Corporate Governance: A Study of Organizational Structures

This report provides a comprehensive analysis of corporate governance and its critical link to organizational success. It begins by defining corporate governance and exploring its fundamental principles, emphasizing the balance of stakeholder interests, including shareholders, customers, management, and the community. The report then delves into the general governance structure of an organization, highlighting the roles of the governing body, including its responsibilities for leading, planning, organizing, and controlling the enterprise. It distinguishes between the roles of management and the governing body and describes how organizations, such as Marks & Spencer, can achieve good governance through diversity, effective risk management, and other key strategies. The report further examines various corporate governance codes, theories, and approaches to minimizing conflicts of interest and developing transparency, accountability, direction, and control within organizational systems and processes. It uses Marks & Spencer as a case study, illustrating the practical application of corporate governance principles.

Corporate Governance and
its link to an organization

Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................4
1.1 Define Corporate Governance and its link to an organization..............................................4
1.2 Identify the general governance structure of an organization...............................................4
1.3 Assess the role of the governing body to direct and control an organization........................5
1.4 Distinguish the role of management and the governing body...............................................6
1.5 Describe how an organization can achieve good governance...............................................7
TASK 2............................................................................................................................................8
2.1 Identify different corporate governance codes to achieve good governance at the senior
management level........................................................................................................................8
2.2 Describe the similarities and differences of various theories affecting corporate governance
development.................................................................................................................................9
2.3 Identify ways to minimize conflicts of interest...................................................................11
2.4 Identify how to develop transparency accountability direction and control in the system
and processes of the organization..............................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Corporate governance refers to the system of rules, process and practices by which an
organisation is directed and controlled. This fundamentally involves balancing the interests of a
many stakeholders of a company. These are shareholders, customers, senior management
executives, financiers, community, government and suppliers. Since corporate governance also
gives the framework for accomplishing objectives of the company. In simple word, corporate
governance introduces to the effective way a corporation is governed. It is also introduces as a
technique by which firms are managed and directed. It means executing the organisation as per
the desires of the stakeholders. It mainly conducted or organised by the board of director and
also the concerned committees for the benefits of stakeholders within an organisation. There are
different benefits of corporate governance such as lowers the capital cost, positive impact on the
share price, ensures corporate success and economic growth, helps in brand formation and
development etc. All these are considered major advantages of corporate governance that helps
business organisation by improving its growth and success at national as well as international
marketplace (Bouchareb and Kouki, 2019). Along with this, there are different principles of
corporate governance including lay solid foundations for management and oversight, structure
the board to add value, promote ethical and responsible decision-making, safeguard integrity in
financial reporting, make timely and balanced disclosure, respect the rights of shareholders,
recognise and manage risk, encourage enhanced performance and many other. All these are main
principles that will help company by improving its financial condition.
For this project, Marks and Spencer is a chosen British multinational organisation that
specialise in selling of clothing, food products and home products, mostly of its own label.
Company was founded in 1884 by Michael Marks, Thomas Spencer and headquartered in
London, UK, England. In M&S, the Board's objective is to develop a sustainable business via
consistent, profitable development and to ensure that business act responsibly within meeting.
Accountability to shareholders and wider stakeholders are the main part of corporate governance
of M&S. Main purpose of this project is to identify the concept of corporate governance of an
organisation.
This project divided into two tasks that include information regarding the corporate
governance. For completing Task 1, there is different information that will be included. These
are definition of corporate governance and its structure, role of governing bodies, role of

management etc. In order to complete Task 2, there is also various information that will be
completed. These are corporate governance codes, similarities and differences of various theories
affecting corporate governance development, ways to minimise conflicts of interest,
development of develop a transparency, accountability, direction and control in the system and
processes. All these are main information that will be required for completing this project
successfully and effectively.
TASK 1
1.1 Define Corporate Governance and its link to an organization
Corporate governance introduces to the practices, process and system of rules by which
firms are governed and managed. In this way, corporate governance model used by an
organisation is the distribution of rights as well as responsibilities by all stakeholders in the
company. It deals with identifying the ways, in order to take effective and appropriate decision.
It provides complete responsibility and ultimate authority to the Board of director. It ensures
transparency which makes sure balanced and strong economic development (Das, 2019).
M&S operates around 1000 stores within the United Kingdom and over 400 within global
marketplace. Company operate clothing, food and home product and other retail enterprise using
the own brand of M&S. Company emphasised on delivering great and effective value for money.
Company believes that effective governance is accomplished through collaboration and
leadership. The work of board of director should enhance, support and compliment the work of
the executive. In order to working together, company organise robust interrogation of actions and
plan, make sure high quality decision making within entire areas of performance, accountability,
responsibility and strategy.
1.2 Identify the general governance structure of an organization
Corporate governance is the effective structure of process, practices and rules used to
manage and direct an organisation. Board of director of company is the primary and essential
force influencing corporate governance. In this structure, board of director represents or shows
the membership of the company. The board sets within place procedures, values, policies and
long term planning to attain the business objectives successfully (El-Bassiouny and El-
Bassiouny, 2019). Governance frameworks structure as well as delineate power and also
governing or management roles within an enterprise. They also set procedures, rules and many

other informational guidelines. Additionally, frameworks of governance define, guide, and give
for enforcement of these processes.
The governance framework or structure of Marks & Spencer has been endorsed by the
Board and also is published on company website so that their shareholders and stakeholders can
observe the standard set by company. Good and effective governance produce higher
productivity and performance. The Board is the protective of the Marks & Spencer brand, its
goodwill and stakeholder relationships; if they do the accurate aspects in right manner, these will
be protected. Within an organisation, numbers of departments are worked including
manufacturing, human resource, marketing, finance, procurement, research and development etc.
All these are main departments of the company that helps them in attainment of competitive
advantages successfully and within less period of time period.
1.3 Assess the role of the governing body to direct and control an organization
Governing body is a group of person that has the authorization to political entity or
exercise governance over an enterprise. They have full authority and responsibility is to make
biding decision within a given geopolitical system or methods by developing news. The primary
role and responsibility of governing body is to protect or defend the well-being, interests and
rights on all the members of an organisation. There are different roles of governing body that
helps in directing and controlling the enterprise. Some essential and effective roles according to
the M&S will be defined as below:
Lead: Governing bodies represents the all members of the company and also ensure they
can participate in business decision. They lead members to develop vision, negotiate and
maximise self confidence etc. This turn to help business organisation by improving its
performance level successfully (Flammer, Hong and Minor, 2019).
Plan: This is another role of governing body the helps M&S in setting overall purpose,
direction, goals, future strategies, ethics and values. This will support M&S in enhancing of its
business values.
Organise: In order to develop governance arrangements and polices, interact with
management, alliances and collaborations, steer relationships with the public as well as among
stakeholders. This will assist M&S in directing business functions and activities in systematic
and effective manner.

Control: This is important role of governing bodies that helps company in controlling all
business activities systematically. Ensure the organisation is legal, accountable and financially
stable, support, hire observe the top manager's performance and monitor or control overall
outcomes. This will be important for M&S in directing as well as controlling an organisation in
successful and systematic manner.
A governing body is obsessed with the ‘large picture’ prospects of these roles and
responsibilities, not the regular management of the company. It works in more effective manner
when each and every member has a proper commitment to and communicated knowledge of
these roles and duties, and how they perform within the organisation. Therefore, governing body
plays important and significant role in an organisation (Hernawati and Surya, 2019).
1.4 Distinguish the role of management and the governing body
Primary role of the management is to acquire people to work with each other for the
purpose of attaining organisation's goals and objectives successfully. It refers to the act of
acquiring people together to achieve desired objectives and goals following available resources
in efficient and effective manner. There are different roles of management within an
organisation. Some roles are defined as below:
Planning: This is a main role of management that helps M&S in planning of business
activities those results in business expansion. This turn to support company in improvement of
its performance and goodwill. This role of the management helps company to attain goals and
objectives, gives a sense of direction and focus.
Directing: This is another and essential role of management that support business
organisation in retaining of talented workers for longer time (Harvey, Maclean and Price, 2020).
In this, business manager become able to guide their employees towards attainment of long term
goals and objectives successfully. This will assist M&S to initiate action and keeps the
organisation moving controlling, hold individual accountable, monitor progress etc.
There are some essential roles of governing bodies such as lead the governing body,
assist steer the performance and direction of the company, earn the regard of other members of
the governing body, be able to mediate when conflict arises etc. All these are effective roles of
the governing body that helps companies in accomplishment of competitive advantages
successfully. There are some important roles of governing bodies which will be defined as
below:

Values guardian: This is a most essential role of governing bodies that means
articulating out institute mission, organisational values and priorities for assets against
undermining. This support business in directing and controlling business activities.
Facilitator: This is a significant role that arguing within the helps of the grants relation
with key stakeholders. This role facilitates M&S in improving of its business functions and
activities nationally as well as internationally (Kamath, 2019).
Political advocate: Meaning of this role is having the contact with MPs (Members
contact details) and also political help from the committee and board. This is important for M&S
in expanding of its business operations and functions internationally in successful way.
Buffer: This is a core function or role of governing bodies. It means monitoring or
controlling the potential divergence. This role support company in monitoring of its business
activities that results are higher productivity and profitability.
1.5 Describe how an organization can achieve good governance
Good governance refers to the way of measuring or evaluating how instructions of the
public are organise public affairs and also mange public resources effectively. Good governance
is when an organisation makes sure that there is a great decision-making procedure within place.
In absence of good governance, a business lacks procedures and policies to make sure
consistency, responsiveness and accuracy to key stakeholders i.e. customers, regulators and
shareholders. There are different ways that will be essential for M&S in achieving of goof
governance. These ways will be explained as below:
Increase diversity: This is an important way for M&S to increase diversity at workplace.
There are different benefits or advantages of having diverse workforce at workplace. These are
higher innovation, better decision making, higher employee engagement, increased profits,
improved hiring results, increased creativity etc. All these best advantages that support M&S in
(Leite, 2020)achieving of good governance essentially.
Prioritize Risk Management: This is another way that assists M&S in achieving of
good corporate governance. This is the role of board to should develop an effective or efficient
system for risk management and oversight. “Risk” is not limited to compliance risks or issues.
It is a wide term that incorporates entire risks to the organisation – e.g. global warming, cyber-
security, financial risks and other types of risks outside the obedience with policy and law
requirements. Efficient risk management show to proper decision-making as well as accurate

risk-reward decisions or cost-benefit. Therefore, risk management is important way for M&S in
achieving of good corporate governance.
Evaluate Board performance: Board of M&S should be wiling to find out their own
weakness and strengths. In case of regular basis, the board must organise a self-evaluation
process that includes the performance of individual directors in an organisation. This process
must be followed for recognising the weakness of board performance and also adopting effective
strategies for improving board performance. This will assist company by reducing the any type
of issues and in attaining of good governance (Masduki and Zaid, 2020).
Therefore, above mentioned all these are considered more effective and useful ways for
M&S in attaining of good governance. There are different advantages of attaining good
governance for M&S. These are stability and growth of company, confidence in investors,
reduce risk and cost of capital, relationship with enterprise, congruence of interests of
management or boards, motivate workforce to get and develop skills, attainment of competitive
advantages in financial market. Therefore, all these are biggest benefits of achieving good
governance.
TASK 2
2.1 Identify different corporate governance codes to achieve good governance at the senior
management level
Corporate governance is understood as the structure of rules, practices and processes that
further will be used for the purpose of performing ethical nature of work. This has major aim
related to guiding of employees and management towards correct nature functioning that further
having no negative impact over others either employees or environment. Adherence of these is
necessary because help in development of organisational image and name in market. This work
as the basic structure for the working of an organisation where everyone has to follow from the
lower to higher level (Murray, Kuban, Josefy and Anderson, 2019). The duty of managing good
governance is not only in the hand of management. Employees and lower level staff have the
similar level of workings in formulation of good governing organisation. The numerous numbers
of benefits which will be associated with the effective performance of this function includes
good brand image, higher productivity, good working atmosphere and higher profitability. The
different codes which has relevance in respect of building good corporate governance within an

organisation includes diverse rules, competent personnel’s, dissemination of timely information,
prioritization of risk management and evaluation of board performance. All these are defined
below in detailed form;
Diverse rules: This is must for an organisation to build the diverse nature rules by
considering culture of employees. This will help an organisation to build the effective standards
which are comfortable for employees to follow. Also, this will help an organisation to play
ethically among their employees without harming their sentiments. The importance of this in
current world is more due to the involvement of globalisation. The benefit of same will be
ascertained in the manner of building good governed company that has capability of fulfilling the
needs of their diverse employees. Simultaneously, this will improve the working of upper
management that they always have to consider the views and culture of employees because this
not only aid in fulfilling governing aspect but help in gaining higher amount of productivity and
profitability.
Competent personnel: This is must for an organisation to have competent personnels at
all levels either lower or upper. Upper is necessary because they have the work related to
development of polices and rules while, lower has the obligation to adhere effectively. So,
fulfilment of this condition not only help the organisation to have good governance but help the
senior management to always maintain good governing activities within an organisation through
building of the competent working teams (Riis, Hellström and Wikström, 2019).
Dissemination of timely information: This is important to maintain corporate
governance because if not informed about the rules then no one will follow. This not only help in
maintaining corporate governance at organisational level but also providing an opportunity that
maintaining it on senior management level where they always responsible for their work related
to dissemination of information to lower staffing levels. The benefit of same they must
ascertained in the form of cooperative working teams and competed tasks on time.
2.2 Describe the similarities and differences of various theories affecting corporate governance
development
There are number of theories of corporate governance that will assist an organisation in
addressing governance challenges from organisation time to time. Corporate governance refers to
the processor procedures of decision making as well as the process by which business decisions
are developed within multinational companies is known as corporate governance. There are

numerous theories which explain the relationship between different stakeholders and an
organisation while carrying out business activities. Name of all theories are Agency Theory,
Stewardship Theory, Resource Dependency Theory, Stakeholder Theory, Transaction Cost
Theory, Political Theory etc. All these are effective and essential theories that helps business
organisation in affecting of corporate governance development (Scherer and Voegtlin, 2020).
Similarities and differences of various theories affecting corporate governance
development
Theories of corporate
governance
development
Meaning Similarities Difference
Agency Theory This theory explains
the relationship
between shareholders
of the company and
direct of the company.
This theory is similar
with the resource
dependency theory
because it affects the
corporate governance
development. This
theory helps in
separation of
ownership and control
in effective manner.
Agency theory is
completing different
from the Transaction
Cost Theory. As there
is cost linked with
every contract with
external party or
business; such cost is
called transaction cost.
Agency theory set
down that people or
workers are held
responsible within
their tasks as well as
responsibilities
Resource Dependency
Theory
This is another theory
that emphasis on the
effective role and
responsibility of board
This theory is similar
with transaction cost
theory. As it states that
executives play a
Resource dependency
theory is different
from the Agency
theory. As, in

director in giving
appropriate access to
resources required by
the company.
significant role in
giving or securing
necessary resources to
a business all the way
through their linkages
to the outside
environment.
Whereas, transaction
theory helps an
organisation by
increasing its value
and importance.
resources dependency
theory, directors can
be classified into four
categories of insiders,
support specialists,
business experts and
community
influentials. In Agency
theory, rewards and
Punishments can be
followed to exact the
priorities of agents.
Transaction Cost
Theory
This theory states that
an organisation has
number of contracts in
the business itself and
with market via which
it develop business
values.
This theory is related
with the resource
dependency theory
because it helps
company in
undertaking of
transaction used the
market is higher.
Human dependency
theory helps in
identifying of
resources that are used
in development of
corporate governance.
This theory is different
from the Agency
Theory. In agency
theory, agent may be
giving in to self-
interest, opportunistic
performance and fall
short of hope of the
principal.
Transactional cost
theory is only
emphasis on cost.
2.3 Identify ways to minimize conflicts of interest
A conflict of interest refers to the situation in which an individual and organisation is
concerned with multiple purpose, financial, interests or otherwise, as well as serving one interest

that could engage working against individual. Organizations need to set up a strategy by which
irreconcilable situations or conflict of interest between businesses and its board, workers and
temporary workers are stayed away from. In this strategy, recognize/list what circumstances
comprise deceptive clashes and accuse a council of the duty of actualizing the arrangement by
screening for the contentions recorded. Such an approach ought to likewise unmistakably express
all the potential coming about moves the association may make because of any irreconcilable
situation found concerning any individual previously connected with the association and any
contender for employ. There are different ways that will be essential and significant in
minimising the conflicts of interest. These ways are described as below:
Make a decision who in the association to indict with the activity of drafting the proper
conflict policy (Solomon, 2020). In an ideal world, the organisation in accuse of creating this
policy along with management its application as well as continued preservation must be the
human resources group of the board of directors, which generally take in one or two members of
the board, the human resources executive and the organization's chief executive or the
accordingly designated representative thereof.
Prevention: This is a most essential way for mitigating or minimising the conflict of
interest. For this, M&S should give workers with professional growth opportunities that boost
knowledge on ethical problems. After a disagreement has happened, work to get out themselves
from one duty or the other to minimise the problem.
Follow Procedure: Associations and overseeing bodies make broad strategies and rules for
the administration of irreconcilable situations. This documentation may incorporate guidelines
and arrangements of precluded exercises. For instance, city representatives in New York must
shun utilizing city hardware to perform volunteer exercises. Make this standard accessible to all
representatives. Consider making it accessible to all possible customers too.
Seek Mediation: Associations got inside an irreconcilable situation may look for help from
an unbiased outsider. This is on the grounds that their expert respectability has been undermined
by the contention. Non-benefits, strict and city organizations can regularly make sure about such
legitimate insight for nothing.
Public Disclosure: Abstain from concealing jobs and duties. Uncovering inclinations in a
public gathering empowers possible accomplices to decide the strategy for them. For example, in
the event that have a recognized arrangement that keeps from tolerating endowments, person are

more averse to be offered bargaining presents. By their position, they likewise build up a crowd
of people to which person are accountable. This straightforwardness is particularly important for
government offices.
Awareness: Be aware of regarding roles and duties. By acknowledging about position and
interests, employees cement their commitments to maintain few beliefs. Reconsider all lawfully
obligatory agreements previous to signing to make sure their consent to everyone the conditions
and terms outlined. Re-read contracts at regular intervals to confirm that no new performance
have desecrated the agreement.
2.4 Identify how to develop transparency accountability direction and control in the system and
processes of the organization
It is important for M&S to develop transparency accounting direction as well as control
within the process and system of the company. There are different ways that will be essential for
an organisation in developing of transparency accountability direction and control. Transparent
accountability and control is the essential process of generating sense of responsibility among
working personnel. It is important for an each and every organisation to develop efficient or
effective transparent accountable direction and control for success of working in market. The
different points needed to adhere for developing direction and control a presented blow:
Set of rules and guidelines: This is important for company and employees to follow all set
of rules and guidelines as it will helps business organisation in development of transparency
accountability or answerability direction as well as control within the process and system.
Company must set all rules and guidance to their employees as they are accountable for this job
that turn to helps in business organisation in improvement of its business system and process
(Solomon, 2020). This will also essential for M&S in improvement of productivity and
performance level. As employees are more accountable for their job and helps other members to
complete all tasks and activities in effective manner.
Necessary to follow by all personnel: It is essential to the all employees either from the
upper or lower level to follow all rules and guidance in the same manner as they build. This is
must because have to bring message at common flower that organisation is serious for their
working where everyone has to perform accountability and responsibly to accomplish given
tasks. This is important all level of employees to follow all rules and standards in systematic

manner. This will facilitate business enterprise in improvement of its growth and development
successfully.
Ensure compliant by special working committee: This is significant for company to hire a
special working committee that helps in increasing of accountability transparency accountability
direction and control in the system and processes of the organization. This is also important for
the company to in achieving of all tasks are completed within a less time period and in successful
manner. Therefore, it is essential and significant for all employees to work in accountable
manner because it helps them in increment of their progress and achievement of better
advantages.
CONCLUSION
From the above mentioned information, it has been concluded that corporate governance
is essential part of business success and growth. This helped company in improvement of its
financial condition. There are different roles of corporate governance such as improves business
performance, motivate employees etc. This turn to assist business in achieving of long term goals
and objectives effectively. Various roles of governing bodies also determined which lead is,
organise, control and plan. The concept of corporate governance has beneficial contributions
towards the organisation. This will create different nature opportunities for an organisation from
where easy for them to accomplish their goals and objectives. The major aspects on which
needed to provide focus while maintaining the corporate governance within an organisation
includes diverse rules, competent personnel’s, dissemination of timely information, prioritization
of risk management and evaluation of board performance. Each one has their own different
contribution in improvement of the governed working of an organisation. The structure of
governance is also playing important role in maintenance of corporate governance within an
organisation. This will work as the guiding factor from where easy to perform the actions and
accomplish tasks. This improves the internal strength of an organisation from where possible for
the higher authorities that they always maintain positive atmosphere at workplace. The major
benefit of corporate governance is improved image of an organisation in front of the stakeholders
along with market participants. The other number of benefits that will be attained includes higher
productivity, higher employee engagement, increased profitability and positive working culture.
It is the duty over management that they focus over their employees and include them in decision

making. This point not helps to gain their support but simultaneously improves ethical working
nature of an organisation.

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