Telstra Board Structure: Ethical and Governance Evaluation

This presentation provides an in-depth analysis of Telstra's board structure, examining its composition and evolution over time. It delves into the company's mission, vision, and core values, highlighting its commitment to simplified and valued technology solutions. The presentation addresses Telstra's complaint management issues and explores the ethical challenges faced by the company, including violations related to privacy concerns and misleading advertisements. It further examines the roles of shareholders and stakeholders, including customers, employees, and government entities, and maps them according to Carroll's Philanthropic Pyramid. The analysis also incorporates the Australian Securities Exchange (ASX) guidelines relevant to Telstra, emphasizing principles related to board structure, ethical conduct, and stakeholder rights.

Telstra

Board Structure

The Board of Directors

About the Board
• Over the years the structure of the board has
not seen much change apart from change in
the board member from time to time.
• Matters of composition are taken care of by
the Board and the Nomination Committee in
accordance with the set framework in the
Nomination Committee Charter.

About
• The company under consideration is one of
Australia's largest telecommunications and media
company, Telstra Corporation Limited. It is involved
with the building and operation of
telecommunications networks. In Australia they
provide 16 million mobile services, 7.5 million fixed
voice services and 3 million retail fixed broadband
services. (Telstra.com.au. 2018)

Contd.
• Telstra is a for-profit organization
• Telstra currently has 31,931 employees
• Telstra's total revenue as of 2014 is $26.3 billion
• Telstra’s total Assets amount adds up to A$39.36
billion
• Telstra is a Australian based organization so not
a multinational organization
• Telstra is listed on the stock exchange as 5.68
per share.
• Telstra is listed up as a national Corporation.

Mission and Vision
Mission
• To build content and technology solutions
that would be simplified, valued and easy
to use. They strive to get to know and
serve their customers better.
Vision
• Telstra’s vision for the future is to provide
a fast and reliable internet connection and
mobile phone service.

Values Articulated
Telstra has 5 core values:
• Care
• Togetherness
• Trust
• Simplicity
• Courage

Complaint Management
• Telstra has had some bad publicity
over the past couple of months, such
as complaints from customers for
bad service.
• Telstra has obviously done something
to fix this issue, as the complaints
have decreased over the past few
years

Ethics
General challenges with international ethics:
• This theory is often based on individuals
• Different traditions (history, business, teaching, philosophy)
• Different judiciary structure
• Culture differences
• Religious differences (including factions)
• Communication challenges (media, definitions, language)
• Governance (ratification, enforcing, overseeing)

Ethical Evaluation
• Consequentialism
• Utilitarianism
• Egoism
• Non-consequentialism

Ethical Violation
• One of the biggest breach of ethical values made by
the company was when they were accused for
tracking the usage of internet of its service users and
sending the data history to a company in the United
States. This raised an issue of privacy concern
(Consequentialism) (ABC News 2018).
• It has been accused of misleading advertisements.
(Egoism)
• Unavailability of detailed costing information to
shareholders. (Egoism)

Share of Profit and Loss
• The role of the shareholders comes with an
element of risk.
• As the company makes money the
shareholders will get a share of the profit as
their dividend. However in the case of a bad
performance, shareholders lie low in the list.

Stakeholders
Individuals and organizations who have a stake
in the institution like individual customers, who
are dependent on modern communications and
internet connectivity for various reasons are all
classified under the category of stakeholders.

Contd.
Who are the stakeholders comprising of:
• Communities
• Customers
• Employees
• Government
• Industry
• Shareholders and investment community
• Media
• Unions
• Suppliers

Stakeholder Map

Carroll’s Philanthropic Pyramid
The 4 major responsibilities stated in the Carroll’s Pyramid are
(Carroll 2016):
• A company, in order to be profitable, must be minimizing cost
and maximizing sales along with making sensible strategic
decisions are the main economic responsibilities.
• The next layer is of legal responsibilities. Here companies are
expected to be law abiding, because the law mirrors show the
society regards as to what is acceptable or unacceptable.
These two responsibilities are required by the society as abiding
by law is just as important as economic performance of the
society or company.

Carroll’s Pyramid
• The ethical responsibilities are different from
the first two responsibilities on the grounds
that ethical responsibilities are not required
but expected by a society whereas the first
two are required. For ethical leadership,
questionable practices must be avoided. For
example, operating above the minimum legal
standards falls under ethical responsibility.

Carroll’s Pyramid
• The philanthropic responsibilities are placed at the top of the
pyramid with their primary aim of being a good corporate unit and
contribute to the improvement in the society’s quality of life.
Corporate contributions which are aimed to support the
community by providing programs or engagements in volunteering
are examples of philanthropic responsibilities. Additionally, the
’One Day. One Cause. One Dollar’ cause encourages employee
participation. Employees who were donating to the Australian Red
Cross Blood Service are supported by Telstra by providing
emergency leave on response and paid leave to employees who
are blood donors. Philanthropic responsibilities are desired and
expected by the society upto a certain extent.

Carroll’s Pyramid

Australian Securities Exchange (ASX)
guidelines
Guidelines that are most relevant to Telstra as per the
Australian Securities Exchange (2018) are:
Principle 2:
The board must be structured to add value: According to
this guideline Telstra must have a board of a size which is
large enough in terms of size, skills, composition and
commitment which will allow for the discharge of duties in
an effective manner. This guideline is well followed by the
company.

ASX
Principle 1: Laying definite foundations for
oversight and management: Telstra has
established and disclosed respective
responsibilities and roles of its board of
members and its management. They are also
clear about how their performance is evaluated
and monitored.

ASX
Principle 3: They must act ethically and
responsibly: Given the size of Telstra it has to
take special care to maintain its reputation
because if damaged its very challenging to
restore. Therefore, stakeholders and expect
them to act responsibly and ethically. This not
only means abiding by the law but also honesty
and integrity. investors

ASX
Principle 6: Respecting the rights of the security
holders: Telstra makes sure that by providing
appropriate information and facilities, the
company strives to respect and protect the
rights of the security holders. This ways the
security holders can exercise their rights
effectively.

References
• ABC News. 2018. Telstra accused of tracking Next G use. [online]
Available at: http://www.abc.net.au/news/2012-06-27/telstra-accused-
of-tracking-internet-use/4094692 [Accessed 16 Sep. 2018].
• Asx.com.au. 2018. Home - Australian Securities Exchange - ASX. [online]
Available at: https://www.asx.com.au [Accessed 18 Sep. 2018].
• Carroll, A.B., 2016. Carroll’s pyramid of CSR: taking another
look. International journal of corporate social responsibility, 1(1), p.3.
• Telstra.com.au. 2018. Telstra - Our corporate strategy. [online] Available
at:
https://www.telstra.com.au/aboutus/our-company/future/Ourcorporat
estrategy [Accessed 16 Sep. 2018].