Agency Theory Versus Stewardship Theory Accounting Essay

Agency Theory Versus Stewardship Theory Accounting Essay Jensen and Meckling (1976) defined an agency correlation as a contractual set-up under which the business owner or the principal engaged a manager or the agent to execute some service on his behalf and may usually entail some decision making exclusively by the agent. The agency theory revolves on the basic proposition about humans, which deals with principals and agents as self-oriented focusing on exploiting their personal advantage (Corbetta and Salvato, 2004; Chua, Steier and Chrisman, 2006). Shleifer and Vishny (1986) explain the agency context in which the financiers needed the agents specialization to obtain maximum returns from their funds, meanwhile the managers since they do not have enough capital on their own would utilize the finances of its principal. Agency theory described managers as opportunistic (Wasserman, 2006) by seizing its optimum advantage for his appointment and role as the mover in the firm for its own benefit, at the expense of the principal (Shulze, Lubatk in Dino, 2003). Both parties goal is to gain that personal advantage in every way possible with the least outlay and expenditure. These expenditures are defined as agency costs (Jensen and Meckling, 1976). This is the total of cash outflows made by the principal for its organization be it in budget proportions, auditing, or employee honorariums; the expenses incurred by the agent for income generating projects and the marginal loss due to the decline in the expected income of the principal as caused by the resulted deviation of motives between the agents resolution and the main goal of the principal to obtain maximum returns from its investments. Thus, high conflicting of interests between the principals and agents that resulted from information asymmetry is the main statement in an agency theory (Davis, Schoorman and Donaldson, 1997). Asymmetry of information between the two parties is displayed when the manager align his capabilities with the expected outcome, result and rationality of the princip al (not knowing his own abilities) leads to satisfying decision-making on the part of the principal while this is an example of adverse selection for the agent (Karra, Tracey and Phillips, 2006). More often than not, this leads to a number of non-satisfactory overall performances of the manager which will in due time lead to the destruction of the firm and the reputation of the agent (Jensen, 2004). As well as for the principals, their incapability of selecting candidates that acts appropriately in all circumstances are proofs of adverse selection. The outcome always entails an ambiguous job description on both parties. Nevertheless, there are still some factors that the agency theory fails to point out, other than motivational or self-gratitude. These maybe are the intrinsic inability or low ability, poor knowledge on business and misinformation of agents that resulted in their failure to deliver high performance for their principals (Davis, Schoorman and Donaldson, 1997). Moral hazard as described by Chrisman, Chua and Litz (2004) is another agency problem confronted by the corporate governance. Its another kind of opportunism which includes utilizing, seizing and assuming all extra benefits from a delegated authority to rule in behalf of the principal. Since it is difficult for the principal to monitor agents, this authority is undeniably has a chance of being abused or misused by the managers. This problems solution is to adapt a good monitoring system and internal self-governance by the principal which entails agency cost (Eisenhardt, 1989). As discussed by Berle and Means in 1932, a company does not behave based with the conventional model in which the agents must act in the best interest of the owners of the firm. Most likely as a consequence, the principal then would guarantee that the managers would act in their best interest. The idea of formulating a contract is relied upon by the agency theory to align the motives of both parties concerned. The goal is to balance the intention by allocating maximized values for shareholders and added incentives and benefits for the managers. Committee audits and performance evaluations by the board may act as effective authority tool for monitoring and scrutinizing potentially opportunistic agents (Mustakallio, Autio and Zahra, 2002). This internal governance system as a solution to ensure the compliance of the agents bounded by the contract will simultaneously be given to a non-executive sect who will be composed of auditors, supervisors and other structural arrangements. This non-executive part of the ownership structure serves as the middle man interconnecting the principal and the agent having a role in monitoring, thereby extending an enormous effect in the change or variation in control (Denis, 2001). In relation to corporate governance, legitimate actions against deceits and other modes of fraudulence may provide some fortification on the part of the principal. Economic analysis suggests that incorporating these solutions to the firm may considerably eliminate opportunism. But there are still factors that need to be considered in this special structure of the firm that is created for internal governance of which other forms of opportunism may arose in those entrusted with responsibility to check on the managers of the firm. The study made by Yermack in 1999 suggests that the board particularly its composition as an authority to monitor managers has an effect on the governance mechanism. The study on the effect of small board of directors in a company got the significant result that there is a positive correlation of this small size to greater market valuation of a company. Meanwhile, Hannifa and Hudaib (2006) stands with the result of Yermack showing results based on more than 300 companies listed in Malaysia which proposed that a large board is less efficient in auditing the performance of the managers compared to a smaller one. Moreover, this huge composition of the board is quite expensive for the companies to maintain in terms of honorariums, commissions and compensation. But in terms of profit and company growth, the large board may seem to be of importance because of the diversity in experiences, knowledge and accountability. Nevertheless, the study made by Guest in 2009, showed a strong result on the non-relation of the large board size to the firm performance however they also robustly imply that they dont suggest to restrict large boards to obtain a better firm performance. All these efforts executed by principals to avoid agency problems, minding the fact that there are still managers that wont deliver exactly what theyre expected to, entails agency costs as discussed. Often, the goal of the principal is to minimize agency costs and focus on profit even if not in growth. Here comes the conflict of organizing the principal-agent relationship (Shapiro, 2005) wherein the idea is exemplified but the measures are often inadequate, thus the alignment of the interests of the principal and manager is hardly ever absolute. A control-oriented firm is then considered necessary under agency theory which suggests that agents will not act to take full advantage of the returns to the principal if and only if systematic self-governance mechanisms are implemented in the firm to protect the shareholders interest (Jensen and Meckling, 1976). Stewardship theory In 1993, Block believes that firms implementing stewardship by front-running service instead of self-interest are those that are most effective in corporate governance. He believes that both the firm and individual needs will be greatly achieved by establishing trust-relationships and treating subordinates as partners. Preston (1998) added a definition of Stewardship Theory to exemplify humane duties owed to all partners that recognizes the importance of a systematic fit of corporate governance considering the elements of its environment. Hosmer in 1996 identifies the need to augment the economic and social responsibilities in governance by recognizing the moral and ethical issues inherent in the stewardship theory. The managers role in stewardship theory is to maximize the potential of the firm and to pursue long-term wealth acquisition with organizational and individual desires best accomplished by assessing collective ends (Hosmer, 1996). The goal is on assuming accountability and responsibility for the organizational community. The model of a manager should be as a steward whose behavior is ordered and organizational; whose collectivistic behavior is of higher reverence than individualistic, self-serving conduct (Albanese, et al 1997). They exemplify that man being intelligent makes rational, not irrational decisions, unlike agency proposers who dispute stewardship. Stewardship theory view employees as assets of the firm as the agency did but they differ in their treatment of the human natures motivation and ability of control. A true steward is driven by his need of self-actualization, growth and achievement without being opportunistic and self-interested in his performance (Mejia et al., 2001). Stewardship ideology proposes that corporate governance structures should exercise advanced authority and prudence. (Davis et al, 1997) .The proponents discussed that high-level of authority and discretion is attained when the Chief Executive Officer (CEO) also assume the position of Chairman of the Board. Stewardship principle argues that the issue is whether or not the ownership structure assists and facilitates in the management achievement of high corporate and firm performance. When the CEO is also the chairman of the board, the organization will be facilitative of this objective letting them assume apparent, clear and objective role expectations and authorize and empower higher and greater management. Thus, stewardship theory is not centralized on self-motivation through own financial gain, but the assumption of two roles as the chairman, at the same time as the manager of the corporation will produce superior results and maximized returns to the shareholders than separation of the roles of the chair and CEO as exemplified by the agency theory. Duality of these roles is considered a functional from in stewardship perspective. According to Fama (1980), being an effective steward of their firm, CEOs and managers are also effectively managing their own assets and careers. Stewardship, however, has its own set of limitations and gaps. Since it is trust-based relationships, it assumes underlying informal agreements and not most of the time, the functional logic or prà ©cised obligations (Mejia et al., 2001). Some authors ( Habbershon, 2006; Miller and Miller, 2005) argue that altruism mainly a compliment of stewardship might be influential in establishing an enormous network for the firm in its early stages, as employing a wide network of trustees or of relatives in cases of a family corporation (less concerned on their specifications) minimizing agency costs compared to a non-family member (Mejia et al., 2001).However, in the long run as the firm becomes more established, the need for well adept and professional managers arise to cope up with the competition thereby expect an increase in the agency costs. In essence, the organizations over all environment systems influence the inclination of managers. In an organization which houses the philosophy for self-actualization and involve employee-owners association, managers are inclined towards the stewardship perspective. Furthermore, collectivist behavior and non-power distance cultures encourages stewardship principles (Davis, Schoorman and Donaldson, 1997). Agency Theory vs. Stewardship Theory Agency theory concentrates primarily on the association between the principal and the agents in corporations, having a formal and contractual nature of relationship however with the presumed goal indifference and incongruence of interest (Sharma, 1997). Meanwhile, Stewardship theory is involved mainly in analyzing the importance of the co-existence of trust-based relationships along with agency relations in firms (Corbetta and Salvato, 2004). The stewardship approach, which encompasses commitment and trust to shared goals and desires exhibited by the principal and the manager alike, aligns the interest of the two parties (Albanese, Dacin and Harris, 1997). In 1997 Davis, Shoorman and Donaldson provided two key points that differentiated the Agency and Stewardship theories. These are the motivation and power comparison. In an agency type, the manager is motivated by personal interests and extrinsic rewards. In the stewardship, the manager is motivated by the human need for intellectual growth, achievement, and self-actualization, and by intrinsic rewards. In an agency theory, the power is institutionally directed while in the stewardship, it is based on personal ability and power to run the particular organization. Davis, et al (1997) argue that the two theories are not mutually exclusive but create a link between agency and stewardship relationships. Clearly, the stewardship theory provided a room for the failures and gaps in the agency theory. A manager of a firm may choose what type of inclination he is up to particularly in decision making as long as these three assumptions are supplemented. First the decision must be mutually agreed upon by both the principal and the agent. Secondly, it will always depend on the situation, and third objective is the expectations of the parties involved. Basing on the result of their study of 22 matrices on the possibilities of the actuations of the principal and agent, the agent can either opt to perform in an agency or in a steward fashion, and so can the principal. There can be four possibilities of outcome in the governance using the link between agency and stewardship and depending on the choice of the concerned parties. Two of which are a concrete exa mple of the agency theory where both have selected to uplift their self-interests and a true stewardship principle which maximize organizational performance. Other two possibilities of outcome which will result in one party taking advantage over the other and one recourse to injustice will result to low performance on the other party. When the principal acts as the steward and the manager acts as an agent, and on the other hand when the principal becomes opportunistic and the manager acts as a steward, which could pave the way for the frustration and declined feelings of self-worth to the aggravated party. The study on the relationship of these theories is very broad, thereby some wouldnt agree to the findings of Davis. According to Albanese, Dacin, and Harris (1997) there is a distinction between agency theory and the agency problem of divided self interest. They discussed that stewardship simply refined and advanced agency theory, it does not present an alternative. Eisenhardts (1 989) review shows that agency theory was continually developed and is studied thoroughly with the incongruent self-interests of the principal-agent as the fundamental supposition. Summary The agency model and stewardship model of the firm provide two different angles for understanding the governance of a firm, its decision making, its internal relationships, and its external relationships. This review advocates that the principal or manager acting as a steward, and employing people with similar expectations, is more in line with the traits needed for an organization to succeed like proper motivation, personal and company growth and self-actualization, thus increasing the potential for maximizing the performance of the firm. Moreover, the advantage of the stewardship model over that of the agency is that it presents managers an organized different array of motivations which could potentially include the interests of all relevant firm movers (Preston 1998).

Eliyahu M. Goldratts The Goal Essay -- Goldratt

The Goal Here are the principles behind the dramatic turnaround story in The Goal. The goal of a manufacturing organization is to make money. Jonah poses this as a question: "What is the goal?" and Rogo actually struggles with it for a day or two, but any manager or executive that can't answer that question without hesitation should be fired without hesitation. But then again, the goal isn't clear to everyone. One of the characters in the book, an accountant, responds to an offhand comment about the goal with a confused "The goal? You mean our objectives for the month?" That's sure to strike a chord with a lot of readers. At an operational level, measure your success toward the goal with these three metrics: Throughput - The rate at which the system generates money through sales. Inventory - The money that the system has invested in purchasing things which it intends to sell. Operational expense - The money the system spends in order to turn inventory into throughput. You could rephrase it this way - and someone does, a bit later in the book: Throughput - Goods out; the money coming in. Inventory - Materials in; the money currently inside the system. Operational expense - Effort in; the money going out. Obviously, your job is to minimize expense and inventory and maximize throughput. Adjust the flow of product to match demand. In particular, don't trim capacity to match demand. It's a standard cost-cutting procedure, sure. But you'll need that capacity later, if you're serious about increasing throughput. Find bottlenecks. If manufacturing is what's limiting your throughput, then the problem isn't that people aren't working hard enough. You have bottlenecks in your manufacturing processes that are holding up everything else. Find the bottlenecks and do everything you can to fix them. Increase their efficiency, even at the expense of efficiency in non-bottleneck places, because the efficiency of a bottleneck directly determines the efficiency of the entire process, all the way through final payment. In the book, a variety of steps are taken to "elevate" and circumvent the bottlenecks. This is where the results start showing up on the bottom line. Soon the plant can actually use information from the bottleneck to do an effective job of scheduling work and (for the first time) reliably predicting when orders w... ...deas in novel form. There were already a dozen essays or articles on manufacturing management paradigms; you couldn't sell those. Novels sell better than essays. They're more readable. Once you realize that managers will buy thousands of copies of a "business novel" and make it required reading for their subordinates, a novel is the only way to go. (Also, The Goal was originally intended as marketing for Goldratt's plant management software company.) My main objection to The Goal is that it's fiction. Rogo makes a few changes, and his problems miraculously go away. It just works. Granted, the policies seem like good sense. But the unrealistic points are glossed over. Maybe plant managers in real life have the authority to adopt dramatic changes in the way they operate, the way Rogo did. Maybe it's easy to convince your top accountant that all his models are wrong, even though you have no accounting experience yourself. Maybe the average plant has an IT department that can create new scheduling software out of thin air in a few days. Maybe not. Goldratt claims a lot of real-life plant managers say they've turned The Goal into a documentary. That's a book I haven't read yet. Eliyahu M. Goldratt's The Goal Essay -- Goldratt The Goal Here are the principles behind the dramatic turnaround story in The Goal. The goal of a manufacturing organization is to make money. Jonah poses this as a question: "What is the goal?" and Rogo actually struggles with it for a day or two, but any manager or executive that can't answer that question without hesitation should be fired without hesitation. But then again, the goal isn't clear to everyone. One of the characters in the book, an accountant, responds to an offhand comment about the goal with a confused "The goal? You mean our objectives for the month?" That's sure to strike a chord with a lot of readers. At an operational level, measure your success toward the goal with these three metrics: Throughput - The rate at which the system generates money through sales. Inventory - The money that the system has invested in purchasing things which it intends to sell. Operational expense - The money the system spends in order to turn inventory into throughput. You could rephrase it this way - and someone does, a bit later in the book: Throughput - Goods out; the money coming in. Inventory - Materials in; the money currently inside the system. Operational expense - Effort in; the money going out. Obviously, your job is to minimize expense and inventory and maximize throughput. Adjust the flow of product to match demand. In particular, don't trim capacity to match demand. It's a standard cost-cutting procedure, sure. But you'll need that capacity later, if you're serious about increasing throughput. Find bottlenecks. If manufacturing is what's limiting your throughput, then the problem isn't that people aren't working hard enough. You have bottlenecks in your manufacturing processes that are holding up everything else. Find the bottlenecks and do everything you can to fix them. Increase their efficiency, even at the expense of efficiency in non-bottleneck places, because the efficiency of a bottleneck directly determines the efficiency of the entire process, all the way through final payment. In the book, a variety of steps are taken to "elevate" and circumvent the bottlenecks. This is where the results start showing up on the bottom line. Soon the plant can actually use information from the bottleneck to do an effective job of scheduling work and (for the first time) reliably predicting when orders w... ...deas in novel form. There were already a dozen essays or articles on manufacturing management paradigms; you couldn't sell those. Novels sell better than essays. They're more readable. Once you realize that managers will buy thousands of copies of a "business novel" and make it required reading for their subordinates, a novel is the only way to go. (Also, The Goal was originally intended as marketing for Goldratt's plant management software company.) My main objection to The Goal is that it's fiction. Rogo makes a few changes, and his problems miraculously go away. It just works. Granted, the policies seem like good sense. But the unrealistic points are glossed over. Maybe plant managers in real life have the authority to adopt dramatic changes in the way they operate, the way Rogo did. Maybe it's easy to convince your top accountant that all his models are wrong, even though you have no accounting experience yourself. Maybe the average plant has an IT department that can create new scheduling software out of thin air in a few days. Maybe not. Goldratt claims a lot of real-life plant managers say they've turned The Goal into a documentary. That's a book I haven't read yet.

Need for Localization: Foreign Company’s Obligations to Local Essay

This paper gives a detailed analysis of the local culture and customs that the foreign companies would have to adjust to in order to remove the social and psychological barriers which they would inevitably have to come up against during their overseas operation. The paper lays emphasis on the flexibility approach and localization as the main aspect for foreign companies in order to succeed. The study reveals that although the impact of globalization has brought greater degree of homogenization in commercial procedures, it still remains a distant dream when different cultures mingle making it imperative for these companies to accept heterogeneity as the only way to enter foreign markets. Customs and norms are die hard behavioral habits and have been ingrained in the society over a long period of time and not easily removable or made to overlook. This is especially so while operating in foreign soils and in many instances this has been seen as one of the biggest hurdles facing companies. Rules of law and government rules and regulations may exist but assuming that all businesses are managed by people and for the people, interaction between people is inevitable for its success. Some parent companies may of course have lesser amount of interaction due to the nature of their products or services yet on the whole it is generally seen that whatever be the business norms of the foreign company it has to make discernible changes when it goes into business in a foreign soil. Franchises and branches are actually an extension of the parent company that has been grounded and molded in a foreign soil by a larger participation of the local community within the internal and external environment of the organization. It is also seen that the cultural differences may be slight, marginal or make very great impact on the business due to the cultural difference that exists between the organization’s country of origin and the foreign soil. Thus, it is quite imperative on the part of the foreign company to make some structural changes which should include a changed human resource practice and a changed view of the organization as a whole in certain aspects of beliefs, assumptions and behaviors and above all understanding the positive sides of other cultures. In case the foreign company is hell bent on imposing the customs and assumptions of its own country of origin stating them to be its organizational culture then it would sooner or later find itself out of business. Hence, being indifferent and unmindful of the local customs can be very catastrophic if it doesn’t allow a certain degree of flexibility in bases that are situated on the foreign land. Areas of Conflicts A foreign company while setting its operational bases in another country invites certain risks from conflicts that it not quite seen in the home country. Firstly, the company if it happens to be a Western one inevitably tries to go about its business taking for granted that globalization has brought in a greater degree of flexibility and that the English language is the only internationally accepted language of the world population. This may sound quite okay within cultures that are a part or partake of Westernized conducts and behavioral patterns yet when such a company tries to place its foot on say Africa, the Middle East and the Asian countries then it is a different story altogether. For one there is greater degree of difference between the two cultures which if not properly understood and practiced may prove to be disastrous for the company. For instance, it is the standard procedure in the Western business to make an agreement that after a fruitful negotiation followed with signing of documents and shaking of hands which indicates that the agreement has been done as per the unanimous consent of the parties involved. However, this doesn’t hold well in the Middle East where coming to a formal agreement would mean that the beginning of several serious negotiations is on the way. In other oriental cultures the start of any business transaction is preceded by a ritualistic performance, the majority being religious based as well after ascertaining the stars on the almanac. In China there are three traditional philosophies namely the Confucianism, Taoism and Buddhism and are generally considered as the foremost philosophies for facilitating social interaction. A foreign company trying to open its branch in China would indeed be in conflict with the local customs and beliefs and hence do very poorly if it doesn’t understand the situation. This is more so with the Chinese mostly preferring a Chinese person as a mediator for any negotiation. In India too there are various religious and cultural festivals which form an integral part of the existence of the native person. In areas of human resource this is more pronounced and the foreign company must make allowance for the same by giving holidays and even be expected to participate by handing over of gifts, involving in the cultural events as well as make contributions to enhance their image with the local participants. Therefore, it is generally seen that the foreign company increases its business substantially while conforming to traditional beliefs and customs of the local people than they would otherwise. Multiculturalism and Cultural Assimilation There is growing evidence that the transnational organizations are adopting a policy of recruiting workforce from various cultures from across the world as it is by far the best way to expand overseas and also to understand and integrate better with the markets in these regions. Multinational companies should therefore make note of the fact that in their home ground things were a lot different than what they are likely to experience across the borders. Globalization as seen in the present does not imply homogenization, but the reverse as this means one has to deal with difference directly instead of from a distance as was earlier the case (Nolan, 1999). In multiculturalism, organization readily accepts the presence of varied cultural groups within its own larger cultural base. In the case of cultural assimilation the organizations by its policies prepares to assimilate those cultures of local communities and tries to effectively integrate them into its organizational culture. It is also true that both diversity and internationalization are needed to create diverse learning environment within companies in order to make them adaptive to local customs and hence remain competitive. For this the foreign company should have well laid out policies of manpower learning and understanding of the various cultures that would arise in the event of transfer of personnel. According to authors Stehle and Ernee, transfers are more likely to succeed when employees of the transfer coalition hold positive attitudes and trust towards the parent company (2007). An effective ethical principle is thus evolved in this way and the organization needn’t fear of any future uncertainties and confusion while carrying on its business in soils alien to its own customs and practices. By the process of assimilation the organization has send out the right message to the local communities. Attitudes towards ethics are rooted in culture and business practice and the term international business conduct and morals refer to the foreign company’s relationships with individuals and entities (Mahapatra and Kumar, 2009). Further those companies who are having certain degree of confusion to start operations in an alien soil can take other routes in the form of joint ventures and franchisees. The uses of joint venture can mitigate problems associated with lack of knowledge in norms, values and assumptions that are the foundation of organizational and individual behavior (Ang and Michailova, 2008). Conclusion Thus it is imperative for the foreign company to have an obligation to the local customs, languages, behavior, religion and cultural assumptions in order to consistently perform well and profitably. Once the company forms a distinctive identity with the local population with its overtures, responses and publicity campaigns the company can benefit both in its image and carry out future expansion programs. There have been several instances of the whole company’s leadership position even that of the parent company being entrusted in the hands of persons belonging to the local community with the target market which in this case means the local market too large enough to avoid or forego. The case of PepsiCo is an example as its leader is a woman of Indian origin and it is quite likely that she would be able to understand the cultural and religious sentiments of the people much better than those not native to the soil. Reference List Ang Siah Hwee and Michailova Snejina (2008). Institutional Exploration of Cross- Border alliance Modes: The Case of Emerging Economies Firm. Normative Pillars of Institutions. Management International Review. Mahapatra S N and Kumar Jitender (2009). Transnational Corporations and Marketing Ethics in Global Market in Post Globalization. International Business Ethics and Global Marketing. Abhigyan. Nolan W. Riall Communicating and Adopting Across Cultures: Living and Working In the Global Village. Cultural Basis of Difference. 1, 1. Westport, CT. Bargin & Garvey. Stehle Wolfgang and Ernee Ronel (2007). Transfer of Human Resource Practices from German Multinational Enterprises to Asian Subsidiaries. Research and Practice in Human Resource Management.

Case for Analysis Covington Corrugated Parts - 1173 Words

Case For Analysis: Covington Corrugated Parts amp; Services Abstract Covington Corrugated Parts amp; Services is a Virginia based company providing precision machine parts and services to the domestic corrugated box and paperboard industry. The business is owned by Larisa Harrison and operates from a 50,000 square foot factory in the rural Shenandoah Valley with 150 employees, many of them now nearing retirement. Due to changes in the economy and new competition their dominant 70 percent of the market share is rapidly declining. While management was focused on building the business, the box and paperboard industry was changing; plastics and reusable containers were becoming more prevalent. Management is now faced with the task†¦show more content†¦The company’s managers have differing opinions on which path the company should take to achieve growth and the current structure is not designed for the challenges they face. Major Issues While management was focused on getting the job done the external environment changed. New competitors and higher quality machines were changing the manufacturing industry and the company lacks a strategy to change with it. Each of Covington’s managers has a different vision of the company’s future making consensus and decision-making a major issue. The lines of authority and responsibility are blurry, causing conflict between managers and department directors. The latest manager’s meeting can be described as chaos. An additional issue facing the management team is the replacement of the workforce being lost to attrition. The loyal, hard-working employees have set a high standard for future members of the Covington team and the younger generation has not yet established themselves as a similar strength workforce. Problem Analysis In the past two decades Covington has been successful operating without a clearly defined organizational purpose. While this organizational design was not a problem in the past, it is now a threat to the company. The latest quarterly earnings illustrate that the once stable Covington is not