Discuss about the CBA Apologises For Manipulating Children Accounts.
The assessment aims in evaluating the unethical measures that was used by the employees of Commonwealth Bank of Australia for activating the children’s Dollarmites Youthsaver accounts. The ethical background of the decisions made by employees of Commonwealth Bank of Australia regarding the activation of the accounts is assessed, while detecting the moral grounds, which the employees has violated. In addition, the breach of social contract is also evaluated to understand the un-ethical measures faced by the company due to the actions of the employees. Lastly, the managerial branch of stakeholders is evaluated in the assessment, which helped in identifying the individuals, who are affected by the decisions made by the employees of Commonwealth Bank of Australia.
The decision made by the employee of Commonwealth Bank of Australia directly reflects wrong behaviour, which they have conducted to ensure their bonuses from the operations. The employees of Commonwealth Bank of Australia have relevantly used bank’s discrepancy fund (i.e. loose change) or their own money to activating the children’s Dollarmites Youthsaver accounts. The children’s Dollarmites Youthsaver accounts were mainly set up by the parents but were not activated. In addition, the employee used the money to activate the accounts without the permission of the parents. The action conducted by the employees of Commonwealth Bank of Australia ensured their bonuses, which helped in improving the level of returns that could be generated from operations. However, the activation of the accounts was without the prior consent of the parents, which also indicates a violation of the privacy and security that was conducted on part of the employees after activating the account. Bosse and Phillips (2016) stated that the violation of ethical consideration on part of the employees directly initiated the law suits by stakeholders of Commonwealth Bank of Australia.
From the evaluation of the agency theory there needs to be a relation between principal and agent in a business, which could resolve problems that can exit in agency theory. In addition, the with the help of agency theory organisation are able to resolve problems that can exist due to unaligned goals and difference in aversion of risk. From the evaluation it could be identified that the organisations with the help of the agency measures is able to resolve the problems existing within the management and stakeholders of the organisation. Therefore, the agency theory relevantly indicates that management takes decision on the basis of returns that could be generated for stakeholders of the organisation. Hence, Agency theory ensures that the management takes relevant actions, which results in higher return for the shareholders of the organisation. In this context, Pepper and Gore (2015) stated that agency theory explains the different level of obedience, which needs to be followed by the organisation, while conducting their operations. On the other hand, Nevo, Nevo and Pinsonneault (2016) criticises that agency theory is considered to have theoretical approach, which has less power than the actual explanation.
However, the current case of Commonwealth Bank of Australia violates the measures that has been taken by the Agency theory in generating returns to the stakeholders. In addition, the decision made by the employees were not ethical, as it only benefited them and ensured their bonuses. Therefore, the measures taken by the employees of the bank mainly violated the foundation of agency theory, as the actions taken by the employees did not help in supporting the activities of stakeholders of the organisation. Hence, the employees did not take the actions on behalf of the stakeholders instead the measures were to improve their own bonuses. The use of discrepancy fund or loose change of the bank for activating the account directly indicates that the employee acted only for their benefits and not for the benefits of the stakeholders, as depicted by the agency theory. Thus, it could be understood that the staff of the Commonwealth Bank of Australia was aiming to increase their personal gains by supporting immoral activities and misusing the discrepancy fund or loose change of the organisation. On the contrary, Pepper and Gore (2015) argued that violation of agency theory components negatively reflects on share price valuation of the organisation, as investors does not rely on operations conducted by the management.
Legitimacy theory relevant indicates that the business is bound by the social contract that each firm needs to be follow, while commencing their operations. Furthermore, legitimacy theory also desires that the actions of the organisation are relatively focused on various social desires, which helps them fulfil their objectivity and guarantee their continued existence in the market. Hence, legitimacy theory indicates that the organisation and its employees conduct fair operations throughout the years of its operation to minimise the occurrence of any unethical behaviours by the management or the employees of the organisation. Moreover, the legitimacy theory revolves upon the notion that there is a social contract between the organisations and Society, which the organisation needs to comply with while conducting their operations. The theory also indicates that the firm Operates with the permission of the society and is ultimately accountable to the society rules. Henceforth, the organisation needs to use ethical measures in using the natural resources and to hire employees. In this context, Deegan (2014) stated that legitimacy theory lays an ethical outline for the organisation, which they need to follow for supporting and upholding the societal regulations.
In addition, From the valuation of the case study it could be identified that the employees of Commonwealth Bank of Australia have violated most of the societal laws recording ethical consideration, while conducting their operations. The case study directly indicates that the employees have violated and used unethical measures for manipulating the Loose change of the bank in ensuring that bonus. The actions taken by the employees of Commonwealth Bank of Australia is considered unethical, as they have activated the Dollarmites Youthsaver accounts without the consent of the parents. Therefore, the employees have violated social contract such as maintaining the trust of the clients, using unethical operations, misutilisation of the company resources and upholding self-interest rather than societal interest.
The employees of Commonwealth Bank nearly broke the trust of the citizens, as the manipulated the accounts and used unethical measure to obtain bonuses for their effort. This relevantly indicated that actions of the employees relatively violated the societal contract, where the management was only conducting operations and violating the personal space of the individuals.
Use of unethical practices in activating the account and obtaining bonuses for the services by the bank relatively increased cash outflow of the organisation. This directly violated the ethical Grounds of banks employees. the employees of Commonwealth Bank have used the unethical practices in their operations and violated the societal contract for conducting smooth and just operations within the organisation (Nishitani 2016).
The employees of Commonwealth Bank of Australia used the discrepancy fund and their own money for activating the accounts of children’s. This directly violated the societal contract of using the resources of the organisation ethically. The employees used the resources of the organisation such as discrepancy fund to stimulate and conduct unethical operations which could increase their chances of getting bonuses from the management.
The employees by using manipulative measures in conducting the operations has a relatively uphold their own self-interest above the society interest. Therefore, the organisation has violated the contractual rule to support operations that incorporate the values of society and minimise unethical activities. Hence, the employees of Commonwealth Bank of Australia have violated the above contractual rules to increase their bonuses during the fiscal year (Chelli, Durocher and Richard 2014).
The stakeholder theory relatively describes the stakeholders of the organisation on two different fronts where the first front is from internal stakeholders and the other is external stakeholders. The internal stakeholders relatively comprise of employees, managers, and owner, which directly indicates the overall operators of the organisation. Moreover, the external stakeholders relatively comprise of suppliers, society, government, creditors, shareholders, and customer. Both the internal stakeholders and the external stakeholders relatively comprises of the stakeholder theory, where adequate persons can be identified who can have problems with the overall scandal conducted by employees of Commonwealth Bank of Australia. In this context, Hörisch, Freeman and Schaltegger (2014) stated that management uses the stakeholder theory to identify the accurate stakeholders of the organisation, who can have an opinion on the operations and on future prospects of the company. Jones, Wicks and Freeman (2017) further added that organisation relatively focuses on specific stakeholders such as employees, creditors, and shareholders while making any kind of decision, as they intend to increase their profits over the period of time.
The manipulation conducted by the employees will directly have an impact on both internal stakeholders and external stakeholders of the organisation. the reactions of the several key stakeholders are depicted as follows.
The reaction of the managers regarding the scandal conducted by the employees will be extremely aggressive, where the management will take relevant measures to control the unethical behaviour of the employees and reduced the cash outflow of the organisation. Moreover, the management will terminate the employees, suspending any kind of future possibilities of the event being repeated again by the employees. The manager could also called the bonuses that motivated employees to conduct unethical operations (Mansell 2015).
The second reaction would mainly come from the government who is responsible for the activities of the Australian banks. Commonwealth Bank of Australia is a relatively governed by public sector management, where the operations conducted by the employees a relatively evaluated by the government. Moreover, the government will impose most strict rules within the organisation for the violation of ethical conduct by the employees.
The major reaction would mainly come from the shareholders of the organisation, where massive selling process will start for the shares of Commonwealth Bank of Australia, as the investors will have low interest due to the scandal conducted by the employees. The investors will start to relate and rely on the information that is presented by the bank on the upcoming events of the scandal. The evaluation will directly have an impact on the share price valuation of the company making the highest and prominent actions that can be taken by a stakeholder.
The reaction of the customers after the shareholders will have the most impact on your operations of Commonwealth Bank of Australia. The customers seeing the violation of ethical Grounds by the employees will resort to other companies, where the trust level is a relatively high. The children account holding customers whose account were activated without the consent will file a complaint against the company regarding mistrust and violation of ethical grounds (Andriof et al. 2017).
Conclusion:
From the evaluation of the assessment, the overall manipulations and unethical measures that was conducted by the employees of Commonwealth Bank of Australia has been adequately addressed. The evaluation of legitimacy theory, agency theory and stakeholder theory are relatively conducted to understand the impact of the scandal on operations of the organisation. The scandal is relatively violated the legitimacy theory and agency theory objectives, as the organisational employees used an ethical measure to fulfil their desires. Moreover, the stakeholder theory relatively indicated the number of stakeholders that may react on unethical measures taken by employees of Commonwealth Bank of Australia.
References and Bibliography:
ABC News. (2018). ‘Breach of trust’: CBA apologises for manipulating children’s accounts. [online] Available at: https://www.abc.net.au/news/2018-05-19/commonwealth-bank-staff-manipulated-childrens-accounts/9779010 [Accessed 22 Jul. 2018].
Andriof, J., Waddock, S., Husted, B. and Rahman, S.S., 2017. Value maximisation, stakeholder theory and the corporate objective function. In Unfolding Stakeholder Thinking (pp. 65-84). Routledge.
Bosse, D.A. and Phillips, R.A., 2016. Agency theory and bounded self-interest. Academy of Management Review, 41(2), pp.276-297.
Chelli, M., Durocher, S. and Richard, J., 2014. France’s new economic regulations: insights from institutional legitimacy theory. Accounting, Auditing & Accountability Journal, 27(2), pp.283-316.
Commbank.com.au. (2018). Youthsaver. [online] Available at: https://www.commbank.com.au/banking/youthsaver.html [Accessed 22 Jul. 2018].
Deegan, C., 2014. An overview of legitimacy theory as applied within the social and environmental accounting literature. Sustainability accounting and accountability, pp.248-272.
Ferguson, A. (2018). Dollarmites bites: the scandal behind the Commonwealth Bank’s junior savings program. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/business/banking-and-finance/dollarmites-bites-the-scandal-behind-the-commonwealth-bank-s-junior-savings-program-20180517-p4zfyr.html [Accessed 22 Jul. 2018].
Hörisch, J., Freeman, R.E. and Schaltegger, S., 2014. Applying stakeholder theory in sustainability management: Links, similarities, dissimilarities, and a conceptual framework. Organization & Environment, 27(4), pp.328-346.
Jones, T.M., Wicks, A.C. and Freeman, R.E., 2017. Stakeholder theory: The state of the art. The Blackwell guide to business ethics, pp.17-37.
Knaus, C. (2018). Commonwealth Bank apologises for staff manipulation of children’s accounts. [online] the Guardian. Available at: https://www.theguardian.com/australia-news/2018/may/19/commonwealth-bank-apologises-for-staff-manipulation-of-childrens-accounts [Accessed 22 Jul. 2018].
Mansell, S., 2015. Book review: rejoinder to Veldman’s review of capitalism, corporations and the social contract: A critique of stakeholder theory (Vol. 22, No. 2, pp. 271-275). Sage UK: London, England: Sage Publications.
Nevo, S., Nevo, D. and Pinsonneault, A., 2016. A Temporally Situated Self-Agency Theory of Information Technology Reinvention. Mis Quarterly, 40(1), pp.157-186.
NewsComAu. (2018). Not-so-mighty Dollarmite accounts targeted in Commbank rort. [online] Available at: https://www.news.com.au/finance/business/banking/commonwealth-banks-dollarmite-scam-exposed/news-story/21c3e1514981063a6b4fd53276216cd6 [Accessed 22 Jul. 2018].
Nishitani, K., 2016. A Comparative Empirical Analysis of the Determinants of Initiation of Integrated Reporting Practices in Japanese and UK Listed Companies: The View of Voluntary Disclosure Theory or Legitimacy Theory? (No. DP2016-07). Research Institute for Economics & Business Administration, Kobe University.
Pepper, A. and Gore, J., 2015. Behavioral agency theory: New foundations for theorizing about executive compensation. Journal of management, 41(4), pp.1045-1068.
Thomsen, S. (2018). CBA staff put loose change or their own money into kid’s bank accounts to make bonuses. [online] Business Insider Australia. Available at: https://www.businessinsider.com.au/cba-staff-put-loose-change-or-their-own-money-into-kids-bank-accounts-to-make-bonuses-2018-5 [Accessed 22 Jul. 2018].
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download