Risks and Recommendations for Trading.com

This report analyzes the key risks faced by Trading.com and provides recommendations to address them. The risks include performance pressure, growth challenges, and organizational culture issues. The report suggests setting fixed salaries, promoting entrepreneurial risk-taking, and adopting an interactive control system.

Governance, Ethics
and Sustainability
2019

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CONTENTS
Introduction...............................................................................................................................2
Risks due to growth....................................................................................................................3
Risks due to organisational culture............................................................................................4
Risks of information handling....................................................................................................5
Conclusion..................................................................................................................................8
Recommendations.....................................................................................................................8
References................................................................................................................................10

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INTRODUCTION
The case of Trading.com will be analysed in this report, which was founded three years ago
in order to offer educational seminars and mentoring services to individuals who wanted to
invest in the stock market. Currently, the company has 100 staff members, and its regional
offices are situated in Melbourne, Sydney, Brisbane and Adelaide. The objective of this
report is to evaluate the key risks which affect the operations of the company. This report
will use the risk exposure calculator (REC) to assess these risks, which were developed by
Robert Simons (Simons 1999). A score between 1 and 5 (5 being the highest) will be given to
companies, and the total score will be evaluated to analyse its position. Recommendations
will also be included for the company to address these challenges.

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RISKS DUE TO GROWTH
In case the employees are facing high-performance pressure in the organisation, then their
performance is likely to suffer since the productivity of employees reduces (Upadhaya,
Munir & Blount 2014, pp.853-875). The employees find it difficult to cope with the high
pressure, and they also find it difficult to work at their highest productivity while facing
burden to achieve targets. While setting targets for employees, the management should
consult with them to make sure that they did not put an unnecessary burden on them.
Targets are not the only source of pressure for employees, a high rate of business growth
also puts pressure on them especially when the company did not hire an adequate number
of workers to share the pressure of the business growth (Guest 2017, pp. 22-38).
This also harms the customer satisfaction level in the company since employees find it
difficult to achieve their targets and provide effective services to customers at the same
time (Saeidi et al. 2015, pp. 341-350). Employees start to reduce their focus on the quality of
their performance to make sure that they meet up with the high growth requirements of
the company. Furthermore, if the company did not have an adequate number of staff
members who have the experience, then it also puts pressure on the employees, and it
becomes difficult for them to make sure that they meet their targets and provide high-
quality services to customers (Haumann et al. 2014, pp. 78-102). In order to provide
effective customer services, the companies should not reduce their employment standards
since hiring inexperienced employees can harm their customer satisfaction level as it
becomes difficult for employees to deliver effective services to customers (Amoopour,
Hemmatpour & Mirtaslimi 2014, pp. 1-6).
Performance pressure
Currently, the pressure on the employees of Trading.com is high due to which it received a
score of 5. The targets are set without their consultants or input, and they receive their
salaries on a commission basis which enforce them to bring more customers to earn a
decent living. The fixed salary of $30,000 is not enough for them to live a comfortable life in
Australia, which further increases pressure on them to the performance that results in
harming their productivity.

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Expansion rate
Trading.com is quickly expanding by already establishing its operations in four major cities
with just 100 staff members, which increase the pressure of growth, and it receives a 5
score. The mentoring services of the company are suffering since consultants are solely
focused on bringing more clients rather than consulting and helping current customers after
their sign up for the course. The number of complaints is increasing, which will soon create
challenges for the company and adversely affect its growth.
Inexperienced employees
Since the number of experienced employees is low in the company, it receives a score of 5.
Trading.com has further reduced the standards while hiring new employees since it is hiring
workers who did not have any sales experiences. New employees work under pressure, and
they find it difficult to provide satisfactory mentoring services to customers, which resulted
in increasing their complaints.
RISKS DUE TO ORGANISATIONAL CULTURE
Effective management of organisational culture enables companies to generate a
competitive advantage since it supports entrepreneurial risk taking the behaviour of
managers and employees who are likely to take calculated risks to expand the operations of
the company (Neves & Eisenberger 2014, pp. 187-205). The policies for entrepreneurial risk
taking are only become successful when parties receive equally high rewards for taking
those risks by putting themselves in uncomfortable situations. Without entrepreneurial risk
taking behaviour, companies cannot stay relevant in the market for a long time since it
harms their customer relationships and relevance of their products and services (Real,
Roldan & Leal 2014, pp. 186-208). This behaviour can only be promoted in a company if the
executives positively react to bad news.
In case the executives resist to hearing bad news, then it creates a fear between employees,
which stops them from taking any risks. They are also less likely to question current
organisational policies and provide their criticism, which could be beneficial for the
company to sustain its growth (Kuo et al. 2015, pp. 2288-2307). The organisational culture
also supports the level of internal competition among employees; however, these policies

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can escalate quickly if the competition is promoted by the management by pitting
employees against each other since it harms their relationship and their ability to deliver
effective services to customers (Frenking 2016, pp. 14-19). The level of ruthlessness in the
internal competition could affect the relationship between existing and new employees in
the organisation that makes it difficult for them to manage their operations and offer
satisfactory services to customers (Hatane 2015, pp. 619-628).
Entrepreneurial risk taking rewards
The policies of Trading.com did not support entrepreneurial risk taking behaviour based on
which the company receives a score of 5. There are no rewards which are given by the
senior management team to employees or managers if they take the entrepreneurial risk.
Rewards are only distributed for the sales performance of employees, which creates
competition between them to increase the number of sales rather than taking
entrepreneurial risks.
Resistance to bad news
The executives of Trading.com and its regional managers resist bad news by avoiding
collecting feedback from employees due to which it receives a score of 5. The managers
have surrounded themselves with ‘yes’ men and women who simply agree with them
without raising any questions or criticising their policies. It makes it difficult for consultants
to provide satisfactory customer services since they are more likely to focus on keeping
managers happy rather than criticising their decisions.
Internal competition
In this regards, a score of 5 is given to Trading.com since its culture supports internal
competition to the extent where employees are pitted against one another, which makes
them ruthless. Their contribution is simply decided by the number of sales which they bring
to the company based on which they receive expensive rewards and holidays. It creates a
negative workplace culture in which employees new employees find it difficult to build a
relationship with existing workers, and it also harms the customer satisfaction level.
RISKS OF INFORMATION HANDLING

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The flow of information should be smooth in the organisation to make sure that executives
have access to relevant business information, which allows them to make effective business
decisions (Wu & Chen 2014, pp. 1141-1164). Transactions in the organisation should be
recorded carefully, and they should be recorded with accuracy to make sure that the
management is able to use such information while taking business decisions. By effectively
evaluating the information of the company, the management can identify key gaps in the
operations of the company that reduces its performance and creates challenges (Kollmann
& Stockmann 2014, pp. 1001-1026). These gaps can be identified if relevant data is collected
from different levels of the company by increasing interactions with lower managerial
personnel and employees. Decentralised decision making also enables the management to
make sure that they make decisions while relying on the expertise of different members of
the organisation (Eliasen, Hegland & Raakjaer 2015, pp. 224-232). Through decentralised
decision making, the burden faced by the senior executives is reduced, and it becomes
easier for the management to make sure that they make decisions after taking contribution
from lower managers and employees to make decisions which are in the benefit of the
company and improves its products and services (Herrera et al. 2016, pp. 2394-2404).
Complexity and velocity of transactions
A score of 3 is given to Trading.com in this factor since the velocity of transactions is high in
the company; however, no policies are implemented to make sure that these transactions
are recorded properly and their information is used to improve the services of the company.
Regional managers are not aware of complex transactions since they did not understand the
work and the direction of the senior management team. Many times, the sales figures are
not reported or reported late by the managers, which make it difficult to understand the
complexity of transactions.
Gaps in diagnostic performance
A score of 4 is given to Trading.com because it has not taken actions to identify gaps in its
performance. Regional managers did not understand the work of consultants, and they did
not interfere with their work. The senior management team also did not implement any
policies to monitor actions of consultants and many times, they did not receive sales figure

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or receive it late which makes it difficult for them to identify the gaps in the performance of
employees.
Decentralised decision making
A score of 5 is given to Trading.com since there are no policies in the organisation that
supports decentralised decision making. The power to make decisions is limited to the
senior management team and the regional managers and employees are not involved in the
process. Due to lack of effective decentralised decision making, the courses of the company
are failing, which affects customer services.

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CONCLUSION
FIGURE 1: TOTAL SCORE OF TRADING.COM ON REC
(Source: By Author)
In conclusion, there are various risks faced by Trading.com, which affects the operations of
the company. The REC provides that a total score between 9 and 20 is considered as safe. A
score between 21 and 34 puts the company into the caution zone. Lastly, a score between
35 and 45 puts the company into the danger zone. A score of 42 puts the company into the
danger zone, which shows that the risks faced by the company are considerably high. It has
to make sure that adequate policies are implemented to address these risks.
RECOMMENDATIONS
Following are suggestions that can help the organisation in ensuring that it addresses its key
risks. Trading.com should set a fixed salary system for employees, and it should give
additional incentives to its customers, which will allow them to improve their mentoring
services. It will reduce internal competition between employees and allow them to focus on
the interest of customers, which will reduce the number of their complaints. A positive

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culture should be established in the workplace in which rewards should be given to
employees and managers for taking entrepreneurial risks in the organisation. Interactive
control system should be adopted by Trading.com in which interactions should be
conducted with managers and employees to make sure that they form strategic decisions
after considering relevant information from their expertise. It will allow them to make
informed decisions which will promote the growth of the enterprise while reducing its risks.

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REFERENCES
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regionalisation and co-management under the post-2013 Common Fisheries Policy’, Marine
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Frenking, S 2016, ‘Feel Good Management as valuable tool to shape workplace culture and
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Hatane, SE 2015, ‘Employee satisfaction and performance as intervening variables of
learning organization on financial performance’, Procedia-Social and Behavioral
Sciences, vol. 211, pp.619-628.
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approach to reduce instability in a master production schedule’, International Journal of
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pp.2288-2307.

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