First Assessment Board Paper A Critical Review of Board Structure
Why this paper is being presented:
Background to this paper:
This study seeks to analysis and compare the corporate governance policies and procedures of two disability services, Yooralla and Scope. The data will be compiled from the latest annual reports and Websites of the two firms. In here, we shall focus in on the two firms boards of directors and give recommendations on how best to increase the diversity of the boards, countenance of the boards, and the makeup structure of the boardsAlthough there is a marked difference in the composition of the boards of the two organizations, both boards have a combination of executive and non- executive directors, many independent directors and a reasonable degree of expertise and diversity on the board and its committees. All these factors explain the achievement and longevity of these disability companies in the country. A board with members of diverse origin, gender, age, colour, disability, etc. will be in a better position to capture the different factors necessary to understand the needs of the populace it serves and hence make relevant decisions. In the future, social media leaders from both organizations must work hard to ensure there is a further diversification of corporate boards to meet the needs of clients across the globe.
1. Introduction
The total performance of an organization is determined by a number of determinants that has some role to play in the total performance of the firm. These criteria are as such deemed to possess significant importance. This type concerns items like the composition of the businesss board of directors, and the efficiency of the committees responsible for the running of the company. Compare and contrast yourself with the following: Since Scope and Yooralla are among the best disability business organizations in Australia today, the objective of this study is to look at the board makeup and committees of these two organizations. This will enable an analysis of the board structures and committees between these two organizations as well as the comparison of one organization with the other. In an effort to gain a better understanding of the topic of focus of this paper, it is important to analyse, assess and contrast the whole board structure and committee of the two firms. Yooralla and Scope are two of the organizations which both entail the responsibility of volunteering to support the disabled in order to offer help to those who need help and might benefit from taking such help.
2. Board Structure
It has unitary board of compare structure and have both the executive and non-executive directors. The board of directors comprises of 7 directors, including 3, executive directors and 4 non-executive directors (Scope Australia, 2024). Currently, the board has two director-related parties and one chief executive officer. This casts doubts on CEO duality which has been associated with self-interested relationship and absence of accountability structure within the firm. However, the good practice is observed in Yooralla, which has a two-tier management system and includes the supervisory and management boards (Affes and Jarboui, 2023). According to the practice of managing the company, the supervisory board is assigned with the authority in appointing and exercising supervision over the management board. This structure is aligned to a conception of separation of powers and helps attenuate the risk posed by high levels of CEO power (Camilleri, 2017). However, with a majority of executive directors on the management board, one might still complain about a lack of both independence and diversity on the board. Both organisations have put in place board sub committees which include the audit, remuneration, and nomination sub committees. It means that unlike Yooralla and Scope does not have a separate risk committee. The animal was generated by the fact that the disability sector involves interacting with vulnerable people and their safety, and offering a separate risk committee may contribute to reducing the threats and providing broader and more detailed risk analysis (Scope Australia, 2024).
Overall Board Structure
Comparison of the two organisational boards shows that Yooralla and Scope have huge dissimilarities in their board setting. The board structure of Scope means unitary board and hence implies that all the responsibilities of directing, deciding and monitoring of the company are vested in this board. Unlike other board structures, the management board and the governing board are the two levels of the board structures that Yooralla has. The Governing Board exercises overall policymaking and high-level strategic decisions as the corporations ultimate authority, but the responsibility for the general administration of the organization belongs to the Management Board (Garzn Castrilln, 2021).
Executive versus non-executive directors
Both Scope and Yooralla have both executive and non-executive directors on their boards, The executive directors on the board bring in the capability of directly overseeing the implementation of decisions made on the board to manage the organization while non-executive directors on the board, bring in the capability of being able to independently oversee the implementation of board decisions in the overall management of the organization (Ekanayake and Perera, 2014). Scope and had six non-executive directors and two executive directors while on the other hand Yooralla has twelve non-executive director and three executive directors. Most of the important decisions are governed by non-executive directors since they come from outside the organization and are paid directors while the executive director offer internal expertise and knowledge into the organization (Gordini and Cordeiro, 2016).
Connected versus independent directors
Scope and Yooralla both have more independent directors on their board of directors than any other category of directors. Scope employs five independent directors sitting on its board while Yooralla has eleven directors on its board (Denis and McConnell, 2003). This is in conformity with international corporate governance standards mainly, independent directors provide board with diverse experience and professional skills while their decision is not likely influenced by the companys management (Karpoff, 2020).
Additional directorships of other boards
While Scope of business and Yooralla organization has some of the directors sitting on other boards as well. Scope and Yooralla have similar management teams, at the Board level, Scope has two directors while Yooralla has four directors, yet both have one additional directorship each (Ahmad et al., 2023). This may help to introduce different skills and experience into the board but such directors should be able to juggle between their roles and avoid running afoul of conflicts of interest.
Board Committees
While both Scope and Yooralla organizations have board committees as a tool of enhancing the functioning of the board. The Scope has three board committees, which are; Audit and Risk committee, Remuneration and Nomination committee, Investment committee (Ormazbal, 2018). Yooralla has three sub-committees of the board namely- Audit and Finance and Risk Committee, Governance and Nominations Committee, and Quality, Safety and Compliance Committee.
Functions, membership, and responsibilities
In both companies, the activities of committees include providing the board with information on certain sectors of the firm and making proposals to the board. However, the membership of the committees in question is somewhat different. While Scope has its executive and non-executive directors in each committee, Yooralla has only non-executive directors. They sought to strike a balance in the various committees to have a balanced view of different aspects by different strong players in the field. In its current position, Scope has efficient board settings and committees to help it in the practice of correct corporate governance mechanisms, as does Yooralla (Tricker, 2019).
3. Board Diversity
Regarding board of directors diverse experience and skills, the two companies can be said to have a somewhat diverse board. Nonetheless, the organisational gender diversity is very poor with only one female director on the board of Scope and two at Yooralla. Several studies have established documented that gender diversity brings value in the decision-making on corporate management and governance (Camilleri, 2017). This means that; lack of different social and cultural characteristics on boards results in lack of different perceptions when addressing crucial issues. Scope was established in the year 2014 and it is a not-for profit disability services organization which supports people with disability and families and carers. Presently, Scope has a board of directors with seven members; out of these, four are male, and three are females. The average age of these directors is 55 years and the youngsters among them work from 40 to 65 years. In other words, the board of Scope group of companies comprises of different skills and experiences like other boards of different companies (Gordini and Cordeiro, 2016).
Yooralla's Board Diversity
Yooralla is also a not-for-profit disability service provider which was established in 1918. It offers a variety of programs as well as services to those with disabilities and their kin. At the present time, the Yooralla board comprises seven directors of which two are male while five are female. On average, the directors at the organizations board are 60 years old with a conclusion of 60 and 75 years (Mallin, 2018). Like in Scope where Yoorallas board currently has a diverse composition in terms of the persons background and profession. Currently, four directors have a background in healthcare, two in finance and one in law. This way, members of the board will have a wide variety of skills, experience, and knowledge to bring into the board. Currently, in the Yooralla board, out of seven board directors, there are five females, and two males (Ormazbal, 2018).
Comparison of Board Diversity
Thus, both Scope and Yooralla have done well in increasing board diversity by gender (Yooralla, 2024). Nevertheless, ethnic, and cultural diversity is well represented yet theres still room for enhancing the diversity. Since disability companies relate to many kinds of clients, it is crucial to have a diverse board to be closer to the clients and meet their needs. Also, all the boards have a great proportion of directors with healthcare experience (Tricker, 2019). This may be beneficial in that it will bring relevant experience for appreciating health care needs of patients with disability; however, it will reduce the capacity of the board in having relevant information when making decisions of the organisation. A more diverse match of skills and experience would be more appropriate within boards and would shed better light on opinions and concluded decisions. Age distribution wise, Scope has relatively young board but Yoorallas board is slightly older than Scope (Camilleri, 2017).
This might be since Yooralla has been in the market for over a century, while Scope is relatively younger organization. Overall, board should be composed of younger and older individual to cover all possible experiences and views. Although both Scope and Yooralla organisations have been able to exhibit some level of progress in the aspect of gender diversity in their boards, the same cannot be said of ethnic and cultural diversity. Board diversification is so central in raising pragmatic solutions for decision-making, solutions for most of the puzzles, and possibilities for innovation in contexts of relevance to the disability organization (Gordini and Cordeiro, 2016).
4. Recommendations
Recommendation: In this case, Scope should follow the lead of Yooralla to adopt a two-tier board model that would enhance a clearer separation of powers within the firm. However, there is an opportunity to improve the organizations risk management and to do this, it is possible to create a separate risk committee.
Next Steps: As part of a review of the board structure at the current level, discuss the possibility of the company moving to a two-tier system. Recommendations: The implementation of provisions of an independent director to the supervisory board so that they can independently monitor the company. This calls for formation of a risk committee which will be responsible for particular risk management and the overall improvement of risk management systems.
Recommendation: Scope should endeavour to increase gender diversity on its board and think of inviting directors from different culture a in order to bring in a rich cultural diversity in the way they handle matters.
Next Steps:
Recruit a diversity officer to ensure gender diversity and diversity in every other social and cultural aspect in the board is promoted.
One should consider adding target diversity goals into the aspects that define the respective board nominations, to increase the likelihood of board diversity.
3. Recommendations:
In this paper, I made an analysis of the board suggest that Scope needs to make the changes in structure and increase the board of directors diversity. There are various good reasons which the company should seek to have this board be more independent and diverse especially with the aim of enhancing good governance practices as well as avoiding a number of risks.
Recommendation:
Apart from changing the board structure into a two-tier system and the attempt to enhance the gender diversity, Scope ought to pay attention to the whistleblowing- and the anti-bribery policies. This also known is as corporate and internal control, which is a set of measures to prevent misconduct and ensure ethical practices are disseminated throughout the company.
Next Steps:
Review current whistleblowing and anti-bribery policies and possibly fortify them.
Train the directors and employees on Ethical conduct, stakeholders whistleblowing, and Anti bribery policies.
5. Conclusion:
Consequently, Scope can enhance the corporate governance practice by adopting some of the recommendations offered in this paper. The subsequent measures indicated above should help the firm to build the next gait to strengthen the board and to increase the board diversity, and improve risk management in the company to improve the governance system.
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