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Chapter 14 Committees in the Business Organisation

2009-07-30T07:09:00.000-07:00

1.What is a Committee?

Committee is a group of people to which some matter is committed.

a) Ad hoc committee –temporary, specific purpose, solve short-term problems

b) Formal committee – part of organizational structure, specific delegated duties and authority

Characteristic of a committee:

a) Permanent

b) Have authority

c) Follow well established procedures

Features of a committee:

a) Rules of procedure

b) Chairperson or secretary

c) Committee papers and reports

d) Notice-announcement of meeting prepared and circulated in advance

e) Agenda-setting out what is to be discussed and in what order

f) Minutes of meeting which are official record of what has taken place

g) Have fairly rigid procedure about speaking, voting rights, proposing the motion and meetings, rights of attendance, agenda construction, quorum

1.1 The Rules of Procedure

Rules are designed:

a) To promote smooth running of a committee

b) To ensure that consistency and fair play are maintained

c) To enable both sides in an argument to state their case

d) To help to minimize the effect of bullying tactics

e) To ensure a proper record of all proceedings is kept

1.2 The size and success of a committee

Size of a committee:

a) Too large – insufficient time for individual to voice their view, but if everyone spoke it would waste valuable time

b) Too few – lack of breadth of expertise, decision may have insufficient deliberation

Successful committee should:

a) be representative of all interests

b) have a chairperson with the qualities of leadership to coordinate and motivate the other committee members, and the ability to handle the group firmly and fairly

c) choose suitable subjects for action, and make precise proposals by agenda

d) circulate reports prior to meeting

e) have clear cut terms of reference

f) have necessary skills and experience

g) be worth the cost of its operation

2.The purposes of committees in an organisation

a) decision-making

b) relaying decisions and instructions

c) brainstorming free exchange to generate new ideas and approaches

d) participative problem-solving

e) providing advice and information

f) consultation

g) act as delaying mechanism

h) oversee a function or procedure

3.Types of committees used in the organisation

Standing committees – for particular purpose on a permanent basis

Ad hoc committees - to complete a particular task

Audit committees - review the company’s accounting policies and internal controls, annual financial statements and the audit report with the company’s external auditors.

4.Examples of committees

4.1Board of directors

- group of people legally charged with the responsibility to govern a company

- elected by shareholders

- purpose is to :-

* lay down strategy, general policy and broad sectional policies

* ensure legal standards are met and accordance with its Articles of Association

* sanction capital expenditure and the method of disposal of profits

* ensure sufficient capital is available and maintain an efficient system

4.2 Steering committee

- oversee a major project ( IT based )

- its role is to :

IT activities are in line

provide leadership at senior level

resource allocation decisions are effective

co-ordinate requirements

create the terms of reference for project team

monitor the progress of various projects

4.3 Works safety committee

- an advisory committee

- it include :

Human resources manager

Safety officer

Department representatives

Works manager

Union representatives

4.4 The Accounting Standards Board(ASB)

- setting accounting standards from the Accounting Standards Committee (ASC) in August 1990

- aim to promote consistency in corporate reporting by creating financial reporting standards

4.5 Ethics committees

- oversee the working practices and procedures in an organization with respect to :

conflicts of interest

confidential information

complaints of customers

transactions involving related parties of the company

5. The advantages and disadvantages of committees

Advantages

Responsibility are shared

Ability to undertake a larger volume of work

Decisions are based on a group’s assessment of facts and ideas

Pool talent, judgement and allows specialization

Improves coordination

Provides focal point for information and action

Improves communication

Disadvantages

Slower decision making

Decision may represent compromise solutions rather than optimum solutions

Waste time and resources

Managers may abdicate their personal responsibility for decision making

Some ‘experienced’ committee members may dominate

Excess procedural matters

Can not act quickly and flexibly

Advantages are particularly important in two respects :

sheer size and complexity of modem enterprises

growing pressures from all sections

Disadvantages can be overcome by:

Authority

Size

Membership

Subject matter

Minutes

-Cost effectiveness

6 The roles of the chair and the secretary of a committee

6.1 The chair

Resposiblities:

Keeping to schedule and agenda

Maintaining order

Ensuring correct procedure

Ensuring impartiality

Summing up or putting the issue to vote and declaring result

Checking and signing the minutes

Must have:

Decisive skills

Ability to silence people in friendly but firm manner

Skill in communicating clearly and tactfully

Skill of summarising

Awareness of non verbal behaviour

Knowledge of relevant regulations

6.2 The Secretary

Resposibilities:

Before the meeting –

Fix date and time
Book venue

Chapt.15 -Business Ethics And Ethical Behavior

2009-07-30T06:48:00.000-07:00

1. Definition of business ethics
Ethics is the analysis of right and wrong, and associated responsibility.Business ethics is the application of ethical values to business behaviour.

Approaches to deciding what is right and wrong includes:
Consequences - the end justifies the means
Motivation of the parties concerned
Guiding principles - treat others as you would like to be treated
Duties - based on religious codes
Key values - importance of human rights

These are often, but not always incorporated into legislation.

2. Why business ethics is important
For the organization
-good ethics should be seen as a driver of profitability
-an ethic framework is part of good corporate governance
-investors are reassured about the risk management
-employees will be motivated in the knowledge

For the individual
-consumer and employee expectations have evolved over recent years
-consumers may choose to purchase ethical items
-employees will not blindly accept orders to act in a manner

3. How can the ethics of business decision be judged?
Ethics goes beyond the legal requirements of business, if an action is illegal, it is almost certainly unethical. There is no universal code of conduct that provides guidance on how a business should conduct itself.

The criteria to be used
- legal ?
- contrary to our company’s adopted code of ethics?
-contrary to any other published official code of ethics
- mind others knowing what you have decided?
- who is affected by this decision

4. How is a profession distinguished from other occupations?
A profession is characterized by
-the mastering of specialized skills
-governance by a professional association
-compliance with an ethical code
-a process of certification

5. The Accountants Role In Promoting Ethical Behaviour:
At the top management level, the professional accountant is the only person who belongs to a profession. Therefore has a duty to act in the interest of the organization. The accountant should conduct himself with courtesy and consideration towards clients and colleagues. They also should not forget that they have a public duty in order to promote ethical behavior throughout the business.

6. Codes Of Ethic And Codes of Conduct:
Most of the companies have approached the business with a set of internal policies or rules in order to enhance the business ethical issues. These rules or policies are regulating throughout the business by instructing the employees to follow them and appointing ethical officers to monitor the policies. These policies can either be called as a corporate ethic statement or a corporate ethic code.

7. IFAC AND ACCA Code Of Ethics:
Both the IFAC and the ACCA have developed code of ethics for their members. The IFAC ‘code of ethic for professional Accountants’ lays down ethical standards to be applied by practicing accountants across the world.

The ACCA’s code of ethic and conduct is published in the annual Rulebook issued by the association. These codes are based on the IFAC code and take similar conceptual frame work.

IFAC and ACCA’s codes of ethics fundamental principles are

Integrity
Objectivity
Professional competence and due care
Confidentiality
Professional behaviour

Chapter 14 Committee in the Business Organisation

2009-07-30T04:37:00.000-07:00

1.What is a Committee?

Committee is a group of people to which some matter is committed.

a) Ad hoc committee –temporary, specific purpose, solve short-term problems

b) Formal committee – part of organizational structure, specific delegated duties and authority

Characteristic of a committee:

a) Permanent

b) Have authority

c) Follow well established procedures

Features of a committee:

a) Rules of procedure

b) Chairperson or secretary

c) Committee papers and reports

d) Notice-announcement of meeting prepared and circulated in advance

e) Agenda-setting out what is to be discussed and in what order

f) Minutes of meeting which are official record of what has taken place

g) Have fairly rigid procedure about speaking, voting rights, proposing the motion and meetings, rights of attendance, agenda construction, quorum

1.1 The Rules of Procedure

Rules are designed:

a) To promote smooth running of a committee

b) To ensure that consistency and fair play are maintained

c) To enable both sides in an argument to state their case

d) To help to minimize the effect of bullying tactics

e) To ensure a proper record of all proceedings is kept

1.2 The size and success of a committee

Size of a committee:

a) Too large – insufficient time for individual to voice their view, but if everyone spoke it would waste valuable time

b) Too few – lack of breadth of expertise, decision may have insufficient deliberation

Successful committee should:

a) be representative of all interests

b) have a chairperson with the qualities of leadership to coordinate and motivate the other committee members, and the ability to handle the group firmly and fairly

c) choose suitable subjects for action, and make precise proposals by agenda

d) circulate reports prior to meeting

e) have clear cut terms of reference

f) have necessary skills and experience

g) be worth the cost of its operation

2.The purposes of committees in an organisation

a) decision-making

b) relaying decisions and instructions

c) brainstorming free exchange to generate new ideas and approaches

d) participative problem-solving

e) providing advice and information

f) consultation

g) act as delaying mechanism

h) oversee a function or procedure

3.Types of committees used in the organisation

Standing committees – for particular purpose on a permanent basis

Ad hoc committees - to complete a particular task

Audit committees - review the company’s accounting policies and internal controls, annual financial statements and the audit report with the company’s external auditors.

4.Examples of committees

4.1Board of directors

- group of people legally charged with the responsibility to govern a company

- elected by shareholders

- purpose is to :-

* lay down strategy, general policy and broad sectional policies

* ensure legal standards are met and accordance with its Articles of Association

* sanction capital expenditure and the method of disposal of profits

* ensure sufficient capital is available and maintain an efficient system

4.2 Steering committee

- oversee a major project ( IT based )

- its role is to :

IT activities are in line
provide leadership at senior level
resource allocation decisions are effective
co-ordinate requirements
create the terms of reference for project team
monitor the progress of various projects

4.3 Works safety committee

- an advisory committee

- it include :

Human resources manager
Safety officer
Department representatives
Works manager
Union representatives

4.4 The Accounting Standards Board(ASB)

- setting accounting standards from the Accounting Standards Committee (ASC) in August 1990

- aim to promote consistency in corporate reporting by creating financial reporting standards

4.5 Ethics committees

- oversee the working practices and procedures in an organization with respect to :

conflicts of interest
confidential information
complaints of customers
transactions involving related parties of the company

5. The advantages and disadvantages of committees

Advantages

- Responsibility are shared

- Ability to undertake a larger volume of work

- Decisions are based on a group’s assessment of facts and ideas

- Pool talent, judgement and allows specialization

- Improves coordination

- Provides focal point for information and action

- Improves communication

Disadvantages

- Slower decision making

- Decision may represent compromise solutions rather than optimum solutions

- Waste time and resources

- Managers may abdicate their personal responsibility for decision making

- Some ‘experienced’ committee members may dominate

- Excess procedural matters

- Can not act quickly and flexibly

Advantages are particularly important in two respects :

- sheer size and complexity of modem enterprises

- growing pressures from all sections

Disadvantages can be overcome by:

- Authority

- Size

- Membership

- Subject matter

- Minutes

-Cost effectiveness

6 The roles of the chair and the secretary of a committee

6.1 The chair

Resposiblities:

· Keeping to schedule and agenda

· Maintaining order

· Ensuring correct procedure

· Ensuring impartiality

· Summing up or putting the issue to vote and declaring result

· Checking and signing the minutes

Must have:

· Decisive skills

· Ability to silence people in friendly but firm manner

· Skill in communicating clearly and tactfully

· Skill of summarising

· Awareness of non verbal behaviour

· Knowledge of relevant regulations

6.2 The Secretary

Resposibilities:

· Before the meeting –

Fix date and time
Book venue
Prepare and issue agenda and related documents

· During the meeting –

Assist the chair

Make notes

Advice the chair on procedure

· After the meeting –

Prepare the minutes

Acting on and communicating the decisions

Deal with correspondance

Chapter 13 : Stakeholder

2009-07-18T07:07:00.000-07:00

A stakeholder is a group or individual, who has an interest in what the organisation does, or an expectation of the organisation. Stakeholders can be broadly classified into three groups: internal, connected and external.

1. Internal stakeholder :
Those intimately connected, and having strong influence on the organisation.

· Employees:
Need/epect-
* Pay.
* Working conditions.
* Job security.

· Managers/directors:
Need/expect-
* Status.
* Pay.
* Bonus.
* Job security.

2. Connected stakeholders:
Those having a contractual relationship with the organisation.

· Shareholders:
Need/expect-
* Steady flow of income.
* Possible capital growth.
* Continuation of the business.

· Customers:
Need/expect-
* Satisfaction of customer’s needs through value for money products and services.

· Suppliers:
Need/expect-
* Paid promptly

· Finance providers:
Need/expect-
* Ability to repay the finance with interest.
* Security of investment.

3. External stakeholders
External stakeholders have no direct link with an organization whether financially or in the running of the company. This group have varying ability to ensure that the organization meets their objectives.

1) Community at large:
Need/expectation:-
* General public, especially if their lives are effected by an organization’s decisions.

2) Environmental pressure groups:

Need/expectation:-
* Organization does not harm the external environment.

3) Government:

Need/expectation:-
* Company activities are central to the success of the economy.

4) Trade unions :

Need/expectation:-
* Taking active part in the decision-making process.

4. Stakeholder conflict

1) Employees vs managers :
* Jobs/wages vs bonus(cost efficiency)
2) Customers vs shareholders :
* Product quality/service level vs profit/dividends
3) General public vs shareholders :
* Effect on the environment vs profit/dividends
4) Managers vs shareholders :
* Growth vs independence

The needs/expectations of the different stakeholders may conflict. It is important that an organization meets the needs of the most dominant stakeholders but others stakeholders also to be considered.

They can use Mendelow’s power-interest matrix to decide who the dominant stakeholder is. The key players can be identified according to the power they have over the organization and the interest they have in a particular decision. The managers must be aware that stakeholder groups can emerge and move from quadrant to quadrant as a result of specific events, so changing their position in the matrix.

Chapter 3 : Organisational Culture

2009-07-18T06:49:00.000-07:00

1 Defining organisational culture
1.1 Definition
Culture- The way we do things around here
- The sum total of belief, knowledge, attitudes, norms and customs that prevail in an organisation

1.2 Components of culture
Key elements :-
(i) norms guide people’s behaviour
(ii) symbols or symbolic action
(iii) share value and beliefs

2 The factors that shape the culture of the organization
Six major influences on the culture :-
(i) size(how large-physical size, employee numbers)
(ii) technology(how advanced-product/productive process)
(iii) diversity(how diverse-product range, geographical spread/culture)
(iv) age(how old-experience)
(v) history(what worked in past-willing learn from mistakes)
(vi) ownership(is owned by sole trader-number of institutional shareholder)

Others influences :-
- individual initiative
- risk tolerance
- clarity of direction
- integration between groups
- rewards system
- conflict tolerance
- communication patterns
- formalization of clothing and office layout
- kind of people employed

3 Writers on Culture
3.1 Schein
1. Schein argues the first leaders of the company create the culture of an organization
2. Once the culture exists, attributes/criteria for the later leaders are determined by the culture.
3. 3 levels of culture:
a) Artefacts- can be easily seen, Eg. The way people dress
b) Espoused values-strategies and goals of organization
c) Basic assumption and values-unseen, mainly at unconscious level, difficult to identify

3.2 Handy
4 cultural types by Handy:
1. Power Culture – one major source of power of influence, usually owner. Usually consists few procedures and rules of a formal kind
2. Role Culture – people describe their jobs by its duties, not by its purpose. Bureaucratic, structure determines authority and responsibilities of individuals.
3. Task Culture –people describes their positions in terms of the results they are achieving. Eg, teams established to achieve specific tasks, Eg; project teams
4. Person Culture-structure and culture built around individuals. Educated and specialists –solicitors, consultants and academic researchers who have come together because of common interest, may use common office services but generally operate independently.

3.3 Hofstede
1. Study for National Differences between over 100,000 IBM employees in different region of the world
2. Five traits/dimensions of culture:
a) individualism vs. collectivism – cohesive/individualistic
b) uncertainty –France & Japan use bureaucracy to reduce uncertainty
c) power distance-tolerance of difference in power
d) masculinity & femininity – distinction between role of gender
e) confucianism & dynamism – attitude to change over the long term

Chapter 2 - Organizational Structure - Part I

2009-07-12T08:08:00.000-07:00

1.1 Different Typres if Structure

There are various patterns of structural changes which are stated below

Entrepreneurial

Entrepreneur owns and manages the business on his own or with the help of an employee. This structure is adapted by business in their early stage.

1. Benefits of this structure
· Fast and easy to decision making
· More responsive to market
· Good control
· Close bond workforce

2. Threats of this structure
· Lack of career structure
· Dependant on the capabilities of the manager
· Cannot cope with diversification

1.4 The Informal Oraganisation and its relationship with the formal organization:
Formal organization structures are those structures which are designed by the management in order to attain its goals. Whereas Informal organization structure consist of the relationships that exists within an organization. These relationships arise due to common interest or friendships.

All the organizations have mix of both the formal and informal structures
Benefits of Informal organizations
· Better motivations
· Better communications
Weakness of Informal organizations
· Inefficient organization
· Opposition to change can be intensified
· The “grape vine effect”

1.5 The Impact of the informal organization on the business:
Manager need to be more aware of the informal structure and ensure that they adapt the formal structure to compliment the informal one. The managers also should concentrate on maintaining a looser formal structure so that the informal structure can thrive. It is highly important for the managers to take in account the informal structures in decision making.

Chapter I - The Business Organization - Part III

2009-07-12T04:58:00.000-07:00

3.1 Different Levels of Planning

1. There are mainly three levels of plannning. That is
a) Strategic planning which involves planning the resources for the long term interest and benefit of the organisation

b) Tactical planning which involves planning the resources at the departmental/divisional level and is considered medium term planning

c) Operational level is planning the details mainly concerned with details and is a stort term plan

2. All the plans are inter-related as one helps in the formulation of the other. Strategic plans helps to formulate tactical plans which in turn is converted into operational level plans like performance targets and budgets.

Example – Strategic planning would decide what goods would be produced for the year. Where as the tactical planning would decide how to use the resources inorder to get maximum benefit. The operation planning would include the extra staff requirements etc.

3.2 The Nature of Strategic Planning

1. Strategic planning looks into the whole organisation and integrates its activities.

2. It looks into the individual products and markets and sets the direction to the organisation.

3. It also takes into consideration the views of stakeholders and also relates the organisation to its environment.

4. It analyses and defines the resources and it looks into becoming a competitor in the market. In the whole it has a long term perspective of the organisation.

3.3 The Strategic Planning Process

This planning process involves three steps. Which are listed below:

1. Strategic Analysis: It is the analysis of internal and external threat or objectives of competitors and the market. It also includes an analysis of stakeholder’s in order to understand their expectations.

2. Strategic Choice: Based on the strategic analysis, the managers have to decide on the basis of the strategy,target market and the most suitable type of growth they want to adopt

3. Strategic Implementation: In this stage the strategies need to be translated into plans for the various types of function in the organization.

Chapter 1 - The Business Organization - Part II

2009-07-12T04:45:00.000-07:00

2. The roles and functions of the main departments in a business organization

2.1 The main functions within an organization

1. Research and development
- Improving existing products
- Developing new products
* customer needs,new ideas,testing & cost

2. Puchasing
- Acquiring goods and services necessary for business
* price,quality,stock levels

3. Production
- Converting raw materials into finished goods
* quality,costs,efficiency,stock levels

4. Direct service provision
- Provide services to clients
* quality,time sheets

5. Marketing
- Identifying customer needs
- Market research
- Product design
- Pricing
- Promotion
- Distribution
* customer needs,quality,promotional,distribution channel & pricing strategy

6. Administration
- Administrative support
- Processing transactions
* efficient,information processing(timely,accurate & relevant)

7. Finance
- Bookkeeping & financial reporting
- Financial controls
- Budgeting
- Raising of capital
* accuracy and completeness of record keeping,monthly management & annual financial reporting

8. Human resources
- Employment
- Rewards
-Training and development
- Grievances and discipline
- Employment services
* staff competence,motivation & welfare,cost,compliance

2.2 Co-ordination

1. The regulation of diverse elements into and integrated an harmonious operation.
2. Achieved between different departments and functions through the budget-setting process

3. Other mechanisms:
· planning meetings
· effective and regular communication
· clear,well documented reporting lines
· supervision

4. Achieved in one or more of following ways:
· Standardised work processes(specified)
· Standardised outputs
· Standardised skills and knowledge
· Direct supervision(hierarchy)
· Mutual adjustment(internal communication)

Chapter 1 The Business Organization - Part I

2009-07-10T20:53:00.000-07:00

1.1 What is an organization

1. Organizations are social arrangements for the controlled performance of collective goals
2. Key Aspects:
a) Collective goals ( common goals)
b) Social Arrangements ( structures that enable people working together towards common goals)
c) Controlled Performance ( systems and procedures ensuring goals are achieved)

1.2 Why do we need organizations?

1. Organizations can achieve results that cannot be produced by individuals on their own, because organizations enable people to:
a) share skill and knowledge
b) specialize
c) pool resources.

2. Organizations are more efficient than individuals, for an organization has the ability of being able to employ the techniques of specialization and division of labour. In particular, organizations:
a) save time
b) pool knowledge
c) are power centers.

1.3 Classifying Organizations by Profit Orientation

I) Profit -seeking organizations
II) Not-for-profit organizations

I. Profit-seeking organizations
Objective: Maximizing wealth of owners, usually expanded into three primary objectives:
a) To continue in existence ( survival)
b) To maintain growth and development
c) To make a profit

Other relating objectives suggested by Peter Drucker :
a) market standing
b) innovation
c) productivity
d) physical and finance resources
e) profitability
f) manager performance and development
g) worker performance and attitude
h) public responsibility.

II. Not-for-profit organizations (NFPs or NPO’s)

1. NPOs unlikely to have financial objectives as primary
2. Instead they are seeking to satisfy particular needs of their members or sector of society. Examples: government departments, schools, charities, clubs
3. One specific category of NFP is a mutual organization that is formed for the purpose of raising funds by subscriptions of members, out of which common services can be provided to serves the interest of their members. Examples:
a) Building societies
b) Trade unions
c) Working-men’s clubs

1.4 Classifying Organization by Ownership/Control

I. Public Sector Organizations
II. Private Sector Organizations
III. Co-operatives

I. Public Sector Organizations
Part of economy concerned with providing basic government services and thus controlled by government organizations. Examples: police, military, primary education, public roads

II. Private Sector Organizations
Private sector, comprising non-government organizations, is a part of a nation’s economy that is not controlled by government. Examples: businesses, charities, clubs ( of which include profit-seeking and not-for-profit organizations)

III Co-operatives

Association of person united voluntary to meet their common economic, social and cultural needs and aspiration through a jointly owned and democratically controlled enterprise.

Characteristics:
1. User-owner
2. User-control
3. User-benefit

· Owned and controlled by their members who buy their goods or use their services
· Meet the needs of member-owners
· Not owned by investors
· Not to accumulate capital for investors

Example: Gujarat Co-Operative Milk Marketing Federation-GCMMF , India.