Impact on Mercury’s Working Practices 6 Exploring the issue of Airbrushing at Mercury 7 Evaluating the Board’s Decision 8 Evaluating the Ethically Of Board Decision 8 References 9 Executive Summary The aim of this report is to examine reputation risks at Mercury Newspapers pal and to devise a strategy to help the company to manage risks. The report is divided into three main sections. The first section identifies the risk related issues and highlight initial recommendations. The second section analyses the proposed changes in UK press regulations and its impact on Mercury’s working practices.
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The final section evaluates the Board’s decision regarding airbrushing and analyses the ethical dimension by using Tucker’s Model. In my analysis I have found that mercury is facing some serious risks to its reputation and it need to take immediate action to mitigate them. There has been recent change in the UK press regulation as IPSO has come up with Editors Code of Practice and it appears that it will function strictly in order to regulate the press effectively. Mercury needs to ensure that they follow the new regulations to minimize the further reputation threat ND to avoid any penalty.
The decision to continue airbrushing seems appropriate from the business point of view but there are questions to its ethically. Introduction Reputation Risk is a threat to company’s name as a result of certain activities. It can be the action of the company or its employees. Apart from fair dealings, true representation of its financial position and good governance, a company is also required to be socially responsible for its actions and it should be environmentally friendly as well.
The loss of reputation can impact on company’s positioning, competitiveness, media elation’s leading to a lack of trust and loyalty of stakeholders (EULA, 2010). It can also impact financially by reducing the revenues because people will simply stop buying goods/services from the company (Buffoon et al. , 2000). A company needs to be very careful in every aspect and it should take appropriate measures to control reputation risk because it can occur in everyday interaction with stakeholders (Buffoon et al. , 2000).
Risk manager responsibilities include to advice on threats and dangers a company is exposed to and to control and monitor them. A risk manager works with all arts of the organization to identify the risks in each of them. Risk manager is responsible to make policies to manage the risk and also, to create awareness among the employees about how to reduce the risks in their specific work. Risk manager is responsible to make a framework to assess risks. Then, consider the risks according to their likelihood and impact, and categories them in different groups.
This is done to priorities the risks that need immediate action and then planning on to the response to those risks. Risk managers create a risk profile which reflects the overall exposure of the many to risks. Moreover, risk manager deals with the insurance and banking companies to assure that the organization is covered to the damages and it is in agreement to the loan policies. Risk manager usually reports to the risk committee or to the board of directors because the senior management is actually responsible for taking decisions to manage risks in an organization (Ward, 2001).
Reputation Risks at Mercury Mercury has maintained a good reputation in the past but recently there has been a threat to its reputation because of the accusations that Mercury’s policy is solely to maximize sales. Rival newspaper had also claimed that Mercury hacked into personal emails and phones and as an outcome of that readers have boycotted Mercury’s news. It could damage the company’s image as it shows that mercury is unable to maintain a professional standard and there is already a decline in sales witnessed after the boycott.
Mercury had also been targeted by a campaign called ‘ Be Real’, which is a campaign against airbrushing of photographs of models. They believe that airbrushing of photographs that are in Mercury’s Sunday newspaper is creating a bad impact on publics confidence in their bodies and as a result of that girls and omen suffer from health issues. They have requested mercury to remove airbrushed photographs as well. This can lead to bad publicity of Mercury if appropriate action is not taken. Causes Of Risks Appointment of a risk manager can be advantageous to identify the causes and types of risks.
Mercury is currently facing reputation risks from non different sources. There is a campaign against airbrushed photographs and accusations for hacking into personal email and phones. The first step is to categories and priorities the risks. Risk from airbrushing of photographs is a tragic risk as this is a long-term decision of board about their product. The risk from the hacking of phones and emails scandal is an operational risk as it is a failure to carry out day to day operations according to their codes of ethical conduct. Strategic risks are serious risks determined by the highest level of management I. . The Board. Some of the operational risk can be serious as well and this seems to be the matter here. Recommendations As a risk manager, would recommend that this hacking scandal issue should be investigated in detail as it was a breach of the ethical conduct and the employees involved should be penalized and then the company should respond to the boycott by an article or a news conference that states that company has taken immediate action in regard to this matter and this type of activity is not supported by the company. This is an appropriate method to address the boycott and win the customers back.
Moreover, Mercury need to revisit the employee performance management and quality control strategies to ensure that such matter would not occur again. The airbrushing issue, which is more complex, should to be the priority of the board. Will conduct further analysis to quantify the risk. It would help to consider the possible results and losses of the possible decisions which would help the board to reach an effective decision. Impact of proposed changes in Auk’s approach to Corporate Governance This section briefly reviews the current corporate governance approach and introduction of new regulations regarding UK press.
It highlights how it influences Mercury’s working practices. Corporate Governance and introduction of IPSO Auk’s corporate governance follows the principles-based approach. It is based on ‘ comply or explain’ basis. This means that if a company’s action is against he codes of ‘ Best Practice Corporate Governance Guidelines’ then it requires an explanation. A company will need to explain why their action was suitable for them. The major change in the UK press regulation is the launch of Independent Press Standards Organization (IPSO). IPSO is a body that that regulates the KICK press.
It is run by its members and it can impose fines if a company is going against its rules. Regarding this current issue that Mercury is facing about invading the privacy of people. The Editors’ Code of Practice stated: “ Everyone is entitled to respect for his or her private and family life, mom, health, and correspondence, including digital communications” (IPSO, 2014). And it further explained: “ Editors will be expected to justify intrusions into any individual’s private life without consent. Accounts will be taken of the complainant’s own public disclosures of information” (IPSO, 2014).
There is a huge difference in the Structure of ELK Corporate Governance and UK press regulations. Press regulations are the rules that a company must follow and failure to that will result in penalty. While UK Corporate governance is more lenient approach towards governing a company. A company can justify if they hose not to follow the specified code of practice. However, there are some similarities between the two as well. As UK press rules I have mentioned above allow some flexibility as well because they have been made by the members of the industry. That means it still have the influence of the major companies working in the press.
Impact on Mercury’s Working Practices As the IPSO is operating now, Mercury will need to be more careful regarding the unethical activities. For example: Hacking into others personal emails and phones because if it does so, IPSO will be uncompromising on it and it will port that in media and it may penalties Mercury with fines as well. This will lead to a potential risk of bad publicity and this time it will be directly on media. It can cause a huge damage to the reputation of the Mercury and it may be hard to recover from it. Mercury will also have to pay huge fines which it would want to avoid.
In future Mercury should strictly condemn any act that is against the ethical codes of the company. They will need to follow IPSO actively so that they can make changes in their ethical codes as the changes are made in rules by IPSO. Exploring the issue of Airbrushing at Mercury Evaluating the Board’s Decision The present Corporate Governance arrangement of mercury needs improvement. We can analyses that considering how the board dealt with issue of airbrushing. The board had a detailed discussion about this matter and the result was derived by voting, which had majority members on the favor of continuing the act of airbrushing.
The problem that lies here is that the Board of the Mercury is not balanced, which indicates that the number of executive directors and Nan-executive directors is not the same. This could result in non-executives voice being suppressed in decision making. Good corporate governance practice states that a company should have a balanced board with equal voting power of executives and non-executives. Good corporate governance also states that the board should have diversity in terms of gender, backgrounds, experience and ethnicity.
This is a further issue with the board as most of the members are males; therefore the board lacks the woman’s point of view about this matter as the issue of airbrushing relates to girls and women. Mercury’s decision to continue to airbrush photos can also lead to loss of popularity and ultimately, a loss of revenue/ ales. The Chairman (Viscount Beauty) pointed out a very significant issue. He image pressure on women and men too, can lead to low self- esteem and in some cases more extreme impacts. Cosmetic surgery rates are rising dramatically, as are the number Of people being treated by eating disorders.
We must challenge the commercially-driven conformity of a perfect body’. Then he discussed his concern that if Mercury’s actions got associated to these extreme events it could be very damaging. This should have been taken more seriously by the other board members because if Mercury action test related to any such extreme event it can have a really harmful impact on the company’s reputation and ultimately sales. For example, if news of such extreme event gets viral, it will get the attention of all the readers/viewers and then they might perceive Mercury as a cause of all such extreme events and would avoid Mercury at all.
This could in turn make the company struggle with its sales. Besides, there is already a ‘ Boycott’ against Mercury at present so they should have avoided anything that can lead to circumstances like that. On the contrary, this decision can be beneficial as well. As the readers’ survey suggests that readers don’t want a change in the newspaper and the women readers appear to agree to this as well. Furthermore, according to the research the 20% online sales seem to be dependent on these desirable photographs that are airbrushed/photo-shopped.
In addition to this the investors supported this strategy of increasing sales too and the Board has to consider their view. Conclusively, from the business point of view the decision Seem to have more benefits than the drawbacks. As the sales is the main concern of the business right now and investors are in favor of this business strategy as well. Evaluating the Ethically of Board Decision This section utilizes Tucker’s 5-question model to analyses the ethically of Mercury’s decision regarding airbrushing. Is it profitable?
This question in regard to Mercury’s situation asks if it is profitable to continue the usage of airbrushed photographs in comparison to the alternative decision (that is to discontinue). The decision to continue to airbrush photographs seems to be more profitable than to discontinue it and this could be the reason why the board agreed to it in the first place. The findings from the reader’s survey and focus groups suggest that customers ant Mercury to keep on airbrushing photographs and Mercury’s had to keep its customer satisfied in order to maintain its profitability. Is it legal? It is legal at present.
Advertising Standard Agency has not acted to ban it yet but they might do that in future because the complaints against these airbrushed photographs are increasing greatly. The number of complaints this year has dramatically increased to thousand in comparison to last year when they were only five. Government support of this activity is not specified in the given scenario. Although, a coalition PM Joy Swanson(The Minister of Women and Equalities) is extremely against it as she stated: “ this paper spells out the real damage irresponsible airbrushing is doing to young women’s physical and mental health”.
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But it’s just the view of one of the Member of Parliament and it’s insufficient to judge the view of the state on this matter. Is it fair? It is a complex situation and there is no straightforward answer to it. Considering the investors right to get the maximum returns and in order to maintain regular payments of dividend. It may seem fair because the company can perform better if they continue to airbrush photographs to attract more customers. If Mercury considers those customers who expressed their views in favor of airbrushing through the survey, they have the right to get the best possible product; it might be fair as well.
But then if we acknowledge those customers who feel the pressure on themselves because of these ultra-thin, digitally altered photographs of models, and are affected adversely by having health issues, then we can conclude that it’s not fair. Is it right? The answer to this can vary depending on the ethical theories we take into consideration. In my opinion the main ethical issue here is wrong decision of intriguing airbrushing which can have the adverse outcome on people of the society.
Considering the teleological approach to ethics which make moral judgments on the basis of the consequence/outcome and considering the utilitarian aspect of this approach, it doesn’t appear to be right as the consequences can be terrible considering the increase in eating disorders and cosmetic surgery rates. This may not be the only cause of that but still it has an impact on these issues. Besides, there is research conducted by Girl Guiding UK that supports that it has a bad impact on young girls and lead to health problems. Is it Sustainable?
Sustainable development links to the fact that companies should make decisions not based on financial rewards, but also on environmental and social consequences of their actions as this is the company’s corporate responsibility. Corporate social responsibility is defined as:” Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large” (Holmes and Watts, 2000: p. 8).