Impact of Royal Commission on Employee Motivation and Performance in Commonwealth Bank of Australia

This report analyzes the impact of the findings of the Royal Commission on employee motivation and performance in Commonwealth Bank of Australia (CBA). It discusses the impact on the psychological contract, employee motivation, and factors affecting motivation in the banking industry.

Running head: ORGANISATIONAL BEHAVIOR
ORGANISATIONAL BEHAVIOR
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
1.0 Introduction................................................................................................................................2
2.0 Overview of Commonwealth Bank of Australia (CBA)...........................................................2
3.0 Findings of Royal Commission.................................................................................................3
4.0 Impact of the findings of Royal Commission on CBA..............................................................4
4.1 Impact of the Royal Commission’s findings on the employee psychological contract.........4
4.2 Impact of the Royal Commission’s findings on employee....................................................5
5.0 Relationship between employee motivation and performance..................................................6
6.0 Factors affecting employee motivation in the banking industry...............................................7
7.0 Recommendations......................................................................................................................7
8.0 Conclusion.................................................................................................................................8
9.0 References..................................................................................................................................9

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1.0 Introduction
As opined by Mone and London (2018), organizational behavior refers to the collective
behavior displayed by the individuals or for that matter the groups within the cauldron of the
different business corporations. Audenaert et al. (2019) are of the viewpoint that the entity of
organizational behavior also refers to the study or understanding of the human behavior within
the organizational setting or for that matter the interface which exists between the workers and
the entire organization itself. More importantly, the construct of organizational behavior greatly
influences the manner in which work is being performed by the different workers within the
organizational setting and thereby their performance (Hitka & Balážová, 2015). It is because of
this relationship of organizational behavior with employee or organizational productivity and
thereby its profitability that the business corporations are taking into effective consideration the
same. Furthermore, it had been observed that the construct of organizational behavior also
influences the employee motivation, psychological contract and other aspects and thus it
becomes all the more important for the business corporations to focus on the aspect of
organizational behavior. This report intends to undertake an analysis of the impact of the
findings of the Royal Commission on the entities of employee motivation, psychological contract
and others within the particular context of Commonwealth Bank of Australia (CBA).
2.0 Overview of Commonwealth Bank of Australia (CBA)
CBA, founded in 1911, is among the four largest banks of the nation of Australia
alongside ANZ, Westpac and National Australia Bank and also the largest bank of the Southern
Hemisphere (Commbank.com.au, 2019). The concerned bank offers different kind of services to
its customers like loan, saving, retail loan, business loan, insurance and others. More

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importantly, it had been seen that the bank had presently expanded its operations in the different
nations of the world like UK, China, New Zealand, USA and others (Commbank.com.au, 2019).
The bank as of 2017 had an employee capacity of more than 52,000 and a gross revenue of
A$26.005 billion (Abc.net.au, 2019). However, this unprecedented growth of the concerned bank
was halted by the findings of the “Royal Commission into Misconduct in the Banking,
Superannuation and Financial Services Industry” (2017) which highlighted the unethical banking
practices followed by CBA along with the other major banks of the concerned nation (Remeikis,
2019).
3.0 Findings of Royal Commission
The results of the Royal Banking Commission clearly revealed the fact that the majority
of the banks of the nation of Australia were not only misleading the customers but at the same
time charging unjustified exorbitant amount of money for the services which were offered to
them (Hutchens, 2019). In addition to this, the results also revealed the fact that majority of the
banks offered loans, insurances and others to customers without proper paperwork, without
verifying the background and the financial details of the customers and others (Stuff.co.nz,
2019). Furthermore, the findings of the Commission also revealed the fact that the major banks
like CBA, ANZ, Westpac and others misreported their revenue so as to evade taxes. For
instance, it was found that the cumulative wealth held by the top four banks of Australia was
$4.6 trillion which as a matter of fact is three times the size of the national economy of Australia
$1.8 trillion (Wright, 2019). The Commission attributed this behavior displayed by the major
banks of Australia to the greed culture which was followed by them and also their desire to
enhance their profitability at any cost (Abc.net.au, 2019).

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4.0 Impact of the findings of Royal Commission on CBA
4.1 Impact of the Royal Commission’s findings on the employee psychological contract
Hitka and Balážová (2015) have noted that the psychological contract refers to the
cumulative expectations and the promises which are being shared between the individuals and
the business corporations at the time of recruitment. As discussed by Bhuvanaiah and Raya
(2015), the promises or for that matter the expectations can refer to the performance expectations
of the corporations from the workers, the wages, perks, adequate working environment and
others on the part of the workers from the corporations and others. Adding to this, Omollo and
Oloko (2015) have stated that it is important for both the business corporations and the workers
to fulfill the psychological contract that they have made with each other since the satisfaction of
the employees and the overall organizational productivity and thereby its profitability depends on
this particular aspect.
In the particular context of the bank CBA, the findings of the Royal Commission clearly
reveal the fact that the psychological contract of the employees of the concerned bank was not
being fulfilled by the same. In this relation, it needs to be said that the greed culture followed
with the spectrum of the concerned bank greatly contributed towards this (Abc.net.au, 2019). For
instance, the entire focus of the bank under discussion here was on the enhancement of the
profitability regardless of the measures which were being taken by the employees for the
attainment of the same (Remeikis, 2019). More importantly, the employees were being given
aggressive targets which in turn hindered the effective fulfillment of the psychological contract
of the employees. This the focus of the employees shifted from the proper or for that matter the
ethical completion of the tasks which were allocated to the mere achievement of the aggressive

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targets which were given to them and this in turn culminated into the greed culture that the
concerned bank followed.
4.2 Impact of the Royal Commission’s findings on employee
Haque, Fernando and Caputi (2019) are of the viewpoint that the entity of employee
performance greatly depends on their motivation level, be it the intrinsic or the extrinsic
motivation, and this has a direct bearing on not only the quality but also the quantity of work
which is being performed by the employees. Adding to this, Shields et al. (2015) have noted that
there are various theories of motivation that the business corporations have the opportunity to use
for the purpose of effectively motivating the workers so that they are being able to perform as
per their maximum capacity. In this relation, the goal-setting theory of motivation is an important
one which is being commonly used by the different business corporations for the purpose of
effectively motivating the workers. For instance, an important precept of Edwin Locke's goal-
setting theory is the fact that the entity of employee performance is directly related to the setting
up of different goals for the workers (Naim & Lenkla, 2016). In the particular of the CBA, it can
be said that the bank did set up different kinds of goals for the employees, which in turn
motivated them adequately for the achievement of the same. However, the major problem arises
because the concerned bank set unrealistic goals which in turn propelled the employees of the
bank to resort to the usage of unethical measures for the achievement of the same (Wright,
2019). Thus, it can be said that the usage of the goal-setting theory of motivation rather than
positively motivating the employees of the bank for the attainment of the aggressive targets that
were given to them propelled them to take the help of unethical measures.
Maslow’s Hierarchy of Needs is another important theory of motivation which is being
used by the business corporations for the purpose of their motivating their workers so that they

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are being able to maximize their productivity (Lăzăroiu, 2015). More importantly, Manika et al.,
(2015) have noted that as per this theory there are various needs of the individuals, the effective
fulfillment of which determines whether they are being able to attain self-actualization or not,
which as a matter of fact is the ultimate goal of all the individuals in their lives. However, in the
particular context of the CBA it was seen that although the different basic needs of the
employees were being fulfilled by the concerned bank yet at the same time it had been seen that
the employees were not being able to attain the stage of self-actualization. This can be attributed
to the aggressive targets which were given to the workers and also the unethical or for that matter
the unjustified measures that were being used by the employees of CBA for the attainment of the
same (Stuff.co.nz, 2019). In the light of these aspects, it can be said that although the CBA took
the help of different kinds of motivational theories for effectively motivating the employees and
were also being able to derive the required benefits from the same yet at the same time it needs
to be said that the aggressive targets which were being given to the employees and the usage of
the unethical measures hindered the attainment of the desired results by the bank under
discussion here.
5.0 Relationship between employee motivation and performance
As discussed by Slack, Corlett and Morris (2015), the entities of employee motivation
and performance are directly related to each other and it is seen that a high level of motivation on
the part of the employees enhances their production. More importantly, Sands et al. (2015) have
noted that when all the basic needs of the employees or for that matter the workers are being
effectively fulfilled then it becomes much easier for the employees to perform as per the
expectations of the business corporations and vice versa. Thus, it becomes important for the
business corporations to take the help of adequate motivation theories, leadership or management

7ORGANISATIONAL BEHAVIOR
approaches and others for the purpose of effectively motivating the employees so as to enhance
their performance. In the case of CBA, it had been seen that although the concerned bank took
the help of adequate management or leadership approaches, motivation theories and others for
the purpose of motivating the employees yet at the same time it had been seen that the aggressive
targets given to the workers propelled them to take the help of unethical measures for the
purpose of performing as per the desired expectations of the bank (Hutchens, 2019). Thus, it can
be said that although CBA was able to get the desired results yet the method which was adopted
by the same for the attainment of the results was unjustified.
6.0 Factors affecting employee motivation in the banking industry
According to Wright (2019), there are various factors which directly affect the employee
motivation in the particular context of the banking industry which can be broadly categorized
into the intrinsic and the extrinsic factors. For instance, to the category of the extrinsic factors the
entities like wages, perks, incentives, rewards, recognitions, promotions and others belong which
directly influence the motivation level of the employees (Hutchens, 2019). On the other hand, to
the category of the intrinsic factors belong the entities of competition, the desire of the workers
to perform better, personal factors and others (Remeikis, 2019). Thus, it becomes important for
the banks like CBA and others to take into account these factors for the purpose of effectively
motivating the employees so that they perform as per the expectations of the concerned banks.
7.0 Recommendations
 Adequate usage of Job Characteristics Model: The effective usage of this model
would help CBA to design the job roles of the employees in such a manner that they
would not be repetitive in nature and also would require the workers to use their different

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skills or knowledge for the completion of the same. This in turn would enhance the
enthusiasm of the workers towards the work that they perform and thereby their job
satisfaction level as well which in turn would also enhance the quality of the work that
would be performed by them.
 Encouraging the employees to use ethical practices: The usage of ethical practices
would enable the employees to complete their job roles with high quality and thereby add
value to the bank. More importantly, this would also help the concerned bank to improve
its brand image substantially and thereby influence the buying behavior of the customers
in the best possible manner.
 Effective management of the wages of the employees: The employees of CBA took the
help of unethical practices because of the large amount of incentives which were being
offered by the concerned bank to the employees. Thus, it is likely that if the concerned
bank would adequately manage the wages of the workers then the usage of the unethical
practices would reduce substantially and this in turn would add value to the concerned
bank in the longer run.
8.0 Conclusion
To conclude, the factor of employee motivation greatly determines their performance and
thus it becomes important for the business corporations to effectively motivate the workers so as
to enhance their performance. More importantly, they are also required to take the help of
different motivation theories and management or leadership approaches so that the basic needs of
the workers and also their psychological contract is being fulfilled in the best possible manner.
These aspects of the entity of organizational behavior become apparent from the above analysis
of the same in the particular context of CBA and the findings of Royal Commission.

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9.0 References
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Bhuvanaiah, T., & Raya, R. P. (2015). Mechanism of improved performance: Intrinsic
motivation and employee engagement. SCMS Journal of Indian Management, 12(4), 92.
Commbank.com.au, (2019). Personal banking including accounts, credit cards and home loans -
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Hitka, M., & Balážová, Ž. (2015). The impact of age, education and seniority on motivation of
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Hutchens, G. (2019). Banking royal commission: all you need to know – so far. Retrieved 7
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https://www.theguardian.com/australia-news/2018/apr/20/banking-royal-commission-all-
you-need-to-know-so-far
Lăzăroiu, G. (2015). Employee motivation and job performance. Linguistic and Philosophical
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Manika, D., Wells, V. K., Gregory-Smith, D., & Gentry, M. (2015). The impact of individual
attitudinal and organisational variables on workplace environmentally friendly
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Omollo, P. A., & Oloko, M. A. (2015). Effect of motivation on employee performance of
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recommendations-of-the-banking-royal-commission-report
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motivated workforce and environmental performance. Journal of Accounting &
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Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A., McLean, P., &
Plimmer, G. (2015). Managing employee performance & reward: Concepts, practices,
strategies. Cambridge University Press.
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Stuff.co.nz, (2019). Australia's banking royal commission final report at a glance. Retrieved 7
September 2019, from https://www.stuff.co.nz/business/world/110372532/australias-
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commission-final-report-at-a-glance-20190203-p50vg2.html