Importance of Ethics in Management: Case Studies of IOOF Holdings and Bupa Seaforth

Running head: MANAGEMENT ETHICS
MANAGEMENT ETHICS
Name of the Student
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Author Note

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Introduction
The importance of ethics in management is crucial to understand from the point of view that
all businesses and organizations are to be abided by certain set of guidelines and it is into
only the responsibility of the organization to formulate these standards, it is equally
significant to develop such standards for all the stakeholders of the company. The
importance ensuring which in organization are: building a positive culture within the
organization, boosting consuming confidence, reducing then financial liabilities and
minimizing number of potential lawsuits. This paper will be analysing the same by
undertaking three different case studies.
Case study: IOOF Holdings
One of the giants of financial services seems to be landed in the mud for demonstrating
numerous unethical and unacceptable financial practices. The regulation and assessment of
the organizational practices of IOOF Holdings was conducted by an independent financial
advisor. The assessment depicted the breach in the reporting policies as well as the
application of financial law for the process of conducting business. The financial service
provider was found involving in insider trading, misrepresenting performance data and the
practices of front running. The unacceptable practices of the organization led to the outcome
of doubt and mismanagement regarding the organizational culture and the structural
hierarchy of the financial officials. The financial review of the organization depicted major
issues and errors, which reflects the practice of unethical approaches. The service providers
of financial offerings were exposed through the response of Federal government on the basis
of a commissioned enquiry of parliamentary joint. The service providers operating in
financial sectors were shook by the analysis of the unethical practices of National Australia

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Bank, financial planning division of Commonwealth Bank and Macquarie Private Wealth.
IOOF is now added to the list.
Few of the issues identified during the review are Questor Cash Management Fund error in
the year 2012 and Platinum Asset Management issue in the year 2012. The error in the
Questor Cash Management Fund was due to the practice of over distribution to internal
shareholders or unit holders for linking 6 million dollars. The unethical practices identified in
the case are forgery, unrealistically low bid to the clients, fraud, cover-ups by management,
insider trading, front-running of the staff members and the association of poor services. The
ethical issues also demonstrated the scenario of directing full focus on the bottom line
without considering the profitability of the law, clients and customers. The organization was
found directing the focus on the strategy of vertical integration. The review demonstrated the
issues and unethical practices in the culture of research division.
IOOF is not considered as a small business offering financial offerings as it demonstrates
market cap of around 2.7 billion dollars and around 1.54 billion dollars funds for the
management initiatives. However, the company marked numerous issues and practices which
reflected the unethical side of the business. The unethical practices of the company started
affecting the livelihood of Australian residents as more than 650,000 Australians are
dependent on the offerings and business association of Australia. Another unethical issue
identified in the case study is the dismissal of staff with ethical stands. In IOOF Holdings, if
an employee is found taking a stand, through whistleblowing or simply communicating the
issues, the whistle blowers are fired without a specific crime. For instance, in an incidence,
one of the equity analyst of the organization communicated the unfair practices and the
association of insider trading in the system, for which the employee was sacked in few days
(Lair 2017). The ethical norms was disrupted as the employee was under the case of Fair
Work. Another unethical practices identified in the case study is the misrepresentation of the
numbers of ‘out performance’.

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The unethical practices of the organization, IOOF Holdings can be assessed under the
theoretical frameworks of ethics like Utilitarianism and Deontology. According to the
principles of Utilitarianism, the ethical practices should be focussed on the ability of
predicting the outcome of a specific activity for a base of organizational strategies (Mill
2016). A person performing acts of benefits for most of the associated people without the
consideration of societal constraints and personal feelings. The ethical practices can be
reflected in the actions, which portrays greatest benefits or value for most of the people (Roy
et al. 2018). The organizational practices of IOOF Holdings does not abide by the principles
of Utilitarianism, as the organization do not consider involving strategies which adds value to
most of the people associated with the system. The organization overlooks the benefits or
association of customers and clients. Another evidence can be the major focus on the vertical
integration of financial planning and investment management. IOOF Holdings, being a
financial service provider should not involve in providing financial advice, which are in
support of the organizational profitability rather than the customers/clients.
Another theory, which can present a different view of assessment for IOOF Holdings is
Deontology. The principles of Deontology demonstrates that ethics and morality is associated
with the action/process of an activity rather than the outcome (Holyoak and Powell 2016).
One of the practices of fraud and misrepresentation can present a picture of unethical system.
The organization was involved in compensating an error of accounts by using the money
from superannuation funds rather than the available corporate resources (Ives and Bekessy
2015). The organization does not abide by the principles of Deontology as it avoided the
morality intact with the process of using inaccessible funds.
It is essential to acknowledge the issue of IOOF holding by understanding the nuances of
the theory of virtue ethics and professional roles. It has been observed that this is considered
to be one of the qualities to keep the professional morality and that of professional
responsibilities separate. This is based on the understanding that for the purpose of managing