Question

Assume that you are a CEO of a certain company. The company is building its Internal Environment:

1. Management’s philosophy, operating style, and risk appetite

2. Commitment to integrity, ethical values, and competence

3. Internal control oversight by the board of directors

4. Organizational structure

5. Methods of assigning authority and responsibility

6. Human resource standards that attract, develop, and retain competent individuals

7. External influences

Below, fill up the company's profile.

Then choose 4 aspects from above to give clear and specific examples of. You should provide one good and one bad example for each aspect. BE specific to your own company environment/business/culture (for example by mentioning department names, people names, detailed events, …).

Answer 1

Company Name - Brent International Private Limited

Brent International is in the business of consumer food. It has its own production along with delivery and service channels. The internal environment of Brent is risk averse and more of far sighted. It places more ephasis on associated risk to all the processes and relevant control measures to counter these risks.

1. Internal Control oversight by the board of directors - Board of directors are responsible for entire functioning of the company. A good governance in this matter would be establishing different sub committeess to have aproper vigil with regular frequency and reporting to the board for any happenings. ex - creation of Audit comittee to look into internal control more diligently and reporting of any observations to the board of directors.

Another example could be having centralised power and vigil mechanism. Means board would be involved in all the ground work and would monitor all the activities on its own. Also oculd be over reliance on one single person.

2. Organisational Structure - Any company requires to have a proper hierarchial structure for smooth functioning. A good Org structure would involve proper hierarchial chain. Following scalar chain for any events and listing of exceptions in case of emergency. The Authority and responsibility ot flow from Senior management to directors, to line heads, to managers and below subordinates. Thereby demarking clear structure and each of them knows what is his role and what is expected out of him.

In case of no proper organisational structure there would be confusion in reporting. Like if there is no clear identified reporting manager or if an employee reports to two different heads it would cause confusion and delay in decision making.

3. Human resource standards that attract, develop, and retain competent individuals - Growth of every company depends on its employees, its human strength. A strong Human resource standards not only attracts talent but also helps in nurturing and retaining it which indirectly acts as a catalyst in Companies growth.

A good human resource standard involves rewarding the right talent, periodic review and periodic awards for the deserving employees. A healthy policy not only involves healthy opportunities and providing an equal platform to excel to all the employees but also understanding needs of the employees. Enrolling employees to learning course which is related to their field of work, maternity / paternity leaves, rewards and recognition, etc.

Another example which impacts employees morale is partial behaviour, No rewards and recognition and unfavourable working condiitons like no strict harrasment policy, etc.   

4. External Influences - External factors have a great impact on the performance of the company. There should be strong governance measure over handling the same. A good governance measure would be creation of departments like the compliance department and market conduct teams. For any changes in law, statute, government policy (Domestic or international) relating to the business would be tracked by the compliance team and they would be the ones to assess the impact and circulate the details to the necessry departments who are directly exposed. thereby assessing the impace and necessary changes required. The market conduct team should only be responsible to communicate to the media for issuing any reports or clarifications on behalf of the company. Multiple spokes person will involve unnecesary rumours and tarnish the public image of the company.

An unrelaiable practice would be giving responsibilty to independent department to track legal changes and adapt. This would ignore the synergies and also multiple changes involving other teams. Also the interpretation might be different for every person and the response would also vary.

These are few aspect which brent International will based its internal environment. Adopting best practices and indirectly boosting its internal environment,