Part I

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Item 2.1 – Partnership Opportunity with Superlarge Supermarkets

          Healy Health Fund (HHF)
intends to partner with Superlarge supermarkets in Australia to use their
ByeByes program as a source of new clients. Considering the report on this
project as the CEO presented it, it is highly significant to the future of the
organization. First, the main significance of the project lies in the fact that
the Byebyes program has approximately four million customers in Australia hence
a potential for four million new customers for HHF. Even though some of the
Byebyes customers may have already subscribed to HHF, more than 75% are still
potential customers. Secondly, the project will ultimately be beneficial to
HHF. HHF requires 2000 new customers to make a profit from the deal in the face
of more than three million new customers. The $200 offer and the promise of an
additional $100 offer for the superlarge supermarket promise to win HHF more
than 2000 new customers.

          One inquiry that I would make in the meeting on this issue
is if the superlarge supermarkets would avail their strategic plans for winning
customers to HHF. I would recommend that each superlarge supermarket that
accepts the deal to submit a detailed strategic plan which they would use to
lure the customers into signing for HHF. I would also propose that they offer
the $200 value to their customers in various ways like discounts and free
vouchers. Finally, the supermarkets should advertise HHF along with their
advertisements for the ByeByes program.

          Implementation of these recommendations would help not only
HHF but also the supermarkets. By intensifying their advertisement campaigns,
they would get more customers for the ByeByes program while HHF would get more
potential customers. Further, offering the $200 to the customer in a variety of
ways would increase the attractiveness of the deal to more customers hence
increasing the number of people HHF would sign up as a result.

Item 2.2 – Potential Member Services Center in Sydney

          The CEO of HHF, Mr. Plummer suggests that the organization
should set up a member services center in Sydney similar to the one in Sydney.
Considering the success of the center in Brisbane, this proposal is highly
significant to the future success of the organization. Since HHF has members in
many parts of Australia, it is important for them to set up as many centers as
possible to enhance member access to the centers. Furthermore, the centers help
not only to improve customer satisfaction and retention but also to help the
organization in signing up more members. In addition, some of the services that
HHF provides at the center such as a gym and access to medical staff can help the
organization to raise more funds.

          Even though the CEO does mention cost-effectiveness in his
report, I would want him to show the exact balance sheet of the Brisbane center
for us to consider the effectiveness of this idea. Also, I would require him to
table the exact cost of the proposed center in Sydney.

          Having confirmed the cost-effectiveness of the proposed
services center, I would suggest that HHF also incorporate periodic screening
services for various diseases for the members at the centers. Apart from dental
and physiotherapeutic services, members should also access regular screening
services for diseases like breast cancer, cervical cancer, and prostate cancer.
Regular screening of members will ensure early diagnosis of these fatal and
expensive diseases hence a decreased cost of treatment. For instance, yearly screening
of breast cancer for women aged above 50 years will enhance early diagnosis
hence a lesser treatment cost. Furthermore, members are likely to support and
like the screening services hence ensuring a higher rate of member
satisfaction. Screening of non-members at a fee on the designated days can make
it even more profitable for the organization.

Item 2.3 – Risk Committee Report

          The report by the risk
committee is highly significant and pivotal to the future of the organization
and is a key determiner of the actions that the organizations will take in the
near future. The most significant aspect of the report its identification of
competition and customer lapse as key risks to the organization. The increased
risk of cybercrime is another key emerging issue that appears in the report.
The significance of this issue is even higher to HHF as they have suffered a
cyber-attack in recent times. Further, the possibility of legislative changes
that can impact negatively on the organization’s is another significant issue
that arises in the report; the fact that the mitigation measures that the
committee suggest seem unsatisfactory make it even more significant. Finally,
the issue of improper claims is an important emergent issue that appears in the
report and has significantly affected health insurers in recent times.

          Although the report seems complete, I would still inquire
why the committee did not consider misappropriation of funds by the top
executive as an important risk which required mitigation. The fact that HHF has
previously been in the limelight for the misappropriation of funds should make
it a key risk to the organization. In mitigating the risks perfectly, I would
propose that the organization contracts internal auditors who would ensure payment
of only the right claims and prevention of misappropriation of funds. Further,
I would propose that the organization introduces new services like the
screening services for the members.

          Having internal auditors will ensure that the organization
does not lose money through fraudulent claims or misappropriation of funds.
Even in the face of rising healthcare costs, experienced auditors will know
what is fraudulent and what is not. Introducing screening services would
enhance the attractiveness of HHF to members hence its competitiveness. Apart
from the advantage of reducing the number of claims, provision of such services
would enhance member retention and would encourage new members to join.

Item 2.4 – Remuneration of Directors

          The finance and audit
committee of the organization has suggested an increase in the remuneration of
the directors and the allowances given to the non-executive members of the
various committees. The main issue arising is the size of the increments that
the committee proposes. The significance of this matter lies in the fact that
its implementation will significantly increase the costs of running the
organization. I believe that even though each director would be happy with the
increased package, they will not be happy with the increase in the recurrent
costs of the organization.

          One thing I would wish to know before deciding whether to
ratify the proposal or not is the effect of these increased remunerations on
the organization’s balance sheet. In other words, I would like to see exactly
how the increased cost of operation compares with the increase in the income
that the organization has accrued over the past one year. I would propose that
the board redirects part of the finances for increasing members’ remuneration
to other projects that can enhance the growth of the organization.

          Since the organization works on a not-for-profit (NFP)
basis, it is important for directors to carry the same mindset. Thus, instead
of jumping at an opportunity of increased remuneration for themselves, the
directors should look at alternative ideas that would look to improve the deal
for everyone else. In this case, redirecting part of the extra funds to new
projects which members of the board may propose like setting up regular
screening services for members would mutually benefit all the members. Anything
that benefits and enhances the members’ satisfaction benefits the entire
organization and, thus, the board members too. Furthermore, using the funds on
projects that focus on the members can potentially enhance the competitiveness
of the organization.

Item 3.1 – CEO’s Report

          The CEO’s report has
several highly significant emerging issues. First, the CEO’s is clear on the
need for the organization to focus on customers in its undertakings. The
upcoming strategic meeting makes this issues even more significant; as a board,
we should look for future strategies which focus on the customer. Second, the
ActiveByte program is an important arising issue. Among the customer complaints
that the CEO earlier reported were questions on the role of ActiveByte and why
all aged members of HHF are required to use it. Third, our decreasing number of
full-time employees and the stagnation of our market share of health funds are
worrisome. A decreasing number of full-time employees predisposes us to high
employee turnover costs hence increasing our cost of operation. Furthermore,
the stagnation of our market share of health funds reveals that we are not

          On the CEO’s report, I would inquire from him what the
executive has done to counter the effect of rising healthcare costs which seems
to be the most important driver of customer lapse. I would propose that the
board moves with speed to plan for greater member and general public education
on ActiveByte.

          Since ActiveByte has been a source of controversy as it causes
dissatisfaction among some members and high satisfaction among other members,
enhanced member and non-member education on this program will enhance the
outcomes. Educating members will encourage them to see the sense of signing up
for the program hence reducing the claims that HHF has to pay. Since the
program is also good for enhancement of the general health of the elderly,
educating non-members about this program can greatly increase the number of
people who sign up for it hence creating a source of extra revenue for the
organization. Furthermore, the non-members who sign-up for the program might
eventually be interested in subscribing to HHF.

Item 3.2 – CFO’s Report

          The organization’s
financial report for the last six months reveals some significant findings.
Among the key emerging issues is that the organization did not achieve all
their key performance indicators as they had projected in the previous year.
The organization registered much lower profits compared to what they had
projected in the budget. The costs of running the organization were also
significantly higher than what the budget had predicted. The CFO’s report thus
shows that even though HHF is trying, they still have some way to achieve their
targets and they, thus, need to do more to improve. On the positive side, the
CFO’s report confirms the importance of services center to the organization.

          In the meeting, I would inquire from the executive the
steps that they have taken to reduce the costs of operation and the request processing
costs. Cutting on the costs of operation is one way in which HHF can maximize
their profits and services to customers. I would thus suggest that the board
deliberates on possible ways of reducing the cost of operation. One way would
be to decline the offer to increase their remuneration as it is. The other way
is to reduce the number of claims by increasing the members’ access to dental
and physiotherapeutic services and ActiveByte.

          Reducing the number of claims will go a long way in
reducing the amount of money that the organization spends. HHF can enhance the
members’ access to physiotherapeutic and dental services by opening more
service centers in as many parts of Australia as possible. Further, the
ActiveByte program can potentially reduce the number of claims by cardiac
patients. Declining to increase the remuneration of the board members will
directly decrease the recurrent costs that the organization has to incur.
Implementation of all these strategies will enhance the ability of HHF to attain
its key performance indicators at the end of the next financial year.

Part II

of a New Director

          The current board of
HHF is an almost perfect board. The board has four very experienced members
with expertise in various fields which is good for the organization. Furthermore,
the board has a good gender balance as two of the five members are female. The
chair, Jane Forsyth, who is a BA holder in marketing and communications
provides a lot of expertise in this area. She also has experience with
directing NFP organizations as she is a member of the board for three other
organizations. Peter Dowling, a psychologist by profession, has plenty of
expertise in human resource issues and management as he owns his own company. Further,
the fact that the organization can contract his company confers an extra
advantage for the organization. Julian Jones, who owns various real estate
properties, brings the wealth of experience in management and confers an extra
advantage of having information on the presence of office spaces or buildings
that the organization can use. Robert Arnett brings loads of experience in insurance
firms and experience as a member of the board of NFP organizations. Four out of
five members of the current board are well above 60 years of age and have
relatively high education levels hence enhancing the strength of the board.

          Despite its seemingly obvious strength on face value, the
current board has some weaknesses. First, the board has relatively few members
compared to the number of clients that HHF target to satisfy in the near
future. Moreover, since all board members are also members of HHF, it is hard
for the board to consider its decisions in the view of a non-member.
Furthermore, the board has a key deficiency of expertise in finance. The board
has members with expertise in marketing and insurance but none with expertise
in finance. This deficiency could explain the previous incident of financial
misappropriation at the organization. Additionally, although having experienced
members in a company’s board is desirable, inclusivity is more desirable. In
other words, the current composition of the board excludes youth. For this
reasons, I recommend that the board either get one new member who is young but
has expertise in finance or gets two new members, one to represent the
interests of the youth and the other to offer expertise in finance. It would be
preferable if the new member or one of the two new members is a not a member of

HHF is not a public limited company, the current board members can effectively
appoint a new board member. The process of selecting a new director should
start at least 35 days before an annual general meeting. Since the date of the
annual general meeting for HHF is not specified, the process can start anytime
for this organization. Selected member has to be above 18 years of age and to
have good fame and character as the Australian law requires. Further, since HHF
is Australian Prudential Regulation Authority-regulated, the current board
members will have to assess the fitness and propriety of a proposed member
before they can select them. The internal regulations of HHF will further guide
this step of the selection process. Even though the Australian law defines the
procedures for assessment of fitness and propriety of potential board members,
different organizations have their additional definitions for these

          If the in the assessments the current board members get an
ideal person who can potentially fill in all or some of the deficiencies
present in the current board, the board will require the candidate to consent
to their appointment to the position. The new board member sends in their
consent in writing – the consent contains the new members’ personal details
which the board submits to the Australian Securities and Investments Commission
(ASIC) within 28 days of their appointment.  After that, the board can then send the
applicant a letter of appointment. The letter of appointment provides a wide
range of information as various acts of the Australian constitution specify. The
letter specifies the duration of appointment which varies from one to three
years depending on the regulations of the organization. The letter also
specifies the expectations and duties of the board in appointment of new board
members; the standard time commitments that the organization will require of
the new board member; induction process and any requirements for further
education; special duties; expectations to participate in various board
committees; information of remuneration; how the board solves conflicts of
interest; confidentiality; and insurance arrangements. The board usually sends
a copy of the organization’s constitution as an attachment to this letter.

Part II

Governance Issues

          The most important
additional governance issues which the board should consider in their
deliberations are:

·       The threat
of bad comments on the organization’s website. Even though there are also many
good comments and a general increase in customer satisfaction on the website,
the presence of these bad comments can have devastating effects as they can
discourage some individuals from subscribing to HHF or convince those who are
already members of HHF but have not made a claim to quit the organization. On
this issue, the board should ratify the CEO’s suggestion of pulling down the
comments box. Rather the organization should go for more physical service
centers where customers can register their complaints.

·       The threat
of cybersecurity and hacking. The organization has experienced a hacking
episode in the recent past. Cybercrime has the potential to interfere with the
activities of an organization adversely, to give an organization a bad
reputation, and ultimately to reduce their competitiveness in the market. To
prevent this, it is important for the board to consider contracting specialists
for advice on cybersecurity.

·       The the last
strategic planning meeting. The difficult landscape in the health insurance
sector in Australia calls for frequent strategic plan meetings to enhance
competitiveness. Although the organization has achieved its key performance
indicators in recent times, frequent strategic plan meetings are still
important. I recommend that the board sets a regular period of three years
between strategic plan meetings.

·       The
potential negative effects of conflict of interest as many directors either do
or intend to do business with the organization. Even though it can be
advantageous for board members to do business with an organization as it may
afford the organization greater discounts, it can be a disadvantage too as some
board members may look to exploit the organization, especially for an NFP firm
like HHF. I propose for an amendment to the organization’s constitution that
will bar board members from engaging in business with the group.

·       The threat
of changing government policy impacting negatively on the activities of the
organization. Changes in government policy are likely to interfere with the
organization’s utilization of incentives to lure members. Seeking for legal
advice in the process of policy-making can help the organization to overcome

In the
process of mentioning my proposals, I intend to utilize my ability to give
in-depth and convincing explanations to influence my fellow directors into
accepting my proposals. For each proposal I make, I will look to enumerate and
explain the pros and cons and prove that it can be advantageous and useful for
the organization hence leaving the other directors with little option but to
accept it. I will also look to counter their counter-arguments assertively and
politely to avoid raising emotion while at the same time convincing them that
their counter-argument is not perfect for the organization.