Keywords: Theories and model of corporate governance in the international context, Board and meeting contents through combined code, Techniques of corporate governance to CQC board, Corporate Governance Assignment Writing Services
Corporate governance is defined as the system and regulations through which organisation is directed and controlled. Globally corporate governance systems vary because of factors inherent in the business environment. These factors are legal systems, accounting standards, societal and cultural values and efficiency of capital markets. Therefore, the difference of these factors leads to agency problem and control system requirement to prevent them (Aziri, 2014).
Care Quality Commission (CQC) is the health and social care independent regulator in England and it aims to ensure that NHS provides quality care in an efficient manner to the public. CQC have executive board and management team to manage the activities and operations of the commission. In January 2016, CQC board meeting was held to elaborate governance and control mechanism of the commission (CQC, 2016; Tricker, 2015).
The objective of this report is to analyse and evaluate the strength and weakness of CQC commission board in light of corporate governance models.
This report is structured into three sections. The first section evaluates the theories and model of corporate governance in the international context. The section analyses the CQC board and meeting contents through combined code. The third section of report applies techniques of corporate governance to CQC board to evaluate overall strength and weakness of commission board performance.
CQC monitor and regulate health and social services in England to set the standard for quality and safety and ensure outstanding service are delivered. Commission has the unitary board, which is composed of 14 members, which include chairman, one executive director, three inspectors and eight non-executive directors. The objective of CQC meeting is to provide stakeholders information about structure, decision, control and performance of the commission.
Noronha (2014) described that governance is a combination of structure, policies and structures framework for leadership to make decisions and action to deliver effective and efficient service in responsible manner. The Anglo-US model is based on outsider approach and characterised by ownership of individual. The model is applicable to UK and US and proposed the legal framework based on shareholders, management and directors interaction.
The advantage of Anglo-US model is that it is developed free market context and evaluate the governance based on separation of ownership and control. However, in recent times, In US, Sarbanes-Oxley act 2002 is enforced for governance and financial practices of organisations. On the other hand, in the UK Combined code, a principle-based approach is used to manage the governance and control of organisation (Haxhi and Aguilera, 2014).
Larcker and Tayan (2015) debated that the Japanese model of corporate governance is multi-dimensional to enclosed financial and industrial network called ‘Keiretsu’. The four key players are bank (insider), afflicted companies, government and management. The focus of model is interaction and relationship of the key players rather power balance like Anglo-US model. In addition, when compare with Anglo-US model, Japanese governance model have little role or voice of non-affiliated shareholders and thus, there are few independent directors to represent outsiders.
The German model is significantly different from Japanese and Anglo-US model, which is based on two articles that are composition of board and rights of shareholders. The board is separated into management and supervisory board as well as shareholders have limited voting rights. In German model, banks are key stakeholders whereas shareholders have limited rights (Eling and Marek, 2014).
To evaluate the board performance of CQC, UK combined code is selected. The code includes management, shareholders, directors, and key areas that are directors (leadership), effectiveness, accountability and remuneration (Plessis and Anil Hargovan, 2014).
According to combined code, an effective board is important for long-term success of the organisation. Moreover, there should be clear segregation of responsibility, which includes running the board, and executive responsibilities of directors and managers. The chairman should be responsible for leadership and non-executive directors’ challenge and propose strategy (Plessis and Anil Hargovan, 2014).
The strength of CQC board is that ‘Peter Wyman’ is chairman to lead the board of 10 direct and 3 inspectors. The role and responsibilities of directors have clearly defined each member of the board have the equal opportunity to challenge and help in the strategy of CQC. Each director in the meeting is raising concern, challenges, and issues and proposing ideas (Haxhi and Aguilera, 2014).
For example, issues of coproduction with patients, whistleblowing and trust are discussed by three different directors. The effectiveness of board is measured through skills and experiences of the directors, independence and responsibilities. The background and experience of each board member of CQC are evident as each member has years of experience and commercial knowledge (Tricker, 2015).
Jackman (2015) stated that a nomination committee is necessary for nomination and appointment of directors. The weakness of board composition was the lack of information on the appointment of the director. There is no information on the nomination committee as in the same meeting new chairman was appointed. Moreover, principle-based approach required that 25% female member nomination on board to ensure the diversity of board.
The female nomination of CQC is 20%, which is below the required level of the female member on the board. Another weakness of the board is that there are only three female members, which raise the issue of gender diversity (Nordberg and McNulty, 2013).
Belcher (2014) elaborated that the increase in the number of female members will increase the gender diversity of board. However, the weakness was no information was available to support the discussion in the meeting. The information related to proposed ideas, new strategic development is not made public, and lack of time to discuss the issue in detail is evident to help in the development of the strategy.
Moreover, director remuneration needs to highlight which should be sufficient to attract and retain directors. However, no information regarding director numerations is enclosed.
Tricker (2015) added that boards members are required to release information for dialogue with stakeholders is important for the mutual understanding of objectives. The timely information allows the other members to prepare for the meeting. The discussion of board meeting highlighted the shortcoming in the audit care inspections. The reason for target shortfall was discussed and answer by Paul Bate and Andrea Sutcliffe who are collectively responsible for strategy and social care audit (Noronha, 2014).
However, there is a lack of information for the stakeholders regarding the issues and comprehensive statement should release the board to explain the matter. One of the important issues, raised by Robert Francis is the lack of whistleblowing system. This should be dealt with immediately priority and shareholders should be engaged in dialogue to implement effective whistleblowing procedure to increase effective of internal controls (CQC, 2016).
The board should present balanced and understandable analysis of financial position and prospects. The strength of the board meeting is the release of monthly performance and finance report. The report enclosed details results on the performance of the board. The three NEDs who are Paul, Robert and Jennifer raise the majority of the questions, which are discussed but the response and strategy to tackle the issues, is not discussed by the board as well as not disclosure is made for other stakeholders (Nordberg and McNulty, 2013).
CQC is an independent commission therefore, it is important to conduct the audit and transparent arrangement should be made for internal control and financial reporting along with the relationship with auditors. Implementation of the sound internal control system and safeguard the public money usage and interest of stakeholders is the responsibility of directors. However, directors have not discussed issued related to internal control and audit issues (Aziri, 2014).
The issue raised by the board members acknowledged and discussed especially David Behan (CEO) has highlighted plans for the operation development and strategy for CQC. The chairman acknowledges the development plans proposed by the CEO and members agreed to release the information for all stakeholders after the meeting. The number of issues highlighted in the meeting is required post meeting discussion and clarification as the directors were short of time to raised questions (Haxhi and Aguilera, 2014).
To summarise, the strength of meeting contents that directors had debate on policy and challenges of CQC as well as board members shared their knowledge and experience. However, the weaknesses of the meeting were the shortage time as well as lack of in-depth discussion on the challenges faced by the CQC.
Care Quality Commission (CQC) is the health and social care independent regulator in England and it has executive board and management team to manage the activities and operations of the commission. The board strength and weakness, as well as performance, were evaluated based on the meeting of the members in January 2016.
In the light combined code, CQC has an effective board, which have the chairman, executive and non-executive directors. The chairman leads the meeting where skills and experiences of director bring diversity and experience for CQC.
The lack of nomination committee and remuneration committee reduce the governance transparency and effectiveness. In addition, lack of information availability, gender diversity and documentation for members prior to meeting represent weakness on the part of chairman. On the other hand, the key strength for board meeting was release of performance and finance report for transparency and governance of the CQC operations.
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