Ethical Governance with Spotless Group HLD Ltd

This report analyzes the ethical governance and board orientation of Spotless Group HLD Ltd, a facilities service providing company in Australia and New Zealand. It examines the company's governance mechanism, board composition, communication network, and adherence to ethical principles. The report concludes that Spotless company follows the principles of ethical governance in serving its customers.

Unit Name and Code
Ethical Governance
With Special Reference to Spotless Group HLD Ltd
Student Name
Student ID
6/2/2019

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Executive Summary
The report is all about the service sector that is providing facilities to various businesses.
This industry is recently evolved and gaining its pace gradually. In today’s world, every
individual, as well as organization, need someone to help them in their day to day activities. The
spotless organization is one of those organization, who aims at providing the facility services to
those businesses who are seeking their help. In order to do so, the company needs to be ethically
sound in the industry.
This gives the scope for this project to analyze the functioning of this company with the
help of its governance on the basis of some ethical grounds. The board orientation of the
company is also analyzed, which helped in identifying and understanding the governance
mechanism of the company. it also helped in understanding the communication network of the
company whit its internal and external environment with the help of legitimacy theory. On the
other hand, the board orientation of the company is analyzed through shareholder stewardship
and resource theory. It is concluded and recommended in this report that the Spotless company is
serving its customers by following the principles of ethical governance.
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Contents
Introduction......................................................................................................................................4
Spotless Group HLD Ltd: Overview...............................................................................................4
Facility Management Industry.....................................................................................................5
History of Spotless Group Holdings............................................................................................5
Corporate Governance at Spotless Group Holdings........................................................................6
Report from Chairperson and CEO..............................................................................................8
Remuneration Report...................................................................................................................8
Analysis of Board Orientation based on Theories...........................................................................9
Shareholder Steward Theory and Board Orientation...................................................................9
Resources Theory.......................................................................................................................10
Interpretation of Spotless Group HLD Ltd Communication.........................................................11
Legitimacy Theory and Spotless Company’s Communication..................................................12
Conclusion.....................................................................................................................................13
Bibliography..................................................................................................................................14
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Introduction
This report gives detailed information about the involvement of ethics in the governance
mechanism of an organization. For this purpose, the selected organization is Spotless Group
HLD Ltd. it is a facilities service providing company that serves in Australia and New Zealand
(Spotless, 2017).
The purpose of this report is to present the outlook of the selected company on ethics and
governance for this purpose in-depth research has been done about the organization, its board of
directors, annual report, revenue report, etc.
For analyzing the corporate governance and board orientation of the company, two
theories are used named as shareholder Stewardship Theory and Resources Theory. On the other
hand, in order to interpret the reviewed data, the legitimacy theory and some articles are used.
The essential outcomes of this report state that it is important for every organization to govern its
management in this way that follows various ethical principles (Department, 2019).
Spotless Group HLD Ltd: Overview
The company is an Australian company that operates in the service sector. Its main aim is
to provide various facility services to much business in Australia and New Zealand. The
company was established in 1957 and since then it is working with the motive of providing
integrated services to their clients (Chonko & Hunt, 2018). Currently, the company has a
workforce of approximately 36000 people. From a very long time, the company is growing and
gaining new heights, with the help of acquisitions (Spotless, 2017).
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The company covers so many areas of facility services. In these, it includes services like
Laundry/Linen, Commercial/Leisure, Health/Government/Education, and Township/Base. From
these service sectors of this company, the company is mainly focused and actively participating
in facility services.
Facility Management Industry
This project is based on a company that provides various facility services to business
houses. It comes under an industry named facility management industry. It is an industry that is
comprised of such companies, functions, objectives, activities, which solely focus on providing
facility services to big and small both type of business houses according to their demand
(Banfield & Kay, 2012). Many international organizations have also defined this facility
management term. According to them, a process focuses on the integration of people, processes,
and place within an organization, with the motive of making their work easy and less
burdensome. It also focuses on providing them a way of living quality life (Government, 2019).
History of Spotless Group Holdings
Ethics are the principles that govern one’s behavior in a particular situation. It tells a
person the way of behaving in every situation from complex one to easy one. Recently the
Spotless group has been charged with a case, which can be treated as an unethical issue (Jenifer
& Raman, 2015). In this William Roberts and IMF, Bentham lawyers claimed Spotless Company
with the charges that the company has misled its investors with its financial results of the year in
2015. They were claiming that the company did not disclose a change in its fiscal policy to
investors. In this way, it broke the ethical and legal rule of the full discloser (Department, 2019).
The company denied the charge; however, his goodwill has been suffered a bit.
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In Spotless Group of companies, the ethics are considered the main part, as its main
function solely is to provide facility services to business, which is based on the principle of
ethics. However, the company is too big; sometimes it has become difficult for managers to
control unethical issues and activities taking place in their corporation. Still, it is the
responsibility of the company to govern and manage ethically (Spotless, 2017).
Corporate Governance at Spotless Group Holdings
Spotless Group HLD Ltd has recently published its annual report of the year 2018. By
analyzing the report thoroughly, it can be seen that the board composition of this company is the
mixture of twelve efficient individuals (Banfield & Kay, 2012). In this, most directors are
dependent directors on the other hand only a few of them are independent (Spotless Report,
2018). The composition of the board of the company is as follows:
Sr. No Name of
Board
Member
Designation Dependent/Independent
Director
Specialization
1 Professor
John
Humphrey
Chairman,
Non- Executive
Director
Dependent Director LLB
2 Dana Nelson Chief
Executive
Officer and
Dependent Director Applied Science
Diploma, Masters
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Managing
Director
of Enterprise
3 Michael
Ferguson
Non- Executive
Director
Dependent Director BCom, CA
4 Simon
McKeon AO
Non-Executive
Director
Dependent Director BCom, LLB,
DPH, FAICD
5 Grant Thorne Non-Executive
Director
Dependent Director BSc(Hons), PhD,
FAusIMM,
GAICD
6 Grant Fenn Non-Executive
Director
Dependent Director BCom, CA
7 Garry
Hounsell
Chairman,
Independent
Non-Executive
Director
Independent Director Retired
8 Martin
Sheppard
Chief
Executive
Officer and
Dependent Director Retired
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Managing
Director
9 Diane Grady
AM
Independent
Non-Executive
Director
Independent Director Retried
10 The Hon.
Nick Sherry
Independent
Non- Executive
Director
Independent Director Retired
11 Julie Coates Non-Executive
Director
Dependent Director
12 Phillip
Garling
Non-Executive
Director
Dependent Director Retired
Source: Composition of Spotless Company’s Board of Directors Extracted from Its Annual
Report
It can be analyzed from the above table that the many board members are dependent in
nature and the ratio of dependent to independent directors of the company is 3:1. The current
chairperson of the board that is Professor John Humphrey is a dependent and non-executive
director (Spotless Report, 2018).
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Report from Chairperson and CEO
According to annual report of Spotless company it can be seen that the chairman
Professor John Humphrey and the Chief Executive Officer Dana Nelson, would like to report
and give its investor through their annual report of 2018 that, the company’s main aim is to
satisfy the need of every business by providing them facility services effectively and efficiently
(Dannemiller, DeWitt, & Gajjaria, 2017). In the year 2017-18, the company is having a strong
market position in all the sectors it is serving. In the future, it is looking forward to becoming the
market player in this industry by taking a competitive advantage over other companies (ILM,
2019).
Remuneration Report
As per Spotless Company’s annual report of 30 June 2018, the remuneration report
according to its Board of Directors state for all its stakeholders that the financial year 2018 of
Spotless company shows a link with Downer Group as well as continued execution of the plans,
which were announced previously by the company (JOO, OH, & LEE, 2016). Statutory revenue
of sales increased by 1.3%, EBITDA and EBIT margins improved, the operating cash flow
showed improvements, the net debt of the company reduced and major debt facilities of the
Spotless company are successfully refinanced. These all were the result of increased goodwill of
the company among its stakeholders (Spotless Report, 2018).
Analysis of Board Orientation based on Theories
Board orientation of any company tells about the roles and duties that can be and will be
accomplished by each board member of that company. With the help of board orientation, a
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company can disclose its roles and responsibilities (Spotless Leadership, 2018). This is the
reason for every company to disclose the duties and responsibilities of its each board member in
order to give information to its all stakeholders about the board orientation of the company.
Complete information about the board of directors of spotless group holdings has been
provided in the above section of this report in a table format (Juneja, Transformational
Leadership Theory, 2019). The information about the company’s board of directors is extracted
from the recent annual report of the company. From this information, the complete board
orientation of the company can be analyzed effectively (Juneja, Leadership Styles - Important
Leadership Styles, 2018).
When the board orientation of the company is analyzed with the help of some theories the
analysis can become more efficient, hence in this section the board orientation of Spotless Group
Holdings Ltd is going to be analyzed with the help of two theories that are Shareholder
Stewardship theory and Resources Theory (M.Madera & MaryDawson, 2014). The board
orientation of the company is going to analyze in the following lines:
Shareholder Steward Theory and Board Orientation
Davis and Donaldson developed this theory in 1991-93. They tried to develop a link
between the ownership of the company and the management (Miklosik, Evans, & Hasprova,
2018). In this theory, the managers are tried to leave on their own in order to make them
responsible for their decisions. They act as the stewards, who control the assets of the company.
They choose to be controlled by the proclaimed behavior of the organization irrespective of their
self-serving behavior (Chambers, Harvey, & Mannion , 2013).
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Board Composition: The board orientation of Spotless Group HLD Ltd is analyzed with this
theory, as the theory is only applicable to such board, which has more proportion of dependent
directors. The board of directors in such theory knows are dependent and know very well the
method of running the company so that the assets of the company can increase in number.
Board Focus: With the help of this theory the exact focus of the board can be determined and
analyzed. The board of this company mainly focuses on developing various growth strategies for
the company and its counterparts. It also focuses on the management of capital of the company
(Chambers, Harvey, & Mannion , 2013).
Key Communications: communication is treated as the main aspect of every business. In
Spotless Company, the communication of the company with its stakeholders is given utmost
importance, as it is a facility service providing company. The board members of the company
mainly focus on communicating with one another (Saxena, 2015).
Resources Theory
This theory is concerned with the behavior of the board of directors of a company. This
theory helps in determining the correct behavior in order to analyze the extent to which the
organization is affected due to external resources of the organization and the functions taken care
by the organization in order to cope up with those external factors (G.Bromley & A.Harrast,
2011).
The theory is important and helpful in determining and understanding the board
orientation of Spotless Company, as it helps in gathering, altering and exploiting the raw
materials and external opportunities faster than its competitors in the industry. This theory’s
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main objective is to ensure that the board members of the Spotless company have a combination
of a variety of skills. With the help of this theory, the board orientation of the company is
analyzed in this section through the following elements.
Board Composition: This theory is applicable in understanding and analyzing the board of the
company, as it does not focus on the independent or dependent character of directors of Spotless
company, however, the focus of this theory is to determine the presence of developmental skills
in the board members that can help the company in growth (Muthusamy, 2019).
Board Focus: The board focus according to this theory should be mainly on increasing and
strengthening the skills of the employees of Spotless company, in order to bring effectiveness
and efficiency in organizational functions. It also focuses on the provider of resources for the
company so they can be attracted to the company.
Key Communications: The board orientation of Spotless Company analyzed with this theory
due to the key communication styles that the board members have taken into consideration. the
main communication of the board members according to this theory revolves around the ways of
analyzing and developing the relationships with the raw material providers that can help through
providing efficient resources for continues increase of the business (Mello, 2015).
Interpretation of Spotless Group HLD Ltd Communication
Every business is considered successful if it is fulfilling the demand of its customers to a
full extent. This can be possible due to a sound communication network inside and outside the
organization. in terms of Spotless company, the communication network of the company has to
be strong and influential, as the core activity of the company is to serve its clients by providing
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them various facility related services and this can be possible if there is sound communication
network among the external and internal environment of the company (ILM, 2019).
The communication network of Spotless Company is not very complex. It is the mix of
formal and informal channels, through which employees and connect to other employees. A
proper hierarchy allows the flow of information vertically and horizontally by following different
designations. There is also the presence of grapevine network, through which the employees can
freely communicate with their friends, team members, supervisors, and managers. This
communication style also allows the employees of Spotless group to participate in the decision-
making process of the organization (McKinley, 2012).
The communication network of Spotless Company helps in understanding the ethical
leadership style of the company in managing the corporate affairs of the company. It can be seen
from the above paragraphs that the board orientation of the company is inspired by two theories
that are shareholder stewardship and resource theory. In both of the theories, the communication
of the company with its stakeholders becomes critical. The interpretation of communication
styles of the board of directors of Spotless company is analyzed in below example with the help
of legitimacy theory (Chambers, Harvey, & Mannion , 2013).
Legitimacy Theory and Spotless Company’s Communication
This theory of legitimacy considered to be main theories among other theory of
interpretation any communication networks. The main aim of this theory is to facilitate the
voluntary disclosure of the company's desirable actions towards society in front of its various
stakeholders. In simple words, this theory focuses and aims at helping a company in voluntary
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disclosing its beliefs, values, purpose, methods, desires, and actions in form of its stakeholders or
the people it is going to serve (Adriana Schiopoiu Burlea & Ion Popa, 2013).
In the case of Spotless Group holdings ltd, the theory helps in understanding and
analyzing the motive of the board of the company. it helps in the determination of the desires of
the board and the identification of the governing method of the company. it can be clear from the
board orientation of Spotless company that various steps were taken by the company is mainly in
order to provide the facility related services to its clients and the corporate governance of the
company can be considered ethical in nature, as it is following and doing business by taking into
consideration all ethical grounds (Batenburg, Walbeek, & Maur, 2013).
Conclusion
The Spotless Group HLD Ltd is a company which focuses on providing facility services
to thousands of its clients in Australia and New Zeeland. The company is one of the major
companies in Australia which provide facility services. It is serving its client from a very long
time. The company had a board orientation of twelve board members, who are working together
for the betterment of their organization. Most of the directors of the company are dependent and
non-executive, this is the reason in order to analyses the board orientation of the company
shareholder stewardship theory has been used.
On the other hand, the resource theory also has been used as the company main focus is
on building a strong resource base for the service. The communication network and its
implication on the company has been interpreted with the help of legitimacy theory. It concluded
that the company is having a strong bond of communication internally as well as externally.
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However, there are some lacking regions where the company should provide their utmost
functions in order to become a market player and achieve more profits than before.
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