This report discusses the theories, models, and frameworks of learning organizations and their impact on leadership and business management. It focuses on the ethical issues and scandals faced by Commonwealth Bank of Australia and provides recommendations for becoming an ethical learning company.
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LEADERSHIP AND LEARNING ORGANISATIONS 1
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Executive summary In this report, different theories, models and frameworks of learning organizations re- discussed in a proper way. Whole report is structured on commonwealth bank of Australia, which can face different ethical issues and scandals at past. This has impacted on reputation and revenue collection of this company. Different ethical issues and scandals of these banking organizations are discussed in this report. In addition, barriers to learning in this organization are analyzed in a proper way. Different corporate social responsibilities of this firm are discussed and other CSR policies recommended. Recommendations are also given to become an ethical learning company. At the end of this study, conclusion has been drawn from the overall discussion. 2
Table of Contents 1.0 Introduction..........................................................................................................................4 1.1 Background of company...................................................................................................4 2.0 Learning organization Process.............................................................................................4 2.1 Structural roles of organizational learning.......................................................................4 2.2 Applying Learning organizational models.......................................................................5 3.0 Evaluation of ethical issues..................................................................................................6 4.0 Assessment of ethical scandals............................................................................................6 5.0 Evaluation of current barriers...............................................................................................7 6.0 Recommendation for becoming ethical learning company..................................................8 6.1 Analysis of needs..............................................................................................................8 6.2 Ethical training plan..........................................................................................................8 6.3 Implementation.................................................................................................................8 6.4 Evaluation.........................................................................................................................9 7.0 CSR programs......................................................................................................................9 8.0 Conclusion............................................................................................................................9 Reference list............................................................................................................................10 3
1.0 Introduction Learning organization refers to companies that provide opportunities to all active members to learn consistently in order to improve professional and personal skills. Commonwealth Bank of Australia is continuously transforming their leadership styles and organizational structure for ensuring learning of its employees. This study focuses on the evaluation of leadership and business management of the Commonwealth Bank. 1.1 Background of company Commonwealth Bank of Australia (CBA) is a multinational bank and its headquarter is located in Sydney, Australia. At present they have 51800 employees those who perform different duties worldwide (Commbank.com.au, 2019). Different services provided by this organizationincludefinancialservices,businessinstitutionalbanking,andfunds management.ThisorganizationisconsideredaslargestfirmthatisenlistedinASE (Australian stock exchange). Main vision of this banking organization is to secure and enhance wellbeing of customers by providing excellent financial service. Hence, they have built a customer-focused culture by increasing their sense of responsibility. They try to follow participative leadership style that helps to impart knowledge to employees. 2.0 Learning organization Process 2.1 Structural roles of organizational learning Organizational structure of CBA contributes to the learning process of their employees. As opined by Rahim (2017). Clear understanding of roles, as well as responsibilities, helps leaders to support organizational learning of members of organizations. Proper guidance of leaders helps to learn of their subordinates and this aspect helps this organization to achieve goalsoftheirbusiness.Executivedirectoroffinancedepartmenthasmentionedthat leadership is all about developing and managing team. Leaders of this firm choose and place right people for appropriate designations (Commbank.com.au, 2019). After that leaders of this firm provide guidance to employees and encourage them to learn new skills. 4
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2.2 Applying Learning organizational models Application of LO framework within organization is an effective practice of encouraging members of organization to learn continuously. According to Storey (2016), five dimensions of LO have been mentioned by Peter Senge and this model is being applied by leaders of largeorganizationstosupportlearningwithinworkplace.Fivedisciplinesaresystem thinking, mental models, and development of shared vision, personal mastery and team learning. Leaders of CBA compromise vision of organization and individuals in order to develop shared vision. Sharing same vision engages employees in achieving organizational goals. System thinking refers to evaluation of issues of overall system of business. As stated by Frese and Keith (2015), this practice helps managers and leaders to understand the process of mitigating issues through continuous learning of employees. Peter Senge has described mental model as concept of employees regarding values of organization. CBA is a flexible organization and they are able to accept as well as adopt new mental models. Leaders of CBA focus on team learning to ensure success (Commbank.com.au, 2019). They provide values to all team members and motivate them to learn within organization. Personal mastery takes place in case of self-development. As mentioned by Pisano (2017), employees of CBA understand their gaps and learn new skills in order to mitigate gaps. This approach helps this company to improve performance and enhance generation of maximum revenue. Figure 1: Five Dimensions of Learning Organization (Source: Influenced by Pisano, 2017) 5
3.0 Evaluation of ethical issues This organization is facing different ethical issues, which includes poor behavior of financial planners. They behave unethically and places savings of retirees in risky investments. In addition, falsification of documents is also done by employees that are another ethical issue. It shows a gap in leadership as proper guidance is not achieved that has impacted in behavior of planners. As mentioned by Usman and Hameed (2017), in learning organization leaders help to improve behavior of subordinates. Leaders of CBA promote unethical behavior by providing huge incentives to financial planner. This has created a sales-based culture and scope of learning has diminished. Moreover, leaders of this organization try to cover any type of misconduct performed by any employee. This is another ethical issue that can impact on customersatisfactionrateanddecreasecompetitiveadvantage.Hochetal.(2018) contradicted that leadership needs to point out gaps in performance of subordinates and provide the opportunity of correction. Main cause behind unethical practices of CBA is the lack of sincerity to maintain corporate norms within workplace. Leaders and managers are not maintaining corporate norms and employees are following their footsteps. This aspect is leading to occurrence of unethical norms.Mr. Sedgwick has mentioned recommendations for banking organization and 9th recommendationhavementionedtofollowethicalstandardalongwithfocusingon consumers (Royalcommission.gov.au, 2019). 4.0 Assessment of ethical scandals In 2015, several customers of CBA have been arrested by the charge of money laundering. Around $3 million banking receipts have been found, which was printed from CBA deposit machines. This proves failure of this large multinational bank because they have not taken proper step to solving the problem of this scandal. According to espoused theory of learning organization, a firm needs to have proper guidelines for problem-solving (Yazdani and Murad,2015).Theseguidelinescanbefollowedbyemployeestosolveproblems. Remuneration report of CBA has been released in 2016 and the management of this company was aware about the money laundering scandal. Investigation has taken place at that time as this issue has been resulted in civil penalty proceeding by Australian transaction report and training center (Royalcommission.gov.au, 2019). Criminals use intelligent deposit machines of CBA to deposit higher illegal amount and it causes money laundering. CBA has faced humiliation and criticism from all stages of business due to their money laundering scandal. 6
In addition, CBA is facing another scandal of data breach of customers. Medical information is private documents, breach of which has decreased security of consumers (Abc.net.au, 2019).This ethical scandal has taken place due to negligence of employees of CBA. It has been mentioned in the Royal Commission Report that banking organization such as, CBA is liable to breach report data on annual basis. Lack of knowledge in employees regarding process to secure shared database is the main cause behind this ethical scandal.This scandal can be analyzed by system theory of learning organization. As said by Mo and Shi (2017), systems theory helps to analyze impact of a context and evaluate connections. Hence, impact of action upon others can be analyzed by the help of this theory. These scandals have impacted on brand image of this organization and impacted in revenue rate. Figure 2: Theories that support Learning Organization (Source: Influenced by Pisano, 2017) 5.0 Evaluation of current barriers CommonwealthBankofAustraliaiscurrentlyfacingdifferentbarriersregarding organizational learning. One of the essential barriers is biases while performing action. As opined by Çeliket al.(2015), biases in action impacts on performance of an organization and decreases productivity. Bias gives rise to different problems like wastage of time, improper 7
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reflective observation and inefficient decision making. In addition, Serrat (2017) argued that biases while performing any action reduces certainty of getting perfect results. Another barrier in organizational learning is resistance during change. CBA has failed records in past during implementation of any change in the organization (Commbank.com.au, 2019). However, the essential stakeholders were involved during incorporation of the change. Different changes like technological change, leadership transition, and change in working hours has failed due to improper planning. As opined by Rahim (2017), leaders and managers inanorganizationneedtotakepositiveapproachduringimplementationofchange. Resistance can be eliminated through motivation and regular discussion. 6.0 Recommendation for becoming ethical learning company 6.1 Analysis of needs It is important for leaders to communicate with employees in order to understand their viewpoints towards ethical learning. This aspect may help leaders of CBA to understand needsofethicallearningpracticeswithinorganization.Onanotherhand,customer satisfaction level and their feedbacks need to be analyzed. This action will help to understand gaps in performance of employees and needs of learning. It is recommended to overview repetitive ethical scandals of this company. This aspect may help them to identify their mistakes and develop strategies accordingly to avoid this kind of issues in future. 6.2 Ethical training plan ActionDuration Training regarding provision of respect to others 2-3 Weeks Asking employees to cooperate with other team members 1-2 Weeks Training for respecting cultural background of others 2-3 Weeks Training for developing moral in employees1-2 Weeks Asking employees to express their opinion in all situations 1-2 Weeks Table 1: Ethical Training plan 8
(Source: Designed by Author) 6.3 Implementation Engagement of leaders and employees are essential in case of implementation of ethical training plan. Leaders and managers of CBA are responsible to inform employees regarding the training program arranged by the company. Employees need to cooperate with the management in order to help this company to become ethical learning company. Employees are liable to attend training program for learning ethics regarding business practices. They need to understand importance of ethical learning and its effect on business performance. 6.4 Evaluation Effectiveness of ethical learning training program needs to be evaluated by the management of CBA. Survey on employee morale can be conducted on regular basis. On another hand, performance of individual employees after training program needs to be monitored. In addition, evaluation of business performance can help to measure impact of ethical learning training program on employees. 7.0 CSR programs CBA has taken different CSR initiatives that include financial education for children. This can help children by increasing their ability to money management. In addition, they have also initiated the program of face to face financial education program. This can help community especially students by increasing their ability to manage money. CSR report of this firm also includes climate change policy. They have supported the mission of zero- emission by 2050 (Commbank.com.au, 2019). However, different other CSR programs like increasing knowledge of community regarding scams like money laundering and improving motivation of employees regarding ethical business process must be included. 8.0 Conclusion From the above discussion, it can be concluded that learning process in an organization helps to increase efficiency of employees. It has been mentioned that cooperation from employees can help to improve their own professional and personal skills. Leaders and leadership style impacts on learning process of a large organization. Gaps in leadership style in CBA have given rise to different ethical issues and scandals. This can be mitigated by following 9
different ethical learning theories and concepts. Recommendations may help this company to become ethical learning organization. 10
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Reference list Abc.net.au. (2019). Commonwealth Bank customers' medical data exposed to potential privacy breach. Available at: https://www.abc.net.au/news/2018-12-03/commonwealth-bank- medical-data-exposed-potential-privacy-breach/10563414 [Accessed on 25th April 2019] Çelik, S., Dedeoğlu, B.B. and Inanir, A., 2015. Relationship Between Ethical Leadership, Organizational Commitment and Job Satisfaction at Hotel Organizations.Ege Academic Review,15(1). Commbank.com.au. (2019).About us. Available at: https://www.commbank.com.au/about- us/careers/fresh-perspectives/leadership.html [Accessed on 25th April 2019] Frese,M.andKeith,N.,2015.Actionerrors,errormanagement,andlearningin organizations.Annual review of psychology,66, pp.661-687. Hoch, J.E., Bommer, W.H., Dulebohn, J.H. and Wu, D., 2018. Do ethical, authentic, and servant leadership explain variance above and beyond transformational leadership? A meta- analysis.Journal of Management,44(2), pp.501-529. Mo, S., and Shi, J. 2017. Linking ethical leadership to employees’ organizational citizenship behavior:Testingthemultilevelmediationroleoforganizationalconcern.Journalof Business Ethics,141(1), pp.151-162. Pisano,G.P.,2017.Towardaprescriptivetheoryofdynamiccapabilities:connecting strategic choice, learning, and competition.Industrial and Corporate Change,26(5), pp.747- 762. Rahim, M.A., 2017.Managing conflict in organizations. Abingdon: Routledge. Royalcommission.gov.au.2019.Finalreport.Availableat: https://www.royalcommission.gov.au/sites/default/files/2019-02/fsrc-volume-1-final- report.pdf[Accessed on 20th May 2019] Serrat,O.,2017.Buildingalearningorganization.Knowledgesolutions(pp.57-67). Springer,Singapore.Availableat:https://link.springer.com/chapter/10.1007/978-981-10- 0983-9_11 [Accessed on 25th April 2019] Storey, J., 2016. Changing theories of leadership and leadership development. InLeadership in Organizations(pp. 33-58). Routledge. Usman, M. and Hameed, A.A., 2017. The effect of ethical leadership on organizational learning: Evidence from a petroleum company.Business & Economic Review,9(4), pp.1-22. 11
Yazdani, N. and Murad, H.S., 2015. Toward an ethical theory of organizing.Journal of Business Ethics,127(2), pp.399-417 12