Corporate Governance Benchmarking

Companies are always finding ways to be competitive in their industry and making high profits to keep their business successful. Companies have to realize that understanding corporate governance and understanding the consequences of not following the laws, can resulting in losing their business. It is always important for a CEO to rely on their management team to plan their strategy and to involve all department staff in the decision making process when coming up with incentive plans and presenting business projects to other investors.

McBride Financial Services has the potential to become a successful company but the CEO’s lack of leadership and miscommunication has put their company in an awkward position. McBride Financial Services and other companies should benchmark other companies that are dealing with the same situation and ask for help on improving their work related skills and communication. Many companies should use laws to help keep their business on track and to avoid any lawsuits and complaints among shareholders, investors, other business, and consumers.

This paper gives an overview of other companies that have similar issues to McBride Financial Services, the key concepts that each companies faces, and how each company have some similarities and differences among McBride Financial Services. Analysis Key Course Concepts Corporate governance initiatives are essential to the success of all U.S. corporations. A variety of tools exist for the execution of company goals, the financial equality of managers, and the proper compliance of many financial provisions. In U.S. corporations, an independent and effective board is essential for management evaluation, self-governing board initiatives, accurate strategic plans, and a promising relationship between the board and management.

Chew and Gillian (2005) include “independent board leadership, whether through a non-executive chair or a lead director, periodic meetings without management of the independent directors, and formal rules or guidelines as acceptable means to achieve these qualities” (p. 182). Furthermore, a structured compensation strategy is vital to supporting corporate initiatives and rewarding managers in a variety of ways.

Chew and Gillian (2005), believe that an incentive plan “is not a stand-alone management tool” (p. 254). Moreover, a strong incentive plan must be designed to fit the company’s general compensation architecture. An effective incentive program includes a variety of rewards, including base salary, cash incentive plans, equity programs, pension benefits, perquisites, promotions, and so on (Chew & Gillian, 2005). Changing an incentive plan cannot only alter the overall risk-reward dynamics of the compensation structure; it can also affect the company’s ability to achieve strategic goals.

Corporate governance is one of the most important concepts in corporate business because it revolves around how companies operate it business and how it eliminates potential risks among the companies. A CEO relies on investors instead of management teams for target goals because a CEO wants to keep their business successful within the market and remain a top competitor. The lack of ethical practices can cause companies to have many lawsuits with shareholders and potential investors.

Compare and Contrast Although McBride Financial Services is deficient in many corporate governance programs, they have the opportunity to improve their financial management strategy. Hugh McBride is currently acting as President, CEO, CFO, and Chairman of the board. To streamline the company’s strategy, they must implement programs that support their success and governance requirements. 

ETRADE Financial Corporation operates with the support of many committees and guidelines, including Corporate Governance Guidelines and the Nominating and Corporate Governance Committee. These committees and guidelines set high standards for the company's employees, officers and directors. Furthermore, inherent in this philosophy is the importance of sound corporate governance. E*TRADE Financial Corporation believes to fulfill its responsibilities and to discharge its duty, the Board of Directors must follow the procedures and standards that are set forth in these guidelines.

JP Morgan Chase & Co. implements their organizational strategy through a comprehensive code of business conduct and ethics that addresses compliance with law, reporting of violations, employment and diversity, confidentiality of information, protection and proper use of the firm's assets, conflicts of interest, and personal securities (JP Morgan Chase & Co., 2012). JP Morgan Chase & Co. is proud of the 200-year tradition of integrity on which the firm is built and has the utmost confidence in the governance provided by the Board of Directors. The Board of Directors is balanced and represents a diverse group of leaders which is highly independent and well equipped to carry out the functions as a governing body on behalf of the stockholders (JP Morgan Chase & Co., 2012).

Boeing Company, Wal-Mart, Gap Inc., HP, Pizza Hut, and Barnes & Noble Inc. just like McBride Financial Services, have faced challenges that involve corporate governance, unethical practices, violations of state and federal law labors. The CEO, management team, and board of directors make financial decisions for their company. Finding a CFO and CEO that would be a leader to their staff, and providing excellent leadership and communication skills among their management team are just a few of their priorities.

Companies try to avoid lawsuits in order to avoid losing money and negative effects on their consumers. Companies are going to make mistakes but it is up to the company to make some improvements, such as using available information and resources, following company rules and regulations, and relying on management and other staff members to make financial and business decisions.

Boeing has had issues with reporting their complaints to the United States federal labor regulator because it does not understand how the labor laws operate and it miscommunicated within the company. Boeing lost their trust with their shareholders, board of directors, investors, and the audit committee because of the cancellation of programs and mishandling of supply chain operations. Boeing involves management and employees on issues that are going on and come up with strategic approaches to resolve their issues.

Boeing, Wal-Mart, Pizza Hut, and GAP Inc. are more focused on following SOX compliance and protecting their employees, consumers, shareholders and management team from being put in a risky situation. The CEO is involved in all company issues and has better teamwork than Barnes & Nobles Inc., HP, and McBride Financial Services. HP and Barnes & Nobles are still searching for answers on how to improve their company and keep up with other competitors.

Barnes & Nobles and GAP Inc. rely on investors to make their financial decisions, which result in many lawsuits with investors and other companies with which it shares stock. Investors put more pressure on the management team to resolve their issues. Barnes & Noble’s investor, William Ackman, had a bad reputation with other company investors because he was known for not complying with the state labor laws and not following SOX compliance. The company had a competitive advantage over other bookseller companies but did not realize the potential the management team had on dealing with corporate governance. CEO, Leonard Biggio tired to buy out the company instead of fixing the issues and negotiating with other investors that would finances the company.

McBride Financial Services and other companies have faced many challenges such as lawsuits, unethical practices in the workplace, violation of labor laws and SOX compliance, and inaccurate financial report, and etc. Companies learn from their mistakes and have remain successful in their competitive market, although shareholders, and investors had file lawsuits and complaints against companies resulting for business to shutdown or sell their companies to other companies.

Corporate governance, SOX compliance, and other labor laws have play an important role on how many companies operate their business and how successful that companies have remain on top of their competitors. Many companies will have a promising future if a CEO, management teams, and other staff members use the valuable resources, research companies that face financial crisis and unethical practices, and rely on each other to make important decisions not just for their company but for their investors, employees, and etc.