Commonwealth Bank: Analyzing the Impact of Repeated Ethical Scandals on Business Performance

This study analyzes the impact of repeated ethical scandals on the business performance of Commonwealth Bank. The study identifies potential challenges and their impact on the current business performance of the company. The study recommends improving the internal culture, customer satisfaction, and cyber security of the bank.

Running head: MANAGEMENT
Management
Name of the student
Name of the university
Author note

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Table of contents
Introduction......................................................................................................................................2
Problem analysis..............................................................................................................................2
Recommendations............................................................................................................................5
Conclusion.......................................................................................................................................6
Reference list and bibliography.......................................................................................................7

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Introduction
The term ethical concern has become necessary for understanding the moral judgment
capabilities of the human being (Trevino and Nelson 2016). By continuing this it cannot be
denied that depending on the ethical functions in the workplace, the organizational culture as
well as the ethical values are being improved. Therefore, it can be said that in order to introduce
an effective organizational culture the ethical values are being influenced. Analyzing the
repeated ethical scandals faced by commonwealth bank, different changes have been proposed
by the tender, who has been appointed for critically analyzing the emerging issues in this
organization. Commonwealth bank is an Australia based banking service providing organization,
which is dealing with repeated ethical challenges from last few years. The aim of this study is to
identify the potential challenges and its impact on the current business performance of the
company.
Problem analysis
Analyzing the past few years’ history of Australian banking scandals, it will be identified
that ethical the commonwealth bank is in the top position. On the other hand, the ethical scandals
are being badly exposed in different news channels, which has brought significant impact on the
corporate image of commonwealth bank. In the words of Crane and Matten (2016), in a recent
article published in 2018, it has been mentioned that online transaction errors have become the
common concern for the bank authority, which has aroused the financial security regarding
questions on the mind of the customers. Due to the online transaction errors, the visa as well as
the logging errors have increased annoying situation among the customers. As per the banking
authorities, for restoring the non-common bank visa card transactions at the Commonwealth
Bank merchant terminals, technological disturbances are being faced by the customers. Not only

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the Visa card blocking issues, but also the digital payment issues are being faced by the
commonwealth bank customers from the last few years. In case of repeated bill payment and
personal loan transaction related issues, the company has become highly major challenging
issues for the organization. In this situation the huge financial loss has brought the barriers for
the organization towards achieving its business success.
In the words of Crane and Matten (2016), in the recent published article, it has been
identified that from the last few years the insurance selling lines are not being paid and due to
this reason the process of personal as well as home loans has got delayed. On the other hand,
lack of initiatives towards maintaining the effective customer relationship, has bought another
challenge for the company to maintain its brand reputation. In the customer complaints, it has
been analyzed that gaining loyal customers has become one of the important barriers for
Commonwealth bank authority. Analyzing the problems, it can be assumed that lack of
systematic initiatives in the workplace, the transparency issue between the customer and the bank
author has been aroused. In an article on commonwealth bank scandal, it has been identified that
money laundering scandal is being considered as one of the important unethical activity done by
the organization. It has been identified that $3 million banking receipts have been printed from
the Commonwealth Bank's deposit machines, which has been recovered by the Australian police
(Afr.com 2019). For avoiding the detection, the multiple deposition techniques have been
adopted by the two men, who have been arrested while making the separate deposits of
$1784408 in total numbers of 101 commonwealth bank accounts (Businessinsider.com.au 2019).
Analyzing the issues, it can be said that from last seven years such kind of unethical activities are
being practices by the commonwealth bank authorities.

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Network error has become common technical problem faced by the users of
commonwealth banking apps (Smh.com.au 2019). Due to various scandals, the transaction
methods have become highly insecure. In this situation, the customer have started losing their
trust from the company. Another scandal, which has been published in the year 2018 that near
about 7000 part-time employees have been ripped off by the authority (Smh.com.au 2019). It has
been identified that, although the company promises to maintain the employment standard in the
workplace, however, proper employee standard has not been maintained by the company. Lower
employee wages structure and delay in payment, dissatisfaction among the employees has been
increased. Analyzing the employment issue, it has been identified that from the last 10 years, the
employees are not being paid, which has influenced the employee turnover rate in the
organization. Due to such unethical practices in the workplace, the security of financial
wellbeing has got effected, which impacted negatively on the corporate image of commonwealth
bank.
The utility bills are increasing day by day, which is driving the customer confidence
towards the uninspiring condition (Heraldsun.com.au 2019). It cannot be denied that due to delay
in legal process in case of solving the issues faced by the customers, the rate of customer
complaints has been increased. Slow housing market as well as digital dispute, has created
various ethical errors for the company. By continuing this it cannot be denied that ethical dispute
not only influenced the financial performance of the company, but also it has impacted on the
organizational environment of the company. In the inappropriate organizational environment,
it has become challenging for the Commonwealth bank authority to maintain the ethical values to
the organization. Increasing rate of financial scandals and employee turnover rate, the brand
reputation of commonwealth bank now is in concerning situation (Heraldsun.com.au 2019). It

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has been analyzed that although the ethical challenges are being repeated in the workplace, but
the management is still performing inactively. Trevino and Nelson (2016) opined that due to lack
of involvement towards solving the emerging ethical challenges, the inactive role of management
is the biggest reason behind the repeated ethical challenges faced by the company. By continuing
this, it cannot be denied that inappropriate leadership practices in the workplace are another
important reason behind decreasing employee efficiency (Businessinsider.com.au 2019).
Therefore, it can be said that not only the financial risks, but also the non-financial risks are also
high for the Commonwealth bank.
Trevino and Nelson (2016) stated that by examining the royal commission incidents, it
has been identified that there are lots of horror stories in the banking sector. Due to millions of
transactions in every year, the banking authorities are less bothered about few of the transaction
errors faced by the customers (Afr.com 2019). Management does not take any kind of initiative
for doing the internal audits, as a result, the problems are not being solved (Heraldsun.com.au
2019). On the other hand, the executive committee of the bank is also not concern about the
repeated issues faced by the customers. Due to lack of proper action, the financial risks of the
company have been increased. Funding and credit risks of the bank have dragged the negative
impact on bank growth (Businessinsider.com.au 2019). In this situation, if the company will not
focus on solving the challenges, the increasing rate of customer dissatisfaction can drive the
negative impact on organizational performance.
Recommendations
Understanding the repeated ethical scandals and its core influencing factors, it can be said
that effective internal audits are necessary for dealing with the challenges. Both the customers
and employee satisfactions have become important for bank authority to develop a strong brand

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reputation. On the other hand, it is also true that by improving the banking regulations the
cyber security can be improved. The bank needs to be more conscious about the ethical
practices, so that the current situation can be improved. Cyber security of the bank needs to be
improved. Data processing and customer relationship development process can be effectively
developed so that rate of customer complaints can be reduced. In order to improve the leadership
practices the transformational leadership needs to be introduced for improving the internal
culture of the organization. In order to solve the customer quarries, a different customer service
department can be introduced, which will work for 24 hours to solve the quarries of the
customers.
Conclusion
It can be concluded in this study that improper management initiatives, the repeated
ethical scandals have become regular incident in commonwealth bank. Analyzing the issues, it
can be said that individuals who are associated with the organization needs to focus on
understandings the ethical values. Due to repeated ethical scandals, not only the financial losses
are being faced by the company, but also influencing the employee turnover rate. In order to
survive in the competitive financial sector, it is very important for commonwealth and authority
to focus on analyzing critically analyzing the emerging issues. In order to increase engagement,
effective wages structure can be beneficial in terms of increasing the employee engagement
towards the organization.

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Reference list and bibliography
Abc.net.au 2019. Retrieved from: https://www.abc.net.au/news/2017-08-15/cba-updates-
settlements-with-clients-and-employees/8805872 [Accessed on 30th Jan, 2019]
Afr.com 2019. Retrieved from:
https://www.afr.com/business/banking-and-finance/commonwealth-bank-safe-haven-for-
criminal-activity-20170804-gxp54g [Accessed on 30th Jan, 2019]
Afr.com 2019. Retrieved from: https://www.afr.com/news/economy/cbas-ordeal-does-australia-
a-service-20180502-h0zizj [Accessed on 30th Jan, 2019]
Businessinsider.com.au 2019. Retrieved from: https://www.businessinsider.com.au/apras-report-
on-cba-highlights-problems-with-leaders-not-walking-the-walk-on-values-2018-5 [Accessed on
30th Jan, 2019]
Businessinsider.com.au 2019. Retrieved from:
https://www.businessinsider.com.au/commonwealth-bank-ceo-matt-comyn-challenges-2018-1
[Accessed on 30th Jan, 2019]
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Hcamag.com 2019. Retrieved from: https://www.hcamag.com/hr-news/commonwealth-bank-
allegedly-ripped-off-7000-employees-claims-union-231657.aspx [Accessed on 30th Jan, 2019]
Heraldsun.com.au 2019. Retrieved from:
https://www.heraldsun.com.au/news/victoria/commonwealth-bank-online-and-visa-transactions-
down/news-story/38c5bb1da1414ffeb2e7b22a6ff21637 [Accessed on 30th Jan, 2019]

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Kiis1065.com.au 2019. Retrieved from: http://www.kiis1065.com.au/newsroom/commonwealth-
bank-network-down-with-major-tech-issues [Accessed on 30th Jan, 2019]
Pearson, R., 2017. Business ethics as communication ethics: Public relations practice and the
idea of dialogue. In Public relations theory (pp. 111-131). Routledge.
Smh.com.au 2019. Retrieved from: https://www.smh.com.au/business/commonwealth-bank-a-
case-study-in-failure-20140704-zsw83.html [Accessed on 30th Jan, 2019]
Trevino, L.K. and Nelson, K.A., 2016. Managing business ethics: Straight talk about how to do
it right. John Wiley & Sons.