The management as well as the organizational practices followed by a particular business enterprise not decides the kind of organizational cultural that would be followed within the framework of that particular organization but at the same time determines to a large extent the prospects of the concerned organization. At the same time in the present times it is seen that the various organizations in order to increase the amount of profit or the revenue gained by them often take the help of unethical organizational as well as management practices which although provides diverse kinds of benefits to them in the short term basis yet in the long term proves catastrophic for the concerned organization. This can be seen as the end result of the focus of the various organizations of the present times to earn a higher amount of profit and thereby to further enhance the growth rate of their organization. However, instead of contributing in a significant manner towards the growth of the organization they often adversely affect the prospects of the concerned organization. A pertinent example of this particular aspect can be seen in the recent fate of the company Volkswagen which because of the unethical practices that it used to utilize had to face not only the ire of the customers but at the same time had to bear significant financial losses as well. This report will discuss about the questionable management as well as organisational practices followed by the Commonwealth Bank of Australia for the process of their growth.
The Commonwealth Bank of Australia founded in the year 1911 is the largest banking institution of the Southern Hemisphere and is known for currently offering a wide range of banking services to the customers starting from simple financial transactions to housing loans, business loans, insurance services and others (Commbank.com.au 2018). The bank under discussion here, headquartered in Sydney is currently operating in Australia, Asia, New Zealand, USA, UK and some of the other major nations of the world and is generally regarding as one of the “big four” banks of Australia along with National Australia Bank (NAB), Wespac and ANZ (Commbank.com.au 2018). The bank was fully privatised in 1966 and is the largest organisation of the nation of Australia listed on the Australian Securities Exchange (Commbank.com.au 2018). The concerned bank has a net market value of more than $93.5 billion as of 2018 and is the 71st largest organisation of the world as per the net annual revenue generated by it (Forbes.com 2018). The bank under discussion here has more than 1100 different branches in the different parts of the world and its annual profit for the year 2017 was A$26.005 billion which is one of the highest ones within the banking industry (Forbes.com 2018). In addition to these, the bank under discussion here is at the same time one of the largest private recruiters of the world and as the statistics of 2017 has more than 51,800 in its diverse international locations including Australia (Commbank.com.au 2018).
The banking institution under discussion has come under criticism from various cauldrons because of the questionable as well as unethical organisational as well as management practices that it has been following for the process of its business operations not only in the nation of Australia but in the other parts of the world as well. The findings of the Royal Commission in the year 2017 are pertinent to note in this particular regard which not only found the concerned bank guilty of money laundering, neutral behaviour towards the various acts of terrorism, putting the bank accounts of millions of users from all over the globe at risks (ABC News 2018). In addition to these, the commission at the same time found out that in order to sell various kinds of insurances as well as loans to the customers from the diverse parts of the world the bank took the help of various kinds of fake documents and at the same time did not even bother to verify the authenticity of the documents submitted by the customers (ABC News 2018). At the same time it was found that the concerned banking institution sold illegal or fake life insurances to the customers from the diverse countries of the world which are worth more than $44-billion (Doherty 2018). In addition to these, there are various kinds of corruption charges against the employees of the concerned organisation who took bribes from the customers to get their loans and other kinds of transactions passed (Doherty 2018).
It is pertinent to note that these practices were followed by the concerned to not only outrival their banking rivals not only in the nation of Australia but in other foreign locations as well and at the same time to earn a much amount of revenue as well (Macdonald, Burke and Stewart 2017). However, in this particular context it needs to be said that these management practices just like the ones followed by the company Volkswagen provided only short term benefits to the concerned banking institution and in the longer run adversely affected the prospects of the banking institution under discussion here (McIlroy 2018). It is pertinent to note that the concerned banking institution has to pay a huge penalty of A$709 million to the national government of Australia for setting the money laundering dispute that was registered against it in addition to the other kinds of penalties (ABC News 2018).
The management practices used by the Commonwealth Bank of Australia for the process of earning an enhanced amount of revenue has not only adversely affected the prospects of the concerned banking institution but at the same time was completely unethical. The precepts of the stakeholder theory of management of the different stakeholders of a particular organization which was propounded by Ian Mitroff in the 1983 book entitled “Stakeholders of the Organizational Mind” are significant to note in this particular regard (Christensen et al. 2015). As the theory, an organization needs to take into effective consideration the entities of moral as well as ethics not only for building sound relationships with the stakeholders who are associated with it but at the same time for the effective management of such relationships (Christensen et al. 2015). Furthermore, the organizations at the same time have the moral as well as the ethical responsibility to follow the kinds of strategies or measures which are likely to provide the maximum amount of benefits or rewards to the stakeholders who are a part of their business (Hernandez, Guarana and Halgin 2016). The management practices used by the Commonwealth Bank of Australia when viewed in the light of this particular theory becomes totally redundant and at the same time it needs to be said that the managers as well as the leaders of the concerned banking institutions were not responsible enough in the actions or the decisions that they made within the framework of the concerned institutions (Oates and Dias 2016). Furthermore, had the managers as well as the leaders of the concerned banking institution being responsible enough then they would have taken into effective consideration the interest the stakeholders and sought to enhance the growth rate of the institution through the effective engagement of the stakeholders and also by winning their loyalty and trust (Oates and Dias 2016).
An analysis of the management practices of the concerned banking institution in terms of the Stewardship theory would also reveal insightful details. The Stewardship theory was proposed by Davis, Schoorman and Donaldson in the year 1997 in their article “Toward a stewardship theory of management” (Schaltegger, Burritt and Petersen 2017). The primary assumption of this particular theory is the fact that the managers when left alone act as the stewards of a particular organization and thereby seek to bring about the growth of the concerned organization through following the kind of strategies or measures that are likely to enhance the spirit of cooperation among the employees (Schaltegger, Burritt and Petersen 2017). Furthermore, it is also argued that the managers tend to take the help of a collectivist, trustworthy as well as pro-organizational culture which the employees to not only perform in a much better manner but at the same time perform their job roles taking the help of the entities of ethics and morals (Macdonald, Burke and Stewart 2017). The managers of the Commonwealth Bank of Australia clearly failed to take the effective consideration the basic assumptions of this particular theory and it is a result of this particular fact that rather than a collectivist, trustworthy as well as pro-organizational culture a corrupt as well as competitive culture fostered within the organization wherein the employees were completely comfortable to use unethical means for gaining more capital (Glinkowska and Kaczmarek 2015). In this regard as well it can be said that the management team of the concerned banking institution failed to perform their job roles in an effective manner.
The Commonwealth Bank of Australia in order to regain the status that it used to once enjoy in the banking sector needs to only stop the unethical usage of the above mentioned practices but at the same time needs to follow various kinds of measures or strategies to resolve the issues that they are facing currently. The first thing that the concerned banking institution can do is to integrate an effective organizational culture within its workplace which not reduce the amount of corruption but at the same time require the employees to work in an ethical as well as collective manner taking into effective consideration the banking guidelines provided by the national government of Australia. Furthermore, the integration of an effective organizational culture will at the same time help in the improvement of the performance of the employees since it is seen that a congenial workplace culture can affect the performance level of the individuals in a positive manner.
The Commonwealth Bank of Australia at the same time can take into effective consideration the precepts of the stakeholder theory and focus on increasing the amount of net revenue earned by them through winning the loyalty as well as the trust of the stakeholders. Furthermore, the effective use of this particular theory will at the same time help the concerned organization to significantly expand their business by effectively taking into consideration the various demands and the requirements of the stakeholders who are a part of their business.
Conclusion
To conclude, the use of effective organizational as well as management practices are very important within the framework of the modern business world and provides various kinds of benefits to the various organizations like the opportunity to gain extra revenue, improvement of the brand or the market image and others. At the same time it is seen that there are various organizations which use unethical practices because of the quick benefits that they provide to the concerned organization. However, it is pertinent to note that the use of these practices provide only short term benefits and in the longer run can adversely affect the prospects of the concerned organization as becomes apparent from the case of the Commonwealth Bank of Australia. Thus, it can be said that the various organizations need to take the help of the diverse measures or strategies which are unpinned by moral as well as ethics.
References
ABC News. 2018. How the Commonwealth Bank laid the groundwork for a royal commission. [online] Available at: https://www.abc.net.au/news/2017-08-07/commonwealth-bank-laid-the-groundwork-for-royal-commission/8779598 [Accessed 13 Sep. 2018].
Anitha, J., 2016. Role of Organisational Culture and Employee Commitment in Employee Retention. ASBM Journal of Management, 9(1).
Christensen, J., Kent, P., Routledge, J. and Stewart, J., 2015. Do corporate governance recommendations improve the performance and accountability of small listed companies?. Accounting & Finance, 55(1), pp.133-164.
Commbank.com.au. 2018. Personal banking including accounts, credit cards and home loans – CommBank. [online] Available at: https://www.commbank.com.au/ [Accessed 13 Sep. 2018].
Doherty, B. 2018. ‘Ruthless, careless and irresponsible’: readers share their banking nightmares. [online] the Guardian. Available at: https://www.theguardian.com/australia-news/2018/apr/21/banking-royal-commission-australia-readers-share-experiences [Accessed 13 Sep. 2018].
Elsmore, P., 2017. Organisational Culture: Organisational Change?: Organisational Change?. Routledge.
Forbes.com. 2018. Forbes.com [online] Available at: https://www.forbes.com/companies/commonwealth-bank/#256b2e365d02 [Accessed 13 Sep. 2018].
Glinkowska, B. and Kaczmarek, B., 2015. Classical and modern concepts of corporate governance (Stewardship Theory and Agency Theory). Management, 19(2), pp.84-92.
Hernandez, M., Guarana, C.L. and Halgin, D.S., 2016. An Empirical Examination of the Performance Outcomes of Stewardship Behavior. In Academy of Management Proceedings (Vol. 2016, No. 1, p. 10495). Briarcliff Manor, NY 10510: Academy of Management.
Lozano, R., Nummert, B. and Ceulemans, K., 2016. Elucidating the relationship between sustainability reporting and organisational change management for sustainability. Journal of cleaner production, 125, pp.168-188.
Macdonald, I., Burke, C. and Stewart, K., 2017. Systems leadership: Creating positive organisations. Routledge.
McIlroy, J., 2018. Bank scandals fuel calls for completely new system: Why we should nationalise the big four under democratic control. Green Left Weekly, (1178), p.8.
Oates, G. and Dias, R., 2016. Including ethics in banking and finance programs: teaching “we shouldn’t win at any cost”. Education+ Training, 58(1), pp.94-111.
Schaltegger, S., Burritt, R. and Petersen, H., 2017. An introduction to corporate environmental management: Striving for sustainability. Routledge.
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