Discuss about the Business ethics and social responsibility-Case study of Commonwealth Bank of Australia.
Business ethics are essential and paramount to organizations success today, they offer a guideline for social responsibility to the community. This is particularly where the decisions and choices made, will affect the community, both directly and indirectly protecting the interest of the community (Hartman, DesJardins, and MacDonald, 2014). Moreover, its applicable in all aspects of the organizational activities. Most experts are in agreement for this to be achieved successfully, business and their employees must adhere to their business ethics. organizations need to be profitable in their market and retain a competitive advantage with the significant changes in their environment from time to time (Chell et al 2014).
However, if there is a misconduct related to the success of the organization, it could be the downfall of the organizations and it may take a while to recover. Therefore, organizations should learn to balance their interest and desires with the societies. In some cases, organizations may find it difficult to conform to their business ethics in their goal to earn profits, however, the society has made steps by incorporating rules and legal framework that would guide businesses through changing their goals and objectives without harming the society (Schwartz 2017).
Since the early ages of industrialization ethical individuals were identified as people who had the ability to perform tasks through the right and proper channels without any supervision. This does not mean that industrialization could be credited for business ethics but it was a response for the business activities carried out by firms at the time such as child labor which leads to a low-cost production of goods and services, dishonest trade, lack of systematic procedures and inequity in various aspects in the businesses. The society, in general, saw such business conducts as depriving and not in the common interest of the community, therefore, a response was needed to counter this with severe consequences in the long run (Crane and Matten 2016). Regardless if this, some organizations still do not adhere to the business ethics, they prefer making profits at this expense while in full realizations of the consequences ahead if caught. In recent years there has been a number of uncovering if such misconduct and nosiness ethic breach, this paper will discuss such a scenario on a recently uncovered scam or misconduct in the Common Wealth Bank of Australia now known as the dollarmite scam.
The commonwealth bank of Australia is one of the largest banks in the countries that has spn over international markets such as USA and Asia. Since its establishment in 1911, it has continued to offer a diverse range of banking services targeting each segment market. This has assisted the firm in gaining a competitive advantage over other banks and making it one of the biggest companies to be listed on the Australian security exchange. It has operated its business activities through the interest and development of the community in Australia and in regions where it has branched out.
This has made the banking organization earn the trust and respect of the community for its due diligence. However, this may come to change due to a recent uncovering of a fraudulent scam conducted by the employees of the CBA related to the junior programs saving the account.
It is common for banks and other organizations to set targets for their employees as a way to increase productivity which will reflect on growth and development of the firm. However, this is not achievable without motivation or rewards like in most cases employee reward their employees with bonuses (Shaw 2016). This was the case at CBA, employees especially the bank tellers discovered a way to acquire those bonuses fraudulently and meet aggressive performance targets. Thousands of these junior accounts commonly referred to as Dollarmite accounts were fraudulently transacted by CBA tellers to their gain. The purpose of these accounts was for parents to be able to save money and secure the future of their children where the money would mature down the line and be used to sponsor their education mostly in college. staff members of the CBA in different branches in the country could carry out transactions without the knowledge of the parents and add a significant amount of money in those accounts that would attract huge bonuses simultaneously through reaching specific targets numbers (Adele 2018).
However, accounts that were fraudulently transacted by the CBA staff members were mainly from parents who signed up their children for the junior account saving program and had no money deposited into their accounts for thirty days rendering the account dormant. If no money was deposited within a thirty-day time frame the sign-up made by would not count or contribute towards the aggressive sale target and rewards, hence the fraudulent transactions by employees. further investigations also showed that the staff member who made transactions in these accounts also created fake referrals that were used to create new accounts for the purpose of boosting their performance graph and acquiring incentives.
The chief executive officer of the Commercial Bank of Australia Matt Comyn stated that the fraudulent actions done by his employees were a serious breach of ethics and conduct since the consumer’s trust was undermined solely for selfish gains. He also stated that he would ensure changes in their policies that would prevent such behavior and, misconduct in the future and undermine the consumer trust. However, there was a similar incident in 2013 but there was no strong evidence to back the claims, this led to the Lyn McGrath, an executive general manager at the time to send a company-wide email informing the employees of the fraudulent dollarmite accounts that were being opened reminding them that it was a misconduct and abuse of the business ethics and their corporate responsibility ,however CBA employees did not seem to heed to her warning (John 2015).
Code of conducts are practices that govern organizations like in this case the Commonwealth Bank of Australia’s banking services that are acceptable to the organization, its consumers, employees, and stakeholders. It also helps in defining and aligning the objectives and goals of organizations with is mission and vision statement.one of the CBA’s code of conduct that was breached is the protecting ‘user data and information’. Through the access to consumer accounts and making the fraudulent transactions on the accounts without the knowledge of the consumers, breached the code of conduct (Adele 2018).. The other code of conduct in that ‘we act with integrity and honesty’, sincerely that is pretty ironical for CBA. Staff members are required to perform their daily activities with integrity and honesty, however, the scam that was uncovered brutalized this code of conduct tremendously, it will be difficult for the bank to recover from particular since the junior saving program has been around for decades (Tom 2018). The third code of conduct is ‘We meet our legal and regulatory obligations, voluntary commitments and internal standards’. For a banking organization that has been around for more than half a decade, it is expected that its employees would have a deeper understanding on the importance of abiding by the international standards and regulatory obligations especially since it is a multinational organization, the shady dealings by CBA’s employees was an abuse of the code of conduct . The final code of conduct is ‘We manage conflicts of interest’, this conduct simply illustrates that that bank ensures that their personal interest does not affect the effective decision making (Ferrell and Fraedrich 2015). This is in contrast with the misconduct of the employees where their interest and needs affected their ability to make sound decisions and choices leading to undermining the interests of the bank and its consumers who have now lost confidence in the junior savings program that has been around for over a century
Conclusion
Business ethics are essential and paramount to organizations success today, they offer a guideline for social responsibility to the community. This is particularly where the decisions and choices made, will affect the community, both directly and indirectly protecting the interest of the community. Moreover, its applicable in all aspects of the organizational activities (Batten, Lon?arski and Szilagyi 2018). Most experts are in agreement for this to be achieved successfully, business and their employees must adhere to their business ethics. organizations need to be profitable in their market and retain a competitive advantage with the significant changes in their environment from time to time. The paper has discussed this further through the business fraud at Commonwealth Bank of Australia which is one of the country’s largest organization listed in the Australian security exchange. Employees at the bank transacted dollarmite savings account for the purpose of acquiring incentives and achieving aggressive performance targets (Du Plessis, Hargovan and Harris,2018). This was a serious breach of business ethics and conduct where the consumer’s privacy was undermined as well and impacting negatively the image of the firm which has taken over half a century to build. The paper has gone deeper on the codes of conduct that have been breached at CBA lamenting on their impacts to the firm. Therefore it is essential for organizations and its staff members to adhere to the business ethics and code of conducts so as to reaction a clean and strong brand while making essential decisions that will align with the mission and vision of the organization (Crane and Matten 2016).
References
Adele F. 2018. Dollarmites bites: the scandal behind the Commonwealth Bank’s junior savings program. [ONLINE] 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
Batten, J.A., Lon?arski, I. and Szilagyi, P.G., 2018. When Kamay Met Hill: Organisational Ethics in Practice. Journal of Business Ethics, 147(4), pp.779-792.
Chell, E., Spence, L.J., Perrini, F. and Harris, J.D., 2016. Social entrepreneurship and business ethics: Does social equal ethical?. Journal of business ethics, 133(4), pp.619-625.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
Du Plessis, J.J., Hargovan, A. and Harris, J., 2018. Principles of contemporary corporate governance. Cambridge University Press.
Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases. Nelson Education.
Hartman, L.P., DesJardins, J.R. and MacDonald, C., 2014. Business ethics: Decision making for personal integrity and social responsibility. New York: McGraw-Hill.
John R. 2015. Dollarmites account should be banned from schools, says the Barefoot Investor. [ONLINE] Available at: https://www.news.com.au/finance/dollarmites-account-should-be-banned-from-schools-says-the-barefoot-investor/news-story/b4dc922034e882fef521d102e5a503f0.
Schwartz, M.S., 2017. Corporate social responsibility. Routledge.
Shaw, W.H., 2016. Business ethics: A textbook with cases. Nelson Education.
Tom C. 2018. Remember The Dollarmites? They’re Now At The Centre Of A Massive Banking Scandal. [ONLINE] Available at: https://junkee.com/dollarmites-commonwealth-bank-scandal/159324
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