Corporate Governance Assesment Report

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CORPORATE GOVERNANCE
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Introduction
Corporate governance is the framework of rules and regulations that are followed for the
smooth functioning of the organization. Corporate governance plays a vital role in establishing
the duties of the members of the organization. The main objective of corporate governance is to
make sure that the interests of the stakeholders are identified, and they are treated equally.
Corporate governance not only helps in streamlining the process and gives people accountability
but also helps in eliminating the risk that is involved in a business. Scandals, fraud, and criminal
liability of the organization can be evaded with the help of corporate governance(Fangwa et al.,
2019).
Discussion
Governance issues differ between for-profit and non-profit organizations
Good governance begins where the Board of directors works qualitatively. Corporate
governance works equally for non-profit firms and for-profit firms. The seen governance
variation between them is the purpose of work done by both organizations. Firstly, corporate
governance issues fluctuate because of different board duties and responsibilities between both
companies. Board of directors of for-profit businesses utilizes their power and responsibilities to
search the ways of gaining high possible profit for the shareholder. So they pressurize their staff
to enhance profit for the company(Hawley & Lukomnik, 2018).
Consequently, employees try to attract the customers in different ways through marketing
strategies, advertisements, and giving awareness about the product to customers to gain their
interest in purchasing products. The board directors obliged shareholders in the duty of loyalty
and care. In contrast, non- profit organizations excluded the benefits of shareholders and work

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for charity purposes, human safety, educational, and religious purpose to serve humanity and
protect them from life hurdles. They protect their assets for being misuse and bearing certain
frauds(Hermalin & Weisbach, 2017). They do not focus on maximizing profit to benefit the
company owners and volunteers rather than collect money to bring positives changes in society
by educating humans and facilitating them. Secondly, both companies work differently so that
they have different sorts of governance structures and leadership styles to attain their corporate
mission. In For-profit organizations, the Board of directors makes decisions based on many
factors such as market and financial risk management, market historical and current trends, wish
list given by shareholders, market condition, and future prediction analysis of the particular
product and other metrics before a captivating final decision for the company. Keeping all these
factors collectively can protect them from bearing large loss letter(Hoffman, 2018).
On the other hand, in non- profit organizations, every decision that the Board makes
rounds over mission and vision of the organization. They focus on attracting donations and
grants by considering the current situation of the country, social protection, child education
purpose, and many others. Thirdly, corporate governance issues differ because of the different
financial structures of both companies. For instance, for-profit organizations funds rose from
systematical operations performed and the financial capital market. They mainly hire a paid
employee workforce to meet their objectives as the financial capital market bears ups and downs.
Hence, shareholders prefer to focus on steady financial growth for long term purposes. For-profit
organizations especially consider cash flow, profit and loss statement, financial matrix, and stock
prices whereas the primary source of fundraising of non-profit entities comes from the donation,
grants, mission-related earned income, membership fees, individual efforts of selling products
and supplies to collect an extra amount(Thomsen & Conyon, 2019). They also channelize talent

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of volunteers who work by their will without getting any pay and sometimes hire staff if they
need because most of their donations used towards the cause. They consider tax-free legal
organizations by the government because they fulfill the social services of the community, so the
government encourages them to take responsibility for providing social services(Martin et al., .,
2016).
For example
British Heart Foundation
British Heart Foundation is a non-profit organization located in the United Kingdom.
There are 14 board of trustees, which comprises of both lay members and medically qualified
members. Corporate governance of the British Heart Foundation is more transparent as per
public demands. They do not tend to volunteers for their time and efforts as volunteers work to
fulfill social responsibility. Their leader comprises of a non-executive Board or maybe CEO
sometimes. The CEO and executive director mostly selected from the ex-members of the Board.
BHP
BHP is a global leading resource company that works in extracting oil, gas, and minerals.
Their main branch mainly located in Melbourne, Australia. They work for the profit of the
organization, which leads corporate governance to lead accordingly. They work by involving the
directors and central employees in decision making by keeping in view the market analysis,
current trends, and customer choices and accordingly make the decisions for the individual
projects.
Governance practices differ across countries