Corporate Governance Strategy for Swimming Club - Case Study Example

Name: University: Instructor: Date: Internal and External Corporate Governance Strategy for Swimming Club Table of Contents Table of Contents 1 1.0.0 Introduction 3 1.2.0 Corporate Structure 3 2.1.0 Internal Corporate Governance Strategy 4 2.1.1 Executives 5 2.1.2 General Manager 5 2.1.3 Assistant General Manager 6 2.1.4 Youth Director 6 2.1.5 Commissioner 6 2.1.6 Outside Contractors 7 2.2.0 Employees 8 2.2.1 Head Coach 8 2.2.2 Assistant Coach 8 2.3.0 Performance Measurement Systems 9 2.4.0 Independent Internal Audits 10 2.5.0 Legal Compliance Mechanisms 11 2.6.0 Ethical Compliance Mechanisms 11 2.7.0 Rights 12 2.7.1 Stakeholders Rights 12 2.7.2 Sponsors Rights 13 2.7.3 Officials Rights 13 2.7 4 UAE swimming Associations Rights 13 2.7.5 Employees Rights 13 2.7.6 Coach’s Right 14 2.7.7 Legal Rights 14 2.8.0 Compensation and benefits package 14 2.8.1 Management 14 2.8.2 Employees 15 3.1.0 External Corporate Governance Strategy 15 3.2.0 Government regulations 16 3.3.0 Media exposure 17 3.4.0 Market competition 18 3.5.0 Public Release and Financial Statements Assessment 19 4.0.0 Future Plans 20 5.0.0 Summary 21 6.0.0 Work Cited 22 1.0.0 Introduction Successful corporate governance is crucial for a business desiring to set as well as meet its strategic goals. Corporate governance is the system by which companies and other enterprises are controlled. The Swimming Club basic purpose is to enhance as well as preserve the investments that created it; specifically, creating wealth, both in the short term and long term. Effective corporate governance may result in organisational success while bad governance results in business failure. For this reason, it is imperative for Swimming Club to formulate and sustain a system of governance. Without a doubt, technology is a key asset for nearly all organizations since it drives business processes (Kearney and Kruger 37). Given that technology has become integral to operations, Swimming Club must understand that inadequate systems may obstruct the competitiveness as well as the performance of the company and make it vulnerable to legislation observance. For this reason, Swimming Club needs to implement proper principles of governance that would apply to corporate governance. 1.2.0 Corporate Structure The structure of corporate governance integrates guidelines, policies and controls that steer the company toward its objectives while as well meeting the needs of the stakeholder. Normally, the structure is a combination of different mechanisms. The diagram below shows the organisational structure of the Swimming Club: Fig 1: Swimming Club Corporate Structure 2.1.0 Internal Corporate Governance Strategy The main sets of controls for Swimming Club stem from its internal mechanisms, and they monitor the activities as well as the progress of the organization and espouse measures when the company goes astray. Besides that, the internal mechanisms maintain the larger internal control fabric of the company serving the corporation’s internal objectives together with its internal stakeholders, which includes owners, managers and employees. Such objectives entail reporting lines that are clearly defined, smooth operations as well as performance measurement systems. In view of this, the internal corporate governance strategy consists of independent internal audits, oversight of management, corporate structure, segregation of policy and control development. 2.1.1 Executives 2.1.2 General Manager The General Manager main role involves managing as well as controlling Swimming Club business and routine operations so as to secure substantial, continuous increase in corporate value for the company’s shareholders. It is the responsibility of the General Manager to make sure that the operations at Swimming Club are in line with the United Arab Emirates laws and regulations. Besides that, the General Manager makes the most important decisions in the company, and the decisions made must be recorded. Besides that, it is the responsibility of the manager to recommend the Swimming Club strategic direction as well as translate the existing strategic plans into business operations. Furthermore, it’s the role of the general manager to manage the company’s financial, physical and human resources so as to realize the objectives of the company; to develop, execute and manage the company’s internal control and risk management frameworks; and to develop as well as update organisational procedures and policies. Imperatively, the General Manager should be alert to important trends in within the recreation industry as well as the company’s operating environment. 2.1.3 Assistant General Manager The assistant general manager role includes preparing all work schedules for the staffs and making sure all employees and coaches report to the work punctually. Besides that, the assistant general manager should supervise in the process of chemical analysis and application to the swimming pools, and make sure workers follow the safety procedures provided by the UAE municipal council. The Assistant general manager responsibilities include; reporting to the general manager the time worked by each staff under his/her direct supervision; ensuring the workers are trained appropriately in their duties; holding safety meetings for every employee; tracking pool attendance and balancing cash drawer. Other roles include; making sure all equipment are operating properly; maintaining staff breaks and staff rotations, and maintaining discipline within the swimming pool facility. 2.1.4 Youth Director The youth director role includes; monitoring the Swimming Club bathrooms, ensuring proper waste management in youth pools, and making sure the youth pools are cleaned twice a week. Another role is setting a positive example for assistant coaches training the youths, and informing the General Manager when more supplies are needed and when the equipment needs maintenance. The youth director should be responsible for scheduling youth events held at Swimming Club on occasion other than the regular scheduled hours. 2.1.5 Commissioner The key responsibility of the commissioner is for establishing and maintaining the rules and regulations. Basically, managing the employees effectively at the Swimming Club needs to set up work rules. The work rules will protect the company as well as the employees, and if implemented as well as executed correctly, it can build and maintain a suitable working environment for everyone. For Swimming Club, some work rules will be non-compulsory; still, UAE laws need the company to have policies concerning particular workplace issues like sexual harassment, drugs and alcohol, as well as smoking. Given that Swimming Club operates in major cities such as Dubai, Al Ain, and Abu Dhabi that are regulated by law, the company must adhere to workplace rules. For this reason, the commissioner should create formal work rules at Swimming Club, rules that can help the company to protect from litigation as well as maintain superior employees’ of work life. If the commissioner needs to select the rules carefully, make sure they are clearly associated with the business, and implemented fairly so as to enable the General Manager to effectively manage the workplace as well as the workers workers. 2.1.6 Outside Contractors During the event days, independent contractors carry out reimbursed work for Swimming Club, but are not workers of the company. The relationship between Swimming Club and the independent contractor should be created through a written arrangement providing particular standards for the work at hand, and describe the rate of pay for that work. Imperatively, independent contractors’ work is performed without interference from the company, but they lack legal protections that employees at Swimming Club have. Importantly, independent contractors have to finish their assigned tasks punctually and in line with the specifications laid down in the agreement.  2.2.0 Employees 2.2.1 Head Coach The Swimming head coaches assist people of all abilities as well as ages in developing swimming techniques and skills, and carry out exercises in the water. It is the responsibility of the head coaches to ensure assistant coaches train as well as develop competent swimmers. If the assistant coaches are good swimmer, they can easily inspire and motivate the customers to develop their skills. The head coaches responsibilities include; supervising assistant coaches as they train the customers; planning as well as delivering sessions suitable for the customers; offering explanations to the assistant coaches; correcting swimming techniques errors and finding means of improving performance; and ensuring the assistant coaches follow the safety standards. Besides that, it is the role of the head coaches to organize and supervise assistant coaches and handling accidents and minor injuries. The head coaches are responsible for setting practice schedule and groups; preparing the monthly report; and running parent coaching programs. 2.2.2 Assistant Coach The assistant coaches report directly to the head coaches, and they are responsible for checking the mental attitude and physical condition of their swimmers supporting their swimmers by enrolling them to competitions and events. At Swimming Club, young kids are brought by their parents to learn basic skills of swimming like water safety, how to properly breathe while in the water, and basic swimming strokes. While they progress, the assistant coaches are expected to refine the swimmers skills by teaching them the basics of fitness and general conditioning. It is the role of the assistant coaches to teach the swimmers suitable progressive skills and offer safe instruction utilising acknowledged lead-up skills as recognised by Abu Dhabi Sports Council as well as UAE Swimming Federation. Using the head coaches’ weekly lesson plans, the assistant coach should plan and successfully organize coaching time for swimming practice. The assistant coaches can promote good public relations through effectively communicating with parents before and after the swimming lessons. 2.3.0 Performance Measurement Systems So as to design as well as implement a suitable system for performance management, Swimming Club must first understand that the system is for offering a prospect of improving the overall business processes effectiveness. The performance management system (PMS) intends to integrate organizational activities at Swimming Club across different managerial functions and levels. Therefore, PMS is a crucial tool for balancing different measures (time, flexibility, quality and cost) across different levels (people, processes and organization) (Glavan 27). All performance management systems have numerous individual performance indicators and measure. In this case, performance measures are crucial indications the organization quantifying how the company can successfully achieve the identified goal. In this case, the flexibility strategies entail the development of the capability to respond economically and rapidly to organisational changes. Basically, performance measures should be positioned strategically since they have an effect on what individuals do. In view of this, the Swimming Club PMS should perform functions such as tracking the organizational performance, supporting the company external and internal communication with regard to performance and helping the General Manager by supporting the decision made both strategically and tactically. Furthermore, the PMS will enable Swimming Club to capture and enhance organizational learning. 2.4.0 Independent Internal Audits The function of internal auditing plays a crucial part in the governance process, and they play a crucial role in helping provide the company assurance that the existing risks have been identified effectively and are being monitored. Internal auditors are tasked with ensuring that the organizational processes are managed effectively, and the existing processes in the organization are effective or efficient. As the direct subordinate to the Board, Internal Audit evaluates and reviews governance, effectiveness, and risk management in the company. In view of this, all internal auditing activities at the Swimming Club should be coordinated, that is to say, reviews should be strategized, executed and reported through similar methods and approaches. The Internal Audit functions should include special inquiries, operating information and financial information examination, and monitoring the internal controls. The other function is reviewing the effectiveness and efficiency of the company’s operations. Without a doubt, how a company designs as well as practices the governance principles differ based on the complexity, size, as well as organization’s life cycle maturity, its cultural and legal requirements or stakeholder structure. The head of internal must collaborate with the executives of Swimming Club in order to be able to determine how the company’s governance can be defined for the purposes of internal audit as well as the degree and anticipations of internal audit consultancy and assurance required to fulfill the internal audit charter. The internal auditor role include; validating the existence of resources and recommending suitable safety measure for their safety; analyzing the internal controls system adequacy; recommending controls’ improvement; and assessing the company’s procedures and policies and ensuring sound business practices. Besides that, it is the role of the internal auditor to assess if the company is complying with UAE federal laws as well as contractual responsibilities. 2.5.0 Legal Compliance Mechanisms The challenge with mechanisms of legal compliance is that the majority of abuses that have infuriated the public are completely lawful; for instance, a company may file false accounting statements, which comply fully with the Generally Accepted Accounting Principles (GAAP). Besides that, companies are regulated by ambiguous laws that make it difficult for the juries have a hard to understand sophisticated as well as abstract financial concepts bearing in mind well-counseled executives know how to distance themselves from their responsibilities. Moreover, criminal law is applicable merely to cases that are extreme; as a result, violations are difficult to put in force. Even though the accounting profession has continually been a strongly concentrated on internal controls, latest business failures have damaged the credibility of auditors in their function of reporting, and has consequently grind down the confidence of the public in the auditing and accounting profession. Therefore, the Swimming Club auditors should offer reports to the company executives on critical practices and policies of accounting and provide information on how to handle the financial information differently. 2.6.0 Ethical Compliance Mechanisms Particular attributes of legal compliance programs are less crucial as compared to the wider insights of the program’s alignment toward ethical and values ambitions. The Swimming Club must have consistency between actions and policies in addition to the ethical climate dimensions of the company such as workers’ fair treatment, ethical leadership as well as ethics’ open discussion of ethics. The Swimming Club should avoid an ethical culture stressing egotism and unhesitating compliance to power, as well as viewing the legal compliance programs as a shield for top management from responsibility. The culture at the Swimming Club should be changed so as to focus on trust and integrity and moderate the resolute concentration on ‘shareholder value’ where performance is measured in terms of stock price. Swimming Club can realize effective corporate governance implementing a set of best practices and principles. This relies greatly on integrity, honesty, fairness as well as the way the company carries out its affairs. Even though, Swimming Club has to make a profit so as to grow and survive, still the quest for profits has to be within ethical confines. The Swimming Club must adopt policies for whistle blowing, environmental protection, and programs for ethical training. This will enable it to build as well as develop a reputation and corporate image, gain trust and loyalty from consumers and will increase employees’ commitment. Undeniably, the ethical compliance mechanisms result in growth and stability given that it encourages confidence. 2.7.0 Rights 2.7.1 Stakeholders Rights Right to fair treatment and their interests must be considered Right to active co-operation with the company in creating jobs and wealth Protection from all forms of human rights abuses Protection from work-related hazards Right to communicate with the top management Right to access the company’s financial performance report Right to participate in corporate actions Right to confidentiality with regard to information offered by the stakeholder 2.7.2 Sponsors Rights Rights to organise events at the Swimming Club Naming rights to the company’s area or physical section Customizing events hosted by the company so as to suit the sponsor’s audience Opportunity of offering prizes for promotional or media activities Rights to use the company’s images, logos, or trademarks 2.7.3 Officials Rights Right to overtime pay and minimum wage Rights to unemployment insurance Protection against discrimination Right to join trade union Protection for their health and safety Right to sue so as to make the company act within the law 2.7 4 UAE swimming Associations Rights Ability to access the company’s work safety policies and measure Right to access the company’s financial statements Right to ensure the company initiatives promotes the greater environmental responsibility Right to eliminate all forms of compulsory and forced labor Right to protect consumers 2.7.5 Employees Rights Right to be free from any form of harassment as well as discrimination Right to a workplace that is safe and free of toxic substances, dangerous conditions, as well as other possible safety hazards Right to fair wages and equality Right to complain and offer ideas Right to negotiate flexible work arrangements Right to be offered fair employment terms and conditions 2.7.6 Coach’s Right Right to be treated with respect and dignity Right to be treated fairly and be assessed on merits Right to complain about unlawful as well as inappropriate behaviours Right to a fair compensation and insurance Protection for their health and safety 2.7.7 Legal Rights Right to employ at will Right to sue Right to borrow money for business activities (borrowing rights) Legal right to sell, buy or own property, which includes trademarks Right to deposit the funds into the company’s retained profits account Right to protect the business product, idea, design or identity. 2.8.0 Compensation and benefits package 2.8.1 Management Management General Manager Assistant General manager Youth Director Commissioner Salary $ 1,500 $ 1,100 $ 960 $ 740 Benefits Health Insurance 120 100 100 80 Life Insurance 100 70 60 60 Retirement Plans 50 30 30 30 Long Term Disability Insurance 40 30 30 30 Long Term Care Insurance 30 20 Retiree Health Insurance 40 20 20 10 Telecommuting 70 40 30 20 Recreation 50 50 30 30 Total Compensation (per Month) $ 2,100 $ 1,450 $ 1, 260 $ 1,000 2.8.2 Employees Management Head Coach Assistant Coaches Officials Salary $ 710 $ 600 $ 500 Benefits Health Insurance 70 50 Life Insurance 60 50 Retirement Plans 30 20 Long Term Disability Insurance 20 15 Retiree Health Insurance 20 15 Telecommuting 40 30 20 Recreation 30 20 10 Total Compensation (per Month) $ 980 $ 800 $ 530 3.1.0 External Corporate Governance Strategy External corporate governance strategies are managed by individuals outside the company and serve the entities’ objectives like financial institutions, trade unions, governments and regulators. Such objectives involve sufficient legal compliance as well as debt management. Furthermore, external strategies are normally enforced on the company by external stakeholders in terms of regulatory guidelines or union contracts. Usually, the compliance and status of external corporate governance strategies are reported by the company to the external stakeholders. 3.2.0 Government regulations Government regulations as an external control have an enormous impact on the company governance. Swimming Club is expected to adhere to these regulations or be punished for violations. The majority of the requirements for corporate governance regulatory are anchored in the OECD Principles of Corporate Governance. In UAE, the Security and Commodities Authority (SCA) needs all institutions as well as companies to adopt rules of corporate governance that intend to: generate an internal organisational control system; and expect these companies to espouse the corporate governance principles and create an operational framework that protects the rights of the shareholders, that facilitate fair treatment of the employees, and that strengthen openness as well as transparency in the company. Besides the listing rules and the company law, a number of industrial sectors as well as companies are made to experience additional external control by regulators appointed by the government or through the UAE governments’ officials. Normally, this occurs in sectors or companies involved in activities believed to be politically or strategically important by the government. In Dubai, the municipality rules specify that the public safety and health department has the authority to shut down a swimming pool that is inclined to bring harm to its users or if the facility is unable to correct particular status within the specified time period to abide by safety and health requirements. It is the responsibility of the Swimming Club General Manager to offer safety requirements and healthy conditions for the facility and ensure indoor air quality and ventilation are compliant with UAE regulations. Besides that, Swimming Club must have lifeguards who should be available full time and be certified and qualified for life-saving technique, Cardiopulmonary resuscitation (CPR) procedures as well as first aid. Swimming Club should eliminate the guesswork by planning as well as designing properly through understanding the needs of the customers and adhering to the regulations as set forth by UAE environmental and municipal bodies. 3.3.0 Media exposure Media scrutiny of the company processes as well as workings ensures, relatively, an improved organizational performance. The company wrongdoings are often exposed by the whistleblowers often to the media organizations as well as government. In view of this, Swimming Club must develop an internal control system intended for assessing the procedures and methods of risk management and putting the Code into practice. The company should also adhere to applicable laws and regulations and continually review financial information utilised in the preparation of the financial statements. The annual governance report should be submitted by the General Manager to the shareholders concerning the company, making public the level of company compliance with the existing internal control regulations. Moreover, the commissioner should make sure the company together with the workers comply with the applicable procedures, laws and regulations having an effect on the company. Noticeably, the media may play a crucial part in the corporate governance by impacting the company’s reputation in numerous ways. For instance, the attention of the media can motivate the politicians to put into effect corporate laws or introduce corporate law reforms when they perceive failure to act could stain their political careers or embarrass them (Gorman, Lynn and Mulgrew 14). Besides that, the media plays a crucial role in shaping corporate directors and managers’ public image, and by this means, they compel them to conduct themselves in line with societal norms. The media pressure can result in maximization of shareholders’ value or lead to deviations from it. The media content is either collected from monitoring events and issues that are open to the public or through investigation, and the content is organised in terms of worthiness before being delivered to both specific targeted as well as general audiences. In this case, the general audiences may be interested to the media exposure of the corporation as stakeholders. For this reason, Swimming Club must pursue a proactive approach toward the media, especially social media given that experience proves that companies that have successfully leveraged social media to their benefit can easily counterbalance possible liabilities and improve its corporate value. Moreover, the constant information produced by the stakeholders and end-users may double up as a guide for comprehending stakeholder concerns and market trends, and can assist the company to mitigate the existing and looming business risks. Media can help the General Manager to evaluate how the company fulfills its values, actions, and vision in the public eye and espouse counteractive actions when needed. 3.4.0 Market competition It has been argued repeatedly that companies having an effective corporate governance practices are more successful in the market (Giroud and Mueller 563). Positive public perception, credibility and reputation brought about by corporate governed play a crucial part in promoting the image of the company and therefore assist in outdoing the competitors. Global as well as internal competition in the company’s product market is a crucial factor in guaranteeing effective corporate governance, but can limit the discretion of the top management. As suggested by the micro-economic theory, prices are forced to equal the marginal cost by competition, which results in allocative efficiency. In the market, competition makes sure that best companies in the industry continue existing and improves managerial performance. For that reason, if the market competition is sufficient, the company’s management can be forced to act consistent with the interests of the shareholders, or else experience liquidation. Essentially, managerial discretion is limited by market competition and for this reason, acts as an alternative tool to other variables of corporate governance. Furthermore, it has the ability to make particular market forces stronger; for instance, increased competition may reduce the company profit, and in so doing, grind down the shares’ market value. This may gesture a takeover, thus forcing the managers to improve their overall performance. If the Swimming Club governance structure is efficient, then the market competition impact would be enormous. Considering that there are many swimming pools in UAE in homes, hotels, and learning institutions, they Swimming Club face stiff completion, and so, the General Manager should improve performance as well as ensure employees are not slack. Increased competition can positively impact Swimming Club productivity if the company develops and implement competition policy. 3.5.0 Public Release and Financial Statements Assessment The financial statements’ public release can expose the company to scrutiny or assessment by the public, sponsors and regulators. Therefore, this is considered as an external control because the company must be careful and truthful concerning the statements’ details and in making sure that they are accurately audited and prepared. As accounting reports, financial statements serve as the main technique of communicating financial details concerning the company to external parties like sponsors as well as banks. Technically, financial statements highlight the process of accounting and offer an account titles tabulation. In addition, the financial status or position of the company as well as changes in finance is reported through financial statements. Therefore, Swimming Club should use financial statements for purposes of communicating the financial decisions made by the company to the internal and external parties. Any company can experience financial problems, such as funds shortage, debt default, and equity as well as liquidity deficiency. Besides that, the company can experience operating-related problems such as suspicious prospective profits, continuous operating losses, incompetent management, as well as poor operations’ control. 4.0.0 Future Plans Presently, the Swimming Club has a presence in Dubai, Al Ain, and Abu Dhabi, however, and has plans to expand to Sharjah, Fujairah, and Rak in the near future. In view of the formulated corporate governance strategy, the Swimming club should first increase their sales in the existing markets so as to achieve an expansion plan that is risk-free way. This may achieved through espousing different pricing strategies as well as improved techniques of marketing. The expansion to these locations will mean that the management of the company will become less centralized, and may result in protectionism, internal politics, as well as disagreement over what projects and goals the company must pursue. Besides that, expansion will mean that the company’s market share will grow; thus, creating need for new strategies for managing the increasing competitors. Imperatively, expansion to these locations will mean that that more capital will be needed, in consequence, generating new responsibilities to investors, shareholders, as well as institutional lenders. Therefore, expansion to these locations will bring with it different changes in the company's objectives, needs, and structure. In view of these realities, the need of Swimming Club to expand should be strengthened by the need to comprehend that profitable, long-term, and meaningful growth is a result of effective planning as well as management. 5.0.0 Summary In a nutshell, corporate governance is of crucial importance to the Swimming Club and should be considered important similarly to the primary business plan. If the company implements the corporate governance effectively, it will be easier to prevent criminal and civil liability as well as corporate fraud and scandals. Besides that, as mentioned above, corporate governance improves the company’s image and makes the public perceive the company as a self-policing corporation responsible as well as worthy of debt holder and shareholder capital. Moreover, corporate governance dictates the shared culture, practices and philosophy of the company together with its workers. Imperatively, a company with no corporate governance system is normally viewed as a body with no conscience or soul. Undeniably, corporate governance will help the Swimming Club to be honest and keep out of trouble. When the philosophy of corporate governance is broken down, then the company management becomes corrupt as well as complacent. Unethical as well as dishonest dealings may make sponsors/investors to flee due to disgust, distrust and fear. The principle of a good corporate governance system is allowing the management to drive the company forward in line with the framework of effective responsibility. In order to manage the issues of conduct and integrity, the Swimming Club General manager should approve an Ethics Code accessible to all stakeholders. Justifications Organization structure; to facilitate allocation of responsibilities for different processes and functions to different entities Internal Corporate Governance Strategy; to increase transparency and reduce conflict of interests External Corporate Governance Strategy; to prevent market shocks and promote shareholder activism 6.0.0 Work Cited Giroud, Xavier and Holger M. Mueller. "Corporate Governance, Product Market Competition, and Equity Prices." The Journal of Finance LXVI.2 (2011): 563-600. Glavan, Ljubica MilanoviÊ. "Understanding Process Performance Measurement Systems." Business Systems Research 2.2 (2011): 25-38. Gorman, Louise, Theo Lynn and Mark Mulgrew. The Influence Of The News Media On The Corporate Governance Practices Of Irish And UK Listed PLCS. Working Paper. Dublin: Dublin City University, 2010. Kearney, WD and HA Kruger. "A Framework For Good Corporate Governance And Organisational Learning – An Empirical Study." International Journal of Cyber-Security and Digital Forensics 2.1 (2013): 36-47. Read More