Organizational Governance and Performance - myassignmenthelp

Question: Discuss about theOrganizational Governance and Performance Management for Rules. Answer: Introduction The corporate governance is a frame work or a system which involves specific rules, regulations, processes etc which an organization is supposed to follow so that it can achieve a sustainable success in its industry. It also involves the process of supporting and balancing the interests of all the stake holders. The case of the Italian dairy company Parmalat is taken into its consideration for analyzing its failure in the corporate governance (Liu, Connell, Xu, 2017). The corporate governance failure of the organization Parmalat The organization Parmalat is the food and dairy giant which is based on Italy. The big holes in the financial statements of this organizations has put into the stage of bankruptcy. The experts highlights that the primary reason behind the failure of the organization is its failure in the corporate governance. Some of the corporate governance failures which can be identified from the case of the organization Parmalat have been discussed here (Dias, Rodrigues, Craig, 2017). The major failure in the corporate governance starts with the nature of the ownership. It has been owned and managed by the complex group of companies. A pyramidal structure of governance and management is practiced in the organization which has been controlled by the strong block holder which is the founder the tanzi family. This can be considered as the major disadvantage of the corporate governance as this complex and the pyramidal structure can make the decision making process delay, discriminated etc which can impact the competitive advantage of the organization. The food industry is prone to continuous changes and there should be a practice of empowering the managers to take critical decisions in order to become more competitive. The other reason for the failure of the corporate governance can be identified from the case of the Parmalat is the unprotected minority share holders. The corporate governance system provides much importance to the share holders and protecting the interests of the share holders (Dimopoulos, Wagner, 2016). Through maintaining and managing proper shareholder engagement process the organization can gain sustainability, competitive advantage, reputation etc. The organization Parmalat being practicing pyramid organizational structure and ownership failed to provide importance to the share holders which has put the organization into risk. The situations like this will resist the new share holders to invest for such organizations and forms the basic reason for the long term ruin for the organization (Schmidt Fahlenbrach, 2017). Apart from this they have also utilized the corporate resources illegally for the private use of the family at the expense of the minority share holders. These illegal activities can certainly impact the organization badly from the legal perspectives and also from the credibility perspectives. The primary purpose of the corporate governance is to built up good reputation and credibility for the organization which can support the organization in holding a dominant position in the market. This would also enable it to produce good competitive advantage also. This illegal activity has lead to the generation of big holes in the financial statements of the Parmalat which has cause for the destruction of the organization. There was also no independent directors from the controlling of the shareholders available in the Parmalat organization which is not compliable with the corporate governance guideline of Italy. This can be considered as the third reason for failure (Oyewunmi et al, 2017). The organization Parmalat could have implemented some mechanisms which would have protected it from its destructive failure. Some of them are mentioned below. A well developed organizational structure which follows a hierarchical model could have been implemented in the Parmalat. This would provide a better clarity in the mechanism and operations. The managers and the directors could have get directions and guidance from their direct superiors which would make the decision making process much easier (Agrawal Cooper, 2017). An inbuilt policies and procedures as per the corporate governance of the Italy were relevant for the organization. Such policies and procedures will restrict the ownership impact in the operations of the organizations and also in the unethical practices. The organization could have implemented good HRM policies and procedures like the job empowerment, self responsibility, etc which makes the employees and the managers to take their own decisions while handling the decision making process. This could have improved the performance of the employees also (Faleye, Krishnan, 2017). Adequate stake holder management system is also an essential factor for the organization Parmalat to make it safe from such crisis. In order to implement and enforce good corporate culture and governance the participants like the non-executive directors, internal audit committed, board of directors etc are having more or less equal role and can be considered as the gate keepers of the corporate governance. The board of directors plays a vital role in the promotion of the personal integrity and professional accountability. Under their guidance the high quality ethical performance can be practiced n the organizations and poor performance and unethical practices can be disciplined. They can also contribute in the maintenance of the reputation and credibility of the organization since they operate in the top position (Shi, Connelly, Hoskisson, 2017). According to the SOX provision and the SEC related rules the auditors and the internal auditing committee who doesnt have primary roles in the traditional corporate governance are now having dominant roles in the same. Apart from this some of the other mechanisms which are essential for the good corporate governance is being responsible towards stake holders, compliance with state and federal statutes, listing standards, Implementation of best practices suggested by investor activists and professional organizations. Conclusion The case of the food and dairy organization Parmalat which is based on Italy has been analyzed with relation to the corporate governance. It has been identified and mentioned that the failure in the corporate governance is the primary reason for its failure and some of its corporate governance failures are identified ad mentioned. Some of the mechanisms which could have been adopted by the company so as to avoid the destruction have also been mentioned. The role of non executive directors, auditors etc are also discussed. References Agrawal, A., Cooper, T. (2017). Corporate governance consequences of accounting scandals: Evidence from top management, CFO and auditor turnover. Quarterly Journal of Finance, 7(01), 1650014. Dimopoulos, T., Wagner, H. F. (2016). Corporate Governance and CEO Turnover Decisions. Dias, A., Rodrigues, L. L., Craig, R. (2017). Corporate governance effects on social responsibility disclosures. Australasian Accounting Business Finance Journal, 11(2). Faleye, O., Krishnan, K. (2017). Risky lending: Does bank corporate governance matter?. Journal of Banking Finance, 83, 57-69. Liu, B., McConnell, J. J., Xu, W. (2017). The power of the pen reconsidered: The media, CEO human capital, and corporate governance. Journal of Banking Finance, 76, 175-188. Oyewunmi, O. A., Osibanjo, O. A., Falola, H. O., Olujobi, O. J. (2017). Optimization by Integration: A corporate governance and human resource management dimension. International Review of Management and Marketing, 7(1). Schmidt, C., Fahlenbrach, R. (2017). Do exogenous changes in passive institutional ownership affect corporate governance and firm value?. Journal of Financial Economics, 124(2), 285-306. Shi, W., Connelly, B. L., Hoskisson, R. E. (2017). External corporate governance and financial fraud: cognitive evaluation theory insights on agency theory prescriptions. Strategic Management Journal, 38(6), 1268-1286.