单选题After several nuclear disasters, a _____ has raged over the safety of nuclear energy.A quarrelB suspicionC verdictD controversy

(a) Distinguish and identify
Voluntary stakeholders are those that engage with an organisation of their own choice and free will. They are ultimately (in the long term) able to detach and discontinue their stakeholding if they choose. Involuntary stakeholders have their stakeholding imposed and are unable to detach or withdraw of their own volition.

The voluntary stakeholders identifi ed in the case are: Forward Together (the trade union), Hesket Nuclear employees, the Ayland government, the board of HPC, local authorities, No Nuclear Now and other nuclear producers who use the reprocessing facility.

The involuntary stakeholders – those whose stakeholding is placed upon them by virtue of their physical position – are the governments of Beeland and Ceeland, the local community and the seal colony.

[Tutorial note: membership of these categories is contestable if time perspectives are introduced. In the short term, some voluntary stakeholders are involuntary in that their involvement cannot be quickly withdrawn. The case clearly identifi es the involuntary stakeholders.]

Assess the claims
The case identifi es three ‘affected’ stakeholders that are clearly involuntary. Both Beeland and Ceeland say that they are stakeholders because of their geographical position and the seals are unable to move because of local environmental conditions.

Beeland government’s claim is based on its position near to the Hesket plant. With the capital 70 km from the plant, it claims that it is already the ‘victim’ of low level radiation in the sea between the two countries. The case does not give the radius of damage if a major incident were to occur but it does say that there is ‘scientifi c support’ for the view that it could affect the capital of Beeland. Assuming that both of these statements are accurate then the Beeland government would appear to have a legitimate and reasonable claim that they are affected by the Hesket Nuclear plant and could be further affected in the future.

The government of Ceeland claims to be a potential ‘victim’ of nuclear contamination from the HN plant and has sought to have the plant closed as a result. The weakness of its claim rests upon the physical distance away from HN (500 km). If the threats to Ceeland are, as scientists have suggested, ‘unfounded and borne of ignorance’ then clearly Ceeland has a weak claim over Hesket Nuclear. It may have political reasons of its own to make protestations, perhaps to appease opinion in Ceeland or to be populist to manage dissent at home.

The case says that the local seal colony is unable to move away from the HN plant because of the local environmental conditions there and so it is unable to discontinue its stakeholding. It is thus involuntary. Low level emissions could potentially affect the seals and their food sources and any major incident would obviously impact it signifi cantly. Whilst their affectedness is therefore indisputable, the value of the colony’s claim rests in part upon the value placed upon sea life value against human and economic value. This assessment is therefore contestable.

The local community is another involuntary stakeholder albeit with a weaker involuntary element than the above three described. Whilst not structurally involuntary (they are able to move away if they do not like it), many local citizens may have lived near the HN plant for many years before it was built and may therefore have simply had to accept its development regardless of their views. The impacts on local communities can be positive or negative in that HN supports them through the provision of jobs but they would also be the fi rst and most affected if there ever was a major incident at the HN plant.

[Tutorial note: allow for other ‘affected’ stakeholders if coherently argued. It is possible to argue that the taxpayers of Ayland are affected involuntary stakeholders, for example.]

(b) Roles of employee representatives
Trade unions are the most usual example of employee representation in corporate governance. Trade unions represent employees in a work facility such as an offi ce or a plant. Membership is voluntary and the infl uence of the union is usually proportional to its proportion of membership.

Although a trade union is by default assumed to have an adversarial role with management, its ability to ‘deliver’ the compliance of a workforce can help signifi cantly in corporate governance. When an external threat is faced, such as with the reputation losses following the 1970s leak, then the coalition of workforce (via Forward Together) and management meant that it was more diffi cult for external critics to gain support.

A trade union is an actor in the checks and balances of power within a corporate governance structure. Where management abuses occur, it is often the trade union that is the fi rst and most effective reaction against it and this can often work to the advantage of shareholders or other owners, especially when the abuse has the ability to affect productivity.

Trade unions help to maintain and control one of the most valuable assets in an organisation (employees). Where a helpful and mutually constructive relationship is cultivated between union and employer then an optimally effi cient industrial relations climate exists, thus reinforcing the productivity of human resources in the organisation. In defending members’ interests and negotiating terms and conditions, the union helps to ensure that the workforce is content and able to work with maximum effi ciency and effectiveness.

Critically evaluate the contribution of Forward Together from HPC’s perspective

Helpful roles
The case describes Forward Together’s (FT) role as generally supportive of the development of the Hesket Nuclear site. Clearly, with a primary loyalty to its members, FT will always pursue causes that are going to maximise members’ job security. When the primary external stakeholder pressure is for the reduction of the HN site, the union and board are aligned in their objectives for the continuation of the facility.

FT’s statement over Ceeland’s concern was very helpful to the HPC board. FT has a clear interest in diffusing unfounded concern where it exists and its statement that Ceeland’s fears were ‘entirely groundless’ would reinforce the power of any similar such statement made by others. Similarly, FT provided support after the leakage incident in the 1970s. The helpful reinforcement was evident when FT pointed to the impeccable safety record and compliance. This may have meant more as a public relations exercise coming from the trade union rather than the HPC board as FT is independent of the company.

Unhelpful roles
FT’s wage pressure, over time, put a pressure on the company’s costs that had, according to the HPC board, created the need to bring in cheaper foreign workers to fulfi l the maintenance contract. From the board of HPC’s viewpoint, such pressure was ultimately self-defeating for the union and effectively meant that the previous maintenance contractor was priced out. The union had been short-sighted in its year-on-year wage demands.

We are not told whether the board agrees with Kate Allujah that workers from Ayland were ‘more reliable’ in such a risk sensitive industry, but her comment was possibly based on prejudice against foreign workers entering the country. She seemed to be unconcerned with the legal implications of her outrage. Given that the company was legally entitled to employ foreign workers in Ayland, she had no valid legal argument for her position. From an economic perspective, it is also unhelpful, from HPC’s perspective to have the union making high wage demands and then complaining about legitimate measures that the company takes to stay within its government subsidy such as cutting costs, including labour costs.

Conclusion
HPC’s relationship with FT has been positive and mutually benefi cial for the majority of the company’s history. Clearly seeing their destinies to be linked, FT has supported the company against external threats but has, at the same time, used its good relations to make wage demands that ultimately led to the award of a maintenance contract to the foreign workers. This would have broken an important relationship with experienced maintenance personnel and the foreign workers may or may not have had the same level of expertise as the previous workers.

(c) Explain agency relationship
An agency relationship is one of trust between an agent and a principal which obliges the agent to meet the objectives placed upon it by the principal. As one appointed by a principal to manage, oversee or further the principal’s specifi c interests, the primary purpose of agency is to discharge its fi duciary duty to the principal. In this case, there is an agency relationship between the government and the board of HPC.

Examine existing agency relationship
Although HPC is run by a conventional board, the company is wholly owned by the government of Ayland. This means that the company’s strategic objectives are determined by the government and these are likely to be different from purely commercial concerns. The nuclear operation is clearly not economic in terms of profi t and so the government’s objectives for the company must be other than that. The case describes this in terms of broadening its energy portfolio and meeting environmental objectives. The board’s objectives are likely to be predominantly fi nancial, due to the control by subsidy placed upon it, but the principal’s political and environmental concerns may also affect the objectives placed upon the HPC board (such as employment objectives in what is a deprived region of Ayland).

The principal is the government of Ayland and ultimately the board is accountable to the taxpayers of Ayland. This means that the development and even the existence of HN is ultimately under democratic control. The agency relationship means that the board of HPC has subsidy targets and also sees its role as fulfi lling an important role in Ayland’s energy portfolio.

HPC as a ‘conventional’ company owned by private shareholders
If HPC was a private company, its principals would be shareholders with very different objectives. Shareholders would be predominantly concerned with the economic performance of HP and the economies of the nuclear power industry. It would insist that the board pursued only those parts of the business that were profi table. This would necessitate a radical redesign of HPC’s business as we are told that in its present form. it is loss-making.

(d) (i)

Statement
Hesket Power Company’s response to the report produced by NNN

Importance of risk assessment at Hesket Power Company
Hesket Power Company was recently dismayed to have been made aware of a report conducted by an anti-nuclear pressure group purporting to be a risk assessment of selected risks to the Hesket Nuclear plant. The company would like to take this opportunity to inform. the public about the irresponsibility of the pressure group’s activity whilst comprehensively rejecting its arguments.

In all industries it is important to assess risks as accurately as possible but in the nuclear power industry, it is critical. It is because the pressure group misrepresented our risks that we feel it necessary to remind stakeholders about the importance of a correct risk assessment based on valid measurements.

In observing best practice, Hesket Nuclear carries out thorough and continual risk assessments in compliance with our regulatory frameworks. The information going into the process must be as accurate as possible because resources are allocated in part on the basis of our risk assessments. Clearly, a risk assessed as probable and of high impact would attract a signifi cant resource allocation and to have incorrect information could conceivably lead to the misallocation of company resources. This, in turn, would be a failure of our duty to the HPC company and ultimately to our owners, the government of Ayland and its taxpayers. The fact that there has not been a serious incident since the 1970s highlights the efforts that we take with risk assessment.

The ways in which we manage risk also depend upon the assessment. Once a risk, such as the risk of a nuclear leakage, is identifi ed and assessed, the company pursues a strategy for managing that risk, typically to transfer or share the risk, avoid the risk, reduce it or accept it. This has implications for the entire strategy of the organisation, especially where the assessed risks are strategic in nature. Inaccurate assessment might, for example, mean accepting a risk that should have been avoided or vice versa.

Our stakeholders expect us to be a responsible company in all matters but especially in matters of safety and the environment. We owe it to our local community, employees and others to ensure that all risks are fully but accurately understood. In addition to ensuring that we are fully compliant with all regulatory regimes applicable to us, we believe that accurate risk assessment is necessary to our valued reputation as an ethical and responsible employer and neighbour.

Finally, as we have seen in the case of this misguided report by the pressure group, inaccurate assessments can breed fear, distrust and unnecessary panic. HPC was disappointed to hear the report being used by critics when the information it contained was inaccurate and this leads us to the second matter.

(ii) HN’s social and environmental ‘footprint’

HPC is aware of some critics that have asserted that our overall footprint is negative. In responding to this, we feel it necessary to remind readers that the footprint of any organisation includes the sum total of its positive and negative interactions with the environment. Whilst this sometimes involves negative impacts such as carbon emissions and accidental pollution, it also takes into account the positive impacts such as social benefi t, through such things as job creation, and positive environmental impacts. Both ‘sides’ need to be taken into account before an overall evaluation of the social and environmental footprint can be established. To focus on only a small number of measures, as some of our critics have done, is to provide an unfair and biased account of our genuine overall footprint.

Social arguments
It is our belief that Hesket Nuclear makes a substantial positive contribution on both social and environmental measures. In terms of social contribution, HN makes a positive impact for several reasons. Whilst accepting that Hesket Nuclear has its critics, the company would like to remind the public both in Ayland and Beeland that the plant is a very large employer and vital to the economic well-being of the region, a fact recognised by a wide range of local and national stakeholders. Others have noted the importance of the jobs provided at Hesket Nuclear to the social and economic well-being of the region and HPC fully agrees with this analysis.

In addition to the jobs provided in Ayland, Hesket Nuclear also provides reprocessed fuel that is cheaper than virgin fuel. This provides support for nuclear power, and hence clean energy, in several developing countries that are our valued customers. Hesket Nuclear therefore indirectly supports employment and social development in those countries. Were our reprocessed fuel unavailable to them, rates of economic and social development growth may be slowed in those countries. We are therefore determined to continue to supply this vital input into those countries and to continue to support them.

Environmental arguments
In addition, as a non-fossil fuel industry, nuclear is relatively non-polluting and is an essential component of the government of Ayland’s clean energy strategy. Hesket Nuclear is proud to be a part of that strategy and will continue to be a dependable producer of nuclear power and reprocessing services. In so doing we will continue to carefully manage the risks of nuclear power supply whilst providing the jobs and clean energy for which Hesket Nuclear is corporately responsible. A likely alternative to nuclear is the burning of more polluting fossil fuels which would presumably be as unacceptable to our critics as it is to us.

Whilst conceding that all nuclear operations require a high level of safety and regulatory observance, we are pleased to be able to remind our stakeholders, including the governments of Beeland and Ceeland, of our very high performance in this area. As our colleagues in the Forward Together trade union recently said, Hesket Nuclear has had an impeccable safety record since the 1970s and is fully compliant with all relevant safety regulations. We fully intend to maintain this high level of performance.

[Tutorial note: allow latitude in responding to part (ii), especially rewarding answers referring to the specifi c case of nuclear]