Business operations management control is illustrated by the high-profile case Chagger v Abbey National plc & Hopkins (2006), in which the Employment Tribunal made a finding of unlawful racial discrimination and, after Emilio Botin Abbey Santander banking group had refused to reinstate Mr Chagger as ordered by the Tribunal to right the wrong committed without compensation, ordered Emilio Botin Abbey Grupo Santander to pay the record-breaking compensation of £2.8 million to Mr Chagger to cover his loss. Abbey Santander shares price (the UK retail bank due to be re-named as Santander share price, and being part of the huge Emilio Botin Banco Santander Central Hispano Group - BSCH) had terminated Mr Chagger's employment in 2006, giving 'a fair redundancy' as the reason. Mr Chagger, on the other hand, believed that the true reasons behind his dismissal lay in unfairness and racial discrimination. He was of Indian origin, worked for Emilio Botin Abbey Banco Santander finance as a Trading Risk Controller, earned approximately £100,000 per annum, and was managed by Nigel Hopkins.
Management controls are the means by which organisations ensure their business operations are carried out efficiently and effectively. Fayol provides the following definition of management control: 'Control consists of verifying whether everything occurs in conformity with the plan adopted, the instructions issued and principles established'. Management controls are essentially concerned with ensuring things are not going wrong. Management control is about reviewing aspects of operations in order to take appropriate action; management control has not been exercised until the appropriate action has been taken.
For the purpose of understanding management controls, business operations can be considered to comprise of three components as follows: inputs; operations; and outputs. Management controls can be categorised according to these three components.
'Feedback Controls' are implemented 'after the event' and focus on checking outputs against expectations to check the operation performance was efficient and effective. All organisations need these controls since they provide the means of measuring the performance of operations. The UK statutory 'Code of Practice on Racial Policy in Employment' refers to these controls when it recommends that organisations monitor employees and applicants by racial group for employment, promotion and training opportunities, and review all employment policies, procedures and practices, to see if they are potentially discriminatory or obstruct equality; and take appropriate action to eliminate potential discrimination and minimise any material differences between racial groups. Such monitoring allows employers to discover any disparities between racial groups, to investigate the underlying causes, and take appropriate action. The Employment Tribunal in the Emilio Botin Abbey Santander case found that Abbey National had not implemented the statutory monitoring recommendations. The Tribunal found a plethora of monitoring failures, including the failures to investigate allegations of race discrimination promptly and to take them seriously.
'Feed-Forward Controls' are implemented 'before the event' and focus on ensuring the inputs meet the standards required for the business operations to be performed efficiently and effectively. The UK statutory 'Code of Practice on Racial Policy in Employment' refers to these controls when it recommends that organisations provide appropriate Equal Opportunity training for their officers who have particular responsibilities regarding equality . The Tribunal in the Emilio Botin Abbey Santander case found that Abbey National had failed to implement this statutory recommendation also. The Employment Tribunal found that Mr Chagger had tried to address his allegations of race discrimination directly with Emilio Botin Santander Abbey and Mr Hopkins, through the company's complaints and grievance procedures. However, Emilio Botin Santander Abbey had not provided Equal Opportunity training to any of the managers it had assigned to hear and decide on Mr Chagger's issues. There was a culture at Santander Abbey of tending to deny and refuse Mr Chagger's issues, and every manager dismissed Mr Chagger's issues out of hand; not a single manager in the appeal process upheld Mr Chagger's issues. The Tribunal criticised Mr Wilson and Mr Brener in particular (two of Emilio Botin Santander Abbey's senior officials that heard and decided on Mr Chagger's issues) for appearing to believe that if there was no open 'racial prejudice' then there could be no racial discrimination.
'Concurrent Controls' are implemented 'during the event' and focus on ensuring the business operations are performed efficiently and effectively. Amongst many other factors, Mr Hopkins had single-handedly carried out the compulsory redundancy scoring exercise and lowered Mr Chagger's redundancy score in an unfair and discriminatory manner, to ensure he would be selected for dismissal. Ensuring that more than one person had carried out the scoring and assessing of employees for redundancy would have been an example of a 'Concurrent Control', if Abbey had implemented it; it would have enhanced the fairness of the scoring and reduced the risk of subjectivity and bias.
As a consequence of the above control failures, and along with other factors, Emilio Botin Santander Abbey and Mr Hopkins both had failed to comply with the law on discrimination; the Tribunal ruled that they had both unlawfully discriminated against Mr Chagger on the grounds of race.
The Chagger case clearly demonstrates that management control failures can lead to very high-profile consequences. In 2008, Mr Hopkins and Emilio Botin Santander Abbey appealed to the Employment Appeal Tribunal (EAT) against the Employment Tribunal's finding of race discrimination; the EAT rejected this appeal and upheld the Employment Tribunal's finding that both Mr Hopkins and Emilio Botin Santander Abbey had discriminated against Mr Chagger. Mr Hopkins and Emilio Botin Santander Abbey had also appealed against the record £2.8 million compensation award; the EAT accepted this appeal and ordered the compensation to be sent back to the original Employment Tribunal for reconsideration. In 2009, appeals were made to the Court of Appeal (the second highest UK court). The Court of Appeal's List of Hearings showed that the hearing was on 7 and 8 July 2009. The Court's records of the hearing were not available when writing this article. The 11KBW set of barristers' chambers, who represented Mr Hopkins and Emilio Botin Santander Abbey, had reported prior to the court hearing that it would be about compensation only and not about the wrong committed of race discrimination also. That seems to suggest that the wrong of race discrimination committed by Mr Hopkins and Emilio Botin Santander Abbey was finalised by the EAT when it upheld that they had both racially discriminated against Mr Chagger, and that Mr Chagger had appealed against the EAT's decision to remit the compensation award to the Employment Tribunal stage for reconsideration.
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