Discuss about the MBA402 Governance Ethics and Sustainability.
Pressure for performance and its potential impact on employees and managers
Trading.com is a well-known company that provides people with share investment courses as well as ongoing mentoring services. It believes firmly in the philosophy that just about anybody and everybody is capable of becoming a share investor but only if they have the right frame of mind, support as well as education in order to do so. Trading.com came into existence around three years ago, having been established by a man by the name of Jospe Drake. The company today maybe regarded as a business enterprise of medium size, with around a hundred staff offices operating in prominent Australian cities like Brisbane, Adelaide, Melbourne and Sydney. The sales for the company witnessed a dramatic increase about a year ago, and its operations today are expanding faster than ever, largely due to the ability of the company to hire as well as induct new staff. The company’s founder Jospe is very proud about this and gives full credit to the company staff for their fantastic capacity to deliver a strong financial performance. The regional managers of the company however are not entirely excited unlike Jospe about the sudden surge that can be witnessed with regard to the company’s financial growth. Since the company is in need of more and more consultants to keep its business going, employment standards have had to be lowered and often many new people are hired by the company who do not have much or no experience in sales and marketing. This report makes use of a risk exposure calculator to identify the different pressure points that are faced by the company due to growth, the pressure points in the company due to culture, and the pressure points that are there owing to information management.
The pressure for performance at Trading.com is extremely high because of the fact that the company is growing at a really fast pace (Aven 2016). The founder of the company has full faith in his employees and believes that each and every one of them are responsible for the terrific financial performance that the company has been able to witness until date. This faith on the part of the boss in his employees has in turn created huge pressure on the employees to do the best that they can when working for him. It is expected that every employee at Trading.com will work to potential, will be productive and will deliver an excellent performance whenever carrying out an important assignment or task. The whole excitement associated with the fast growth of the company finds its manifestation in all employees working day and night to do their best for the company. Not a single employee at Trading.com is allowed to or given the scope to breathe as they have to tell themselves that they have to do as best as they can when they go to office everyday as their boss expects them to do that much. This is in turn is quite risky in nature as the pressure for performance can negatively impact the employees and the managers at the company. Many of the employees are capable of cracking or collapsing under work pressure both physically and mentally, something that will ultimately result in a loss of human resource for the company. This is because the employee who is unable to cope with the pressure will have to give in his resignation even if he does not have the incentive to. The pressure of performance can definitely ensure quick growth but only for a limited period of time. In the long run, employees need to be allowed to relax and take it easy if they are to give their best over an extensive period time rather than for just a short while (Bahr 2014).
Rate of expansion and the risks of a high-pressure recruitment strategy
The rate at which Trading.com has been expanding is a whole lot faster than the ability of the company to hire and to induct new employees into its ranks. As the business grows, the owner of the company expects plenty of people to be hired, in order to keep the business going in a smooth, efficient and profitable manner. The rate of expansion of the company is one that is sure to create a lot of pressure on human resource administrators who have to work day and night in order to make sure that the company has an extensive employee base to fall back on (Cameron 2018). This means that the human resource professionals at the company will have to do anything and everything they can to ensure that there are plenty of employees that the company can use in order to keep its business going in the right direction. Recruiting is not an easy task and the compulsion to recruit as many consultants as possible for the company is something that will invariably compel the human resource professionals to lower the standard of employment. Not all the people who will be recruited to work for the company shall possess the skills or the experience that is needed to do a good job. It therefore has to be assessed whether such a high rate of business expansion is something that is good for the company or not. While it is indeed good in terms of profit, a high rate of expansion will result in a lowering of service standards in the long run which in turn can affect the business of the company in the future. The clients who are happy with the services that are provided by the company now may turn out to be hugely dissatisfied later on, when they see that the work is being done by inadequate and inexperienced professionals (Chemweno et al. 2017).
The high rate of expansion that is experienced by Trading.com is forcing its HR professionals, as discussed above, to recruit employees, especially consultants for the company who are not up to the mark. Since the company needs a continuous flow of consultants to keep its business running, it is having to lower its employment standards by a considerably extent and employ whoever is willing to work for the company. As a result, many of the employees being recruited for the company are those who have little or no experience in the domain of marketing and sales. They lack both the experience and the acumen that is needed in order to clinch deals and negotiate well enough with clients in order to secure good profit for the company. So while the company is hiring enough people to keep the business operations running, the fact that it is hiring people who are not going to make a success of these business operations will lead to a high risk situation (Haimes 2015). Soon all client negotiations will begin to fail due to the inexperience that is demonstrated by the key consultants or employees of the company and investors may pull back their resources because they will not be able to place any faith or confidence in the people whom they are doing business with. This in turn will result in a huge loss for the company in the long run. Hiring inexperienced employees for key positions in the company, especially consultancy, is something that is more than likely to work well for the short term but it will backfire if the bigger picture is taken into consideration. The inexperienced employees will take the business in a downward direction and the company will then have to look for skilled employees to salvage its business growth, something that it can procure only in lieu of very high remuneration (Dadashzadeh et al. 2017).
The risks of hiring inexperienced employees for key positions
The culture that is prevalent at Trading.com is one that is highly competitive. The consultants working for the company are always pitted against each other in ruthless fashion and those who are able to earn good dividends for the company are rewarded generously via expensive gifts as well as holidays. Doing good work for the company is therefore a top priority for each and every consultant who is working for Trading.com. They want to do their best and give their maximum to the company in lieu of exciting bonuses and rewards like a short trip to an exotic destination or a salary bonus that is pretty substantive. While motivating employees using incentives like salary bonuses and expensive holidays can definitely work well for the business growth of the company, it is at the same time creating a ruthless competitive culture where employees are willing to get each other down in order to race forward. Rather than focusing on collaborative efforts and working for the common good, the consultants are only focused on themselves. They are only interested in how much they can do for the company on an individual basis so as to earn a reward or an incentive (Sadgrove 2016). They have no interest in working in teams or in collaboration with employees to take the company in forward direction. The competitive culture is also high risk as it can give employees the motivation to harm each other if necessary in order to go forward. Employees might be willing to betray their co-workers or turn against them at the drop of a hat in order to get ahead with an individual assignment. Again, while this can be fruitful for the company in the short term, in the long run it will creative a negative work culture where employees hate one another and cannot stand the sight of each other, leading to bad vibes and a high employee turnover rate in the long run (Li 2014).
Trading.com is a company that is not really characterized by well defined channels for information sharing. Communicating with employees is therefore a task that regional managers are not known to do too well (Senkov and Borisov 2016). Most of the regional managers who are working for the company prefer to leave the consultants alone rather than engage with them on any level as the consultation process is something that they find too complex to decipher. The regional managers instead prefer to be surrounded by yes men and yes women who will do as they bid them to do. They are entirely resistant to bad news and focus instead on resolving unanticipated emergencies or flare ups that may arise in the course of work. They have very limited access to employee performance data and do not know much about those working under them at both a professional and personal level. They prefer instead for the consultants to do their work as autonomously as possible and do not interfere. They do not ever want to know what could be going wrong in the domain of operations and prefer the yes men and women who do their bidding to take charge of such negative situations instead and handle employees on their behalf. This in turn creates quite a risky situation for the company because in spite of its fast growth, the company will not be able to continue expanding over a long period of time if its managers and employees are not communicating well with one another. If the executive regional managers are resistant to bad news, it means that they are not willing to be accountable for anything that could go wrong in terms of operations, and would like to place the blame on middlemen or the consultants instead. This will be sure to impact the work culture at the company negatively in the long term (Sterne et al. 2016).
Pressure points due to a competitive work culture
A lot of the business that is carried out by Trading.com rests on the development of courses. Such courses are those that are designed and conceived by Jospe Drake and his team of senior managers. While they operate like a team, in truth though, none of them have any team spirit and neither do they really want to work as a team (Surminski et al. 2016). They all do their work independently and come together to discuss something with the whole value only after they have first created something that is of substantial value. They do not consult each other or take each other’s opinions into account when they sit down to develop courses that are later made available to the clients. The senior managers including the founder of the business prefer working instead in complete isolation and meet with each other to discuss work only after they have first completed their individual projects. This lack of faith and trust in one another and the inability to turn to each other to create something good for the company as a whole, has led to a gradual rise in the failure of new courses. Trading.com is slowly and steadily, losing its ability to develop high selling courses that are presently responsible for the company’s high rate of expansion in the world of business. Since the courses are not being developed through collaborative discussion and effort, the courses that are consequently being created for clients are those that are lacking the essential qualities that could make these popular and successful in the market. If the senior managers made the effort to sit together with each other and discuss client preferences and needs prior to developing the courses, then this problem could definitely be curtailed. So the senior managers working on the development of courses, in complete isolation from one another is something that is definitely very risk for the growth of the business (Thakor 2016).
Due to the high rate of expansion and growth that is experienced by Trading.com, a lot of pressure is created on the internal reporting systems that measure all the critical performance variables. Such reporting systems provide crucial information on the returns on capital that is invested, order backlog, service or product quality and same store sales. Managers tend to turn their attention to the adequate functioning of the internal reporting systems only when there is a crisis in the business. In good times however, they will be more than willing to let such a process slide (Shameli-Sendi 2016). In the case of Trading.com, this is also quite evident. If a crisis or problem is detected, then the internal reporting system will be checked and evaluated by the managers to make sure that operations are being carried out in the desired manner and that the returns for the business are as expected (Lavoie et al. 2015). When there is no sign of disarray, the managers will refrain from bothering about the internal reporting system altogether and will let this be. They will not bother to run all the figures and the facts in their heads to make sure that source of the problem may be detected should it arise in the first place (Uhl and Gollenia 2016).
The gaps in diagnostic performance are those that arise when the computer systems do not work properly. This is when the managers at Trading.com have to spend their time engaging in phone calls with clients and business partners to carry out the work that would otherwise have been done by a computer system. Yet the fact that computer systems can collapse when being aggressively used to keep a fast paced business running is something that cannot be denied. With regard to Trading.com, clients have started complaining about the frustration or negative attitude shown by consultants at the time of booking a course. Until a course is paid for, consultants appear to put in all the effort that is needed in order to sell the course. Once the course is sold, phone calls are not returned and the consultants appear to lose interest in the clients altogether. This is highly risky for the business in both the short term as well as the long term. Client dissatisfaction is not desirable at all if a business is to keep running profitably over a long period of time. Consultants need to be more diligent about phone call communications with clients in the event that the computer systems meant for several bureaucratic work, fail to function properly for a certain period of time.
The degree of de-centralized decision making at Trading.com is one that is quite high since it is a fast paced and continuously expanding business. As is true for all rapidly growing businesses, the local managers are provided with a lot of autonomy and are allowed to take decisions as and when they feel fit. The top-level management of the company gets involved only regarding matters such as goal setting, performance reviews and resource allocation. While this is good for Trading.com in the sense that this enables the company to respond to market demands rather quickly and also gives the regional managers of the company the motivation that they need to keep doing good work, there is a downside as well. The regional managers may not have an idea of the company’s overall corporate strategy and may unknowingly take on a lot of risk in the decision making process. Also, since there are no well defined channels for the purpose of information sharing, senior managers may not get to hear about important events or occurrences until at the last moment, when it is too late to change or do anything to resolve a situation.
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