Essay on The 's Principles Of Business

Essay on The 's Principles Of Business

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Most companies’ primary goal is to maximise profit in order to remain competitive in the market. The concern usually arises in the measures and approaches companies take to achieve that goal and how it will benefit in the short-term and long-term process. (Eccles, 2011)

From 2005 to 2011, HomeServe’s employees were rewarded for selling products and getting more and more customers. (Brignall, 2011a) Two insurance policies were miss-sold to almost 70,000 customers, targeting elderly and vulnerable people, who were given insufficient information on the products being sold to them and the policies turned out to be unsuitable for them. Customers’ complaints were also disregarded for up to six weeks amounting to 48,000 complaints unresolved. Thus, the staff was focused on ‘quantity’ over ‘quality’ regardless of the customers’ needs. (Brignall, 2011b)

These mistakes led to HomeServe breaching a number of FCA’s Principles of Business. In particular, Principle 7 stating “failing to pay due regard to the information needs of its clients and communicate information to them in a way which was clear, fair, and not misleading”, and Principle 6 which states “failing to pay due regard to the interests of its customers and treat them fairly with regard to complaints handling”. (FCA, 2014)

III.1.1. A stakeholder approach

According to Falck, “a company does well by doing good”. Therefore what we try to develop as non-executive directors is the idea to ensure stakeholders’ interests are met either through well trained staff or customer’s satisfaction; and we are confident this would create value, lead to the company’s success and help HomeServe avoid any bad publicity or charges. (Porter, 2011; Falck, 2007)
We noticed that HomeServe 's manageme...


... middle of paper ...


...’s satisfaction. Indeed, HomeServe also aims to adopt a complaints’ office IT system in order for complaints to be addressed and resolved quickly. For instance, it upgraded its digital interaction and recruited 444 engineers in 2015 and now there are over 700 engineers. (HomeServe, 2016a)

In the long term, we would recommend HomeServe to be aware of all internal and external factors contributing to its sustainability, and by doing so they need to take into account not only the expectations of the shareholders but also the stakeholders’ as well.
This is why more Non-Executive Directors (NEDs) are needed, because this long term process could be facilitated by their presence since their role is to oversee company’s issues in a much objective and broader perspective by monitoring the executive directors and acting in the company’s stakeholders’ interests. (Higgs, 2003)

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