo-performance-6-ways-to-grade-the-chief/>. [February 12, 2015].