business governance plan

Write a 1,400- to 1,750-word paper identifying the functional departments that must participate in a business governance plan within the industry you selected in Week 4.

Please use the  automobile industries  that I talked about in the paper

Explain departmental roles and the significance of those roles to the plan, as well as the political ramifications of including each department.

Evaluate internal interaction and external interfaces for each department.

Address at least the following departments in your plan:

Human resources

Legal

Finance

Marketing and advertising

Board of directors

Format your assignment according to APA guidelines.

Include at least five scholarly references in your paper.

Running head: BUSINESS GOVERNANCE IN AN INDUSTRY 1

BUSINESS GOVERNANCE IN AN INDUSTRY 12

Business Governance in an Industry

Marilyn R Wilbur

University of Phoenix

February 8, 2021

Business Governance in an Industry

Introduction

A good corporate governance plan is essential for the success of the accounting industry and other industries. Business governance helps create and maintain direction within organizations and promote goodwill with company stakeholders. It comprises a collection of processes, practices, rules, and policies that company executives or boards used to control and direct a corporation. The accounting industry must develop a workable plan to guide the development of effective governance models. This paper discusses the components of an effective governance plan, its political and moral implications, and its relationship with organizational integrity, issues, solutions, and implementation.

Major Components of a Business Governance Plan

A governance plan is a set of processes, roles, and responsibilities that guide the development and implementation of best practices in automobile industries. These best practices alongside governing structures are the framework for achieving business success. Typically, governance plans comprise proper definition, clear vision and strategy, participants and clear division of responsibilities and rules, policies and procedures, communication strategy, and shareholder organizations. An effective governance plan needs a clear definition and efficient structure. The accounting industry needs a foundational definition of what governance means and its purpose of ensuring that company executives align their behavior and actions with their best interests.

Similarly, it should clearly define its mission statement and business strategy to guide all participants towards a common goal. The vision specifies what the organizations need to do, while a system defines how they will do it. The plan also defines organizational culture and core values. An effective governance plan should also have a robust structural design and framework that includes rules and policies outlining individuals’ roles and responsibilities carrying out the organization’s mission. Structural configuration allows organizations to direct and control a governance board of directors by influencing their ethical character and knowledge to prepare them for their roles.

Ali (2015) suggests that accountability is a vital element of good governance, and directors should be accountable for their actions and holding decision-makers responsible for all decisions. Crucially, board members need a high level of integrity, accountability, and transparency regarding decision making. The board is responsible for making decisions and monitoring goal attainment and performance measures. They also identify and mitigate potential risks. A proper governance plan should also involve shareholders in decision making and other critical aspects of the future business.

Moral Underpinnings

Moral principles are vital in corporate governance to ensure positive relationships between the company and society. Ethical structure, positions, and regulations are essential for promoting moral choices in governance practices. The degree to which business decisions reflect moral principles and values is key to a business’s long term success. Precisely, achieving and maintain successful business operations and relationships requires organizations to manage their risks, including their transparency and integrity risks, and protect their reputation. Integrity is a valuable asset in promoting trustworthiness, and guarding that asset is a core role of board members. Boards make decisions that have consequences and directly affect employees, shareholders, organization, and the country at large.

Consequently, moral issues resulting from board behaviors, board structure, processes, values, and standards in the accounting sectors lead to significant consequences. For instance, Enron leaders’ failure to commit to their moral standards and ethics code led to all-time scandals. According to Edel Lemus (2014), Enron’s financial manipulation strategy, which led to a loss of $2.9 trillion following employee fraud, caused its collapse and the significant financial crisis in the United States. As a result, top executives must reason morally and respond ethically in their actions to represent the organization’s interest and prevent moral liabilities. Good governance depends on boards’ ability to build trust and restore confidence with stakeholders and shareholders through legal, ethical, and moral compliance mechanisms while mitigating business risks.

Political Implications

Effective business governance must consider the potential political ramifications involved. A governance plan should not include actions which not permissible by laws. Similarly, company owners and boards don’t have absolute autonomy to create a business governance plan without legal considerations. One of the critical political provisions in the accounting sector that the U.S congress designed to limit indiscretions on fiscal business activities and protect investors from fraudulent practices is the Sarbanes-Oxley Act (Chang and Choy, 2016). Therefore, laws and regulations are an integral part of the accounting sector as they legitimize certain parties’ interests, especially management and shareholders.

Different sets of political forces influence various levels of corporate decision making. According to Nordberg (2009), power and politics play a pivotal role in shaping the company law and board policy formation. For instance, the board, as opposed to employees in organizations, execute all business affairs, including voting on crucial matters. Essentially, the board of directions is the governing board of the organization and mostly renders decision making. Besides, political implications guide shareholder’s and stakeholders’ involvement. At a national level, political climate and its interaction with the national economy also influence corporate governance quality. Board uses political resources for its gains. For instance, politically connected CEOs are less likely to be replaced. However, political implications vary across organizations depending on the needs of income, economic and technological factors.

Organizational Integrity

Integrity is paramount in achieving good corporate governance. Organizational integrity is even more critical in the accounting sector, where most corporate malfeasance and fraudulent practices malpractices have increased over the recent past. Integrity is relevant to organizational success or failure. For instance, the due diligence carried out by merger partners, investors, or acquire is highly influenced by corporate integrity. Consequently, organizations must demonstrate a high level of integrity by obeying rules and regulations in all their business operations. Integrity starts with the board of directors. As such, leadership should exhibit a high level of morality and ethics in their governance system to act as role models of the entire organization (Hubert, 2018). How leaders and managers comply with regulations is a measure of organizational integrity.

Organizations can also promote organizational integrity by aligning their management systems with both company values and commercial goals. Precisely, the board of directors should align their business goals with transparent, honest, and accountable ways of doing business throughout the organization. The company’s core values and ethics code should inform and direct all their practices, including their commercial capabilities, assessing and managing risks, and interaction with stakeholders. Organizational integrity involves organizational norms, rules, values, and people, notably managers’ actions, decision-making, and resolutions (Huberts, 2018). As a result, how organizations relate and communicate with their stakeholders, such as customers, employees, investors, and the general public, demonstrates their integrity level. For instance, building a robust organizational community that is laid upon trust and mutual respect by engaging them in open communication and decision-making promotes high corporate integrity. Therefore, companies pursue organizational integrity by incorporating effective communication strategy, morality, ethics, core values, and transparency into their overall business strategy to enhance competitiveness, viability, and positive relationships with surrounding stakeholders and reputation.

Issues Resulting from Lack of Organizational Integrity

Lack of integral organizational results in numerous business issues that contributes to organizational cynicism if not resolved. Integrity breakdown can cost a company a substantial amount of money and time trying to repair. In severe cases of corporate misconduct involving fraudulent financial reporting and misappropriation of assets like the Enron scandal can amount to legal lawsuits resulting in the loss of millions of dollars, time, and other possible penalties, including jail time. Subordinates witnessing their leader’s unethical behaviors may influence their selfishness, causing them to act unethically too. Employees demonstrate low integrity through poor quality, missed deadlines, failure to meet specifications, and poor customer service. When employees lack identity or loyalty with the firm, they become disengaged, failing to carry out their duties as prescribed and making many mistakes. This results in numerous customer complaints, which possibly lead to a decline in overall profitability. Although corporate misconduct occurs in a corporate setting, it is likely to get public, leading to loss of company reputation, loss of customers, and potential investors. Therefore, managers and employees should be aware of the consequences of their actions and act in ways that satisfy generally accepted ethical standards to avoid compromising integrity.

Application of Established Practices to Solve Issues

Therefore various practices that organizations can institute to lessen chances of board members misconduct. Pops (2015) recommends organizational culture that encourages fairness, speaking up, and listening carefully. Organizations should start by conducting anonymous surveys with their employees to determine their concerns, perceptions, and opinions about an organization’s culture, leadership behaviors, or code enforcement. Pops (2015) suggest that employees usually can speak up about critical issues but instead chose to remain silent because of a lack of confidence or fear of negative personal and professional consequences. Consequently, assuring individual members that ethics complaints or concerns will be addressed with fairness will create a culture of openness and trust. Employees will feel free to report any misconduct within the organization. He further recommends keeping codes in context to enhance ethical thinking and making ethics stronger in the organizations. Despite Enron requiring all employees to read and sign the 84-page organizational code, the company encountered the most significant corporate misconduct. This reflects the fact that ethical behavior cannot be created by the imposition of regulation but by cultivating and modeling ethical behavior’s commitment through ethical leadership. In short, organizational code should become part of daily corporate practices. The organization discusses and solves ethical issues and internalizes them as an integral part of everyday decision making. This approach has been beneficial as it instills ethical culture as part of every employee’s values.

Factors Affecting Successful Implementation

One of the critical factors that affect the successful implementation of established practices is ineffective corporate governance and control mechanisms. Today, many business organizations have implemented best practices due to multiple business scandals with corporations. However, corporations fail to follow the recommended rules and policies because they lack a good governance plan to guide them. Most organizations lack responsibility and self-help principles and rely on the government to supervise and control compliance measures. Ineffective business governance, which results from weak boards, facilitates standard goal-setting, inadequate performance measurement, and evaluation, which curtail execution and achievement of desired targets (Roszkowska & Melé, 2020). Besides, a lack of supportive organizational culture and an improper exercise of power influence successful implementation. If unethical leaders with their financial interests lead organizations, they are likely to discourage efforts to implement such practices. Resistance to change is another damaging impediment to integrity building. Often, resistance against change occurs within organizations due to poor communication, lack of confidence, unrealistic timelines, and fear of failure. Organizations can also resist change if they think that the way they have been acting is right.

Solutions to Impediments

The most effective way to implement practices that help retail integrity is through active leadership. When leaders neglect to support initiatives that promote integrity, it results in resistance to implementing such strategies. Appointing ethically correct leaders means building a supportive environment that encourages and motivates the entire organization to embrace the change. Good leaders should balance personal integrity and business integrity by making decisions without any emotional influence. Tiller (2011) supports that the best leaders are the ones that combine both company programs, such as core values and personal actions, to keep the organization balanced and centered. Therefore, for an organization to achieve high organizational integrity, it should have leadership that creates strong community relationships within an organization by inspiring open culture based on its core values, purposes, and vision.

Besides, organizations can implement best practices by integrating the proposed initiatives into their business strategy. For instance, the two recommendations- keeping code in context and establishing open communication networks, should become part of daily business operations. Enterprises can achieve this by designing appropriate corporate structures, the right management team, communication strategy, and establishing cross-functional teams that focus on commitment and cooperation. They should consult employees’ opinions and views on important business matters and the decision-making process. When employees feel included and appreciated, they become responsible and accountable for their actions. This enhances their loyalty and identity to the organization, increasing their commitment to organizational core values, code of ethics, and generally accepted code of conduct. Maintaining an open and supportive culture helps overcome the key impediments to the successful building of integrity, particularly institutionalized resistance to change. Overcoming such obstacles is the first step towards creating and sustaining a solid framework for organizational integrity.

Conclusion

An effective plan is crucial for achieving good corporate governance. Defining the reasons for corporate governance is an essential factor to consider when developing a business governance plan. Governance guides managers and other executives by making the right decisions, avoiding external influences, and aligning their organizational integrity actions. Since individuals have varying levels of ethics, morality, discipline, and personal values, corporate governance provides control and oversight by outlining a set of rules and principles to follow. Organizational integrity helps is crucial for business success as it allows a business community to build positive work relationships and teamwork. Therefore, leaders at all organizational levels should establish programs that develop and retain integrity by encouraging healthy and open cultures for all relevant stakeholders.

References

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Nordberg, D. (2009). Politics in corporate governance: how power shapes the board’s agenda. Centre for International Business and Sustainability (CIBS) Working Paper, (3). DOI: 10.2139/ssrn.1332310

Pope, K. S. (2015). Steps to strengthen ethics in organizations: Research findings, ethics placebos, and what works. Journal of Trauma & Dissociation, 16(2), 139-152. DOI: 10.1080/15299732.2015.995021

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