Corporate Governance - The Concept of Accountability - Case Study Example

Corporate Governance - The Concept of Accountability and How Accountability Would Be Affected By Complex Organizational Structures 1. Define the concept of accountability and critically assess how accountability would be affected by complex organizational structures. Illustrate your answer by reference to the case scenario. The concept of accountability is related with the ways and means through which the organizational employees are able to interact with one another and thus come out clean as per their respective actions. Accountability therefore touches upon those aspects which are usually not covered by other domains. These encompass the need for having a clear but basis as per the employees’ manifestations and their representative actions. It also accounts for their truthfulness that they need to embody within their day to day dealings, actions and undertakings. Complex organizational structures mar the very essence of accountability since the networking hierarchies are in such a way that there is improper level to level touching within work regimes amongst the employees. They seem to be on a missing curve on most of the occasions and hence they have no idea as to how and where they should put down their actions for the betterment of the organization in the long run. Within the complex scenario of this company within the case study, the accountability premise seems to be on a constantly missing domain. This is because there are so many networks going on within the organizational levels and also the fact that the organization has broken down into sub-organizations has made matters tough to comprehend in entirety. Merck Astra would have done itself a world of good had it not broken its organizational basis into so many different parts. If it really wanted to do something like this, there should have been a proper framework which could have been devised from day one. What is happening now is that there are different directors at varied levels, who do not have any knowledge as to how and where they need to report to their bosses, who once again are located at different levels. Hence the scenario at Merck Astra is way too complex for a commoner to decipher and it gets even more confusing for the people who work within such a regime. Perhaps one can realize that breaking down Merck Astra’s different divisions into MAP, MAZ and so on will actually deliver value for the sake of the organization but it might just take away the sheen from the organizational entity. The eventual fabric of the organization will receive a very hard hitting dent which would not be easy to recover on the part of the people who actually are sitting at different executive and non-executive levels. The directors are unsure who they need to report to so one can easily understand what the subordinates working under their aegis would be going through. This brings to mind the understanding related with having a proper hierarchy of directors, managers and different employees so that a check and balance mechanism could be inculcated within the auspices of the organization. This would eventually foster the basis of accountability within Merck Astra and hence all its undertakings would be remarked as clean and very apparent in front of one and all. Accountability can only come about when there are adequate efforts made to ensure its incorporation within the related levels. 2. Evaluate unitary and two-tier boards in the context of corporate governance. The corporate governance realms require that the communication is done in such a way that there are no loopholes and shortcomings within the length of the corporations and the government. What this suggests is the fact that the corporate governance matters must have a very set hierarchical setting in place so that any issues that might arise within the future are taken care of in an adequate way. The two-tier boards are usually not very appreciable since these give some of the directors the right to vote, while others being at the same level still, are disallowed from the voting quarters. Then again, unitary boards are better since these have a single line of command which means that the decisions are taken by people whilst knowing beforehand who is the head and who is going to take the final call in the wake of an issue that might crop up within the future. The concept of having separate unitary and two-tier boards is different for a number of companies which exist within industries that are far and wide. This is because different companies have unusual work regimes and hence the need for having hierarchical structures which are more suited to look after their business needs and requirements. What corporate governance really requires is that there should be one board (unitary) that takes care of the corporation’s entire efforts and realms so that it gets easier for the governance mechanism to interpret what really is the organization looking forward to. There must not be any loophole, which might arise if there are different bosses working at a number of varied levels, all of whom have their respective chains of command. The presence of a unitary board at the UK office might just turn out to be a very useful eventuality for the organization but it is the two-tier board that functions within the German workplace quarters that hurts the basis of the organization more than anything else. This is because the corporate governance mechanisms are having a serious shortfall at the German quarters and hence these should be done away with, at the earliest possible time. Furthermore, it is always advisable to have as few bosses as possible so that the final decisions are taken by the people who are the most deserving and who can actually stand up and take responsibility whenever anything of magnanimous effect takes place, all of which essentially could be in a negative connotation. 3. Write a report for Sir Edward Evans to send to the boards of the holding companies, Merck Astra and AstraZenca. The report should include: (i) An explanation to board regarding the UK combine code of conduct and the principle behind the code which will affect the company It would be important for Sir Edward Evans to analyze the basis of the UK combine code of conduct before this report shall make its pointers apparent. This is because the UK code of conduct shall be duly forwarded to the holding companies – Merck Astra and AstraZenca. Therefore there is a need to properly understand on the part of Sir Edward Evans the need for having a clear cut policy as far as the code of conduct for developing the drugs is concerned. Anything that has the slightest bit of risk shall not be tested upon humans at all because what this does is in essence is to highlight the negativities about the organization as a wholesome basis and then project the same to the publics that are spread far and wide. What is even worse is the fact that word of mouth has been very abysmal for quite some time now and it would be important to devise a code of conduct which shall ask the employees to abstain from revealing company secrets to people who have no direct or indirect role within its related affairs. This shall be a very important step that Sir Edward Evans has to take because this will highlight the loopholes, allow him to understand where these shortcomings could be fixed as well as make him realize how the same menace can be uprooted from the bottom. Therefore the combine code of conduct within the UK operations would be a very successful step that Sir Edward Evans shall take in order to safeguard the due rights of the organization as well as the staff who works for the betterment of Merck Astra and AstraZenca on a proactively consistent basis. If these steps are taken quickly, the company shall return to its good olden self, however the lack of the same steps on the part of Sir Edward shall mean more problems for the holding companies and indeed the organization in the coming times. The combine code of conduct would take care of all the steps that are taken inside the organization as well as outside it. Since the UK code of conduct will be developed, this will give the UK office a better idea of how things would be shaped up at the different workplaces within the UK. It would be a good head start since this would manifest the need for having a regime which will spell out the policies and standards that need elaborate descriptions as far as the working methodologies are concerned. Sir Edward therefore needs to be properly told about all of the actions which are important under the aegis of the UK combine code of conduct and how each one of these would be playing its due part within the sound working bases of the organization in essence. The devising of the code of conduct would essentially take care of the long standing problems within the UK operations and it will give the employees something to cheer about as well. Sir Edward must comprehend the fact that the employees are having issues whilst getting orders from their top management as there are problems of magnanimous effects and that these can only be solved if a proper code of conduct is formed in unison with all the UK operations. This will leave no stone unturned as well as highlight the missing links which remain within the fore of Merck Astra as of present. Any organization would immensely appreciate the idea of having a smooth network where top level employees can easily get their points across to their subordinates. Same should be the case within this organization as well which sadly is not so at the very moment. Sir Edward therefore has his task cut out as he has to mend a number of different ways within the organization and that he must do so quickly to save the rising costs that are incurred within the aegis of communication gaps which have increased with the passage of time. Also the resources have been allocated for all the wrong areas which must also be taken into account. (ii) A statement explaining what is meant by responsibility. Responsibility encompasses any and every step that has been taken by the person under duty to make sure that a set activity or undertaking is accomplished without any problem. This needs to be backed up with solid proof that the responsible party was there when the undertaking was carried out. Even if this person was not present, responsibility asks of this individual to oversee what has been happening for quite a while and how more sanity could be brought within the ranks of the organization that he indeed works for. Responsibility is therefore very important as it provides Merck Astra’s employees a window of opportunity to give in their very best time and time again. There must not be let up in the wake of completing tasks that are of due significance and hence all-out efforts need to be put in which shall ensure the same. (iii) Identification of three stakeholders affected by the drug trial. The first stakeholders of the drug trial are indeed the victims of one such testing regime. This is because their lives would be disrupted in entirety as they seek to spend it in their own righteous ways. Hence the role of the organization as the guilty party is to ensure that it takes care of all the matters that pertains to the victims’ lives in the future and until they are alive. This is because they were put on a drug trial to guarantee success for the drug that was being tested, in essence they came forward to let this drug be tested upon them in the first place and now it is the responsibility of the organization to give them what they need the most. This is a basic matter that comes under the aegis of the corporate social responsibility domains and therefore needs to be covered as such. Thus the volunteers shall receive compensation for the efforts that they put in whilst coming up for the drug trial. The second stakeholders are those people who have bought the shares of MAP and are now facing losses due to the bad word of mouth related with the company. The stocks have come down and this is a point of serious consideration for the people who have spent their money in buying MAP’s shares. They must also be given the incentives which will make sure that their trust realms are reposed and this will only help the cause of the organization in the long term scheme of things. It will also develop a positive linkage with the financial brethren for surely they are the drivers of MAP’s success now and ever after. The third and final stakeholders are the officials of MAP and indeed the entire Merck Astra organization. This is because it has to bear the brunt of such negative publicity. Now what it would do is to make the customers of Merck Astra’s products feel a bit skeptical about buying its drugs off the shelves. This will seriously hurt the cause of the organization which is to make sure that its products get sold in a very effective way, reaching the intended target audiences. Hence these stakeholders will have a tough time in comprehending where and how they need to get their act together so that all of them can have positive ramifications in the long run. (iv) Assessment of MAP’s responsibility towards these stakeholders. MAP had a responsibility to take care of the rights of the people for whom it had plans to test the drug. MAP must have made sure more than 100 percent that the results would not be as these turned out to be in the end. However since this was a drug testing case, perhaps MAP can be given somewhat leeway as it asked for volunteers to appear for the drug trial. However then again it must have made sure that these volunteers would be given the much needed cover when it came to their life security domains. MAP had a serious role to play within the ensuring regimes of their lives, their family members and so on. MAP could have taken one step ahead and insured their lives and important possessions before this drug trial even came into proposition. The responsibility as concerns to the financial brethren would have been to get MAP’s stock index higher so that any negativities which might arise due to these drug trial regimes would be easily managed and handled in the long run. However since the drug trial results were literally leaked out and the news was blown out of correct proportions, one shall believe that MAP could have done little to thwart the negative sentiments within the financial domains. As for its own part, it could have managed the public relations entity within the company to make sure that the internal information did not leak out and that all its important matters remained in-house. However this did not happen, which meant a lot of propaganda against MAP and the people affected by the drug trial. References Author Unknown. (n.a) Case Study. Attached in PDF file. Read More