Organizational Leadership: Issues, Theories and Strategies for Improvement

This article explores the issues faced by the Commonwealth Bank of Australia due to poor leadership and unethical practices. It analyzes different leadership styles and recommends adopting a transformational leadership style to improve the organizational culture. The article also evaluates different strategies to improve the situation and recommends creating a culture of free communication and ethical practices.

Running head: ORGANIZATIONAL LEADERSHIP
ORGANIZATIONAL LEADERSHIP
Name of Student
Name of the University
Author Note

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Table of Contents
Introduction......................................................................................................................................3
Description and analysis of the leadership issue faced by the company.........................................3
Literature review and application of theories..................................................................................3
Evaluation of alternatives to improve the situation of the organization..........................................3
Recommendation of the most suitable strategy...............................................................................3
Conclusion.......................................................................................................................................3

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Introduction
Organizational leadership refers to the ability of an individual toachieve higher
performance from the employees of the organization through motivation them and by
creatingproper human relationships with them (Miner 2015). Leadership helps in achieving the
organizational objectives and in improving efficiency of the organization. Organizational
behavior refers to the study of the behavior of the individuals of the organization and the
influence of the individuals, structure and the groups on the organization behavior. The company
selected for the purpose of this study is the common wealth bank of Australia or the CBA. The
common wealth bank of Australia is banking and financial services providing company of
Australia. It belongs to the banking and financialservices industry. The main products of the
company are- insurance and finance, corporate banking, consumer banking, mortgagees, credit
cards facility and various other products. It is a multinational bank carrying out its operations in
New Zealand, United Kingdom, and various other places. It is largest bank among the various
listed companies of Australia (Rosenbach 2018). However, the company has recently been in
news due to the allegations placed against the company by Royal commission. The main vision
of the company is to meet the needs for the customers by providing the best financial services
and their values includes – prestige, elegance, and others (Shanafelt and Noseworthy 2017). The
mission of the company is to increase the wealth of customers and help him in getting a fulfilling
life through various financial services. The company needs a transformational leader to change
the culture of the organization and to solve the various leadership issues being faced by the
company.

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Description and analysis of the leadership issue faced by the company
Leadership in organization involves setting of the goals for both the individualsand the
groups forachieving the objectives of the organization (Antonakis and Day 2017). The leaders in
an organization help in achieving the organizational objectives by creating effective relationships
with the employees and helping the employees to develop. These leaders help in aligning the
individual’sgoals of the people with the organizational goals of the organization. The leader
helps in communicating the visions and missions of the company to the employees and also
helps in sharing the vision with the individuals (Shanafelt et al. 2015). They have the ability to
show the big picture to the employees for any decisions of the company thereby overcoming any
resistance from the employees or other individuals of the organization. A leader creates the
organizational culture by doing what he says. When the organizational members see the leader
carrying out some act they tend to do the same therefore a leader plays a very important role in
developing the culture of the organization. This is what happened in case of the Commonwealth
bank of Australia (Alvesson and Sveningsson 2015). Due to poor leadership in the company a
culture of unethical practices have been started and has led to the downfall of the company. The
culture of the financial planning department of the company suffers from various ethical issues.
The leaders of the company have a complete idea of what is happening in theorganization but the
leaders of the CBA were not knowing of the actions of the financial planners and came to know
about it only when whistle blowing took place on the company. Poor leadership at the various
levels is the main reason behind the unethical culture in the organization. Many customers were
exploited by the company because of lack of control by the top management for various
activities. The leaders of the company were incapable of creating a consistent culture across the
company. According to the recent report published by the Australian Prudential Regulatory

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Authority or the APRA, poor culture and poor leadership were the main reasons behind the
various scandals of the company (Laub 2018). The board of directors did not know what is
happening in the organization and were not have appropriate ownership in many cases. Catherine
Livingstone, the chairwoman of the commonwealth bank of Australia, said that the previous
management failed to carry out proper governance irrespective of being the top executives of the
company. CBA was engaged in selling poor value of creditcardsand various others financial
services such as the bank charged higher fees from clients without providing them with the
services in return of that. Various misconducts by the company along with the unethical culture
of the company show that the company is lacking proper leaders in the company (Jamison,
Rosenbaum and Carter 2016). He chairwoman of the company said that ever since she had joined
the company she had identified issues of poor culture and governance in the company and so she
stood up against the then leader. According to the Australian Prudential Regulation Authority
some of the main reasons for the present scenario of the company is that there was deficiency of
leadership skills at the top levels. The audit committee, risk committee and the board did not
provide proper governance to the company and they failed to take proper information and ask
proper questions from the various responsible people of the organization. The second reason was
that the management did not give importance to the risk, compliance with various standards and
the issues related to internal audit. Approach of the top management was defensive and legalistic
(Yahaya and Ebrahim 2016). The third reason was that the executive committee was not properly
focused. The company had a divisional structure and under that the senior executives took
responsibility of their own tasks and the culture was accommodating. The CEO of the company
accepted in an interview that the company did not have a culture of learning from the past
misconducts. Customers were still not prioritized and the executives did not call bad behavior.

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The bank kept selling junk insurances to its customers even though they knew about the
repayment and other issues. The then leader told the management to temper their sense of justice.
Poor leadership in the organization leads to many issues such as loss of morale of the employees,
lack of proper direction to the employees of the company and many other similar drawbacks
some of these has been seen in case of the Commonwealth bank of Australia.
Literature review and application of theories
There are different leadership styles that are used by the leadersof the organization to
show direction to others in an organization (Kasser 2016). There are two main paradigms for
understanding leadership styles- leaderswhose emphasis on task and leaders who give emphasis
to relationship (Hawkins 2017). Those leaders who give more importance to task they fail to get
the cooperation of others and their instruction are followed forcefully by the followers. Those
leaders who give too much importance to relationship hey fail to increase the productivity of
employees because they are nor taken seriously by the employees.

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Figure 1: leadership styles
Source: (Yahaya and Ebrahim 2016)
The four main types of leadership on the basis of the two paradigms are- directing
leaders, delegating leaders, supporting leaders and the coaching leaders. Autocraticleadersor the
directing leaders are those who are task oriented people and therefore know how to get their task
done by others (Driskill 2018). In the above matrix, autocratic leaders are shown as giving more
importance to task than relationship. These leaders do not care about their relationship with the
employees and they are only interested about their task. In case of this type of leadership, the
communication is one-sided and all instruction flow from top to bottom and the people at the
lower levels are required to follow the same. The second type of leadership is called the

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delegating leadership in which the leaders are low on both task orientation and relationship
orientation or the directing and the supporting behavior. These leaders are neither liked by the
employees nor they know how to get the task done by the employees. These leadersarealso
known as delegating leaders because they delegate all their responsibility to others in the
organization and do not take the authority of their work. The third type of leadership is that of
supporting leadership. These leaders arehighly liked by the subordinates because they have good
relationships with the subordinates (Avolio et al. 2016). They support their subordinates in all
scenarios and are therefore known as supporting leaders. However, one major drawback of this
style of leadership is that they give too much importance to relationship with employees and as
results these leaders cannot get achieve their goals and there tasks is not completed on time
because the subordinate of these leaders do not take them seriously. These leaders therefore
cannot achieve their target. The last type of leadership is where the leader gets a high score on
both-relationship with employees and for achieving targets. These leadersare called the
transformationalleader’s or the coaching leadership. These leaders are highly admired by the
staff due to their ability to achieve the goals of the organization by maintaining good relationship
with the employees of the organization. These leaders motivate the employees to help them
outperform their targets. The scenario of the Commonwealth bank of Australia is that they have
got autocratic leader’s as it is only the top management who takes all the decisions without
consultation with the employees. The leader at Commonwealth bank of Australia only knows
how to earn profits and how to get the task done by the employees of the organization. The bank
has recently been in news because it increasing profits by carrying out various unethical practices
such as money-laundering and others (Dhir 2019). These leaders are not liked by their employees
or followers. The leader of CBA is not liked by his followers because of his way of getting

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things done. The chairwoman of the company stood against him, the CEO of the company raised
his voice against him. The way he carries out his work is not liked by the people in the
organization. The autocratic leaders are the people who are only concerned about the task and do
not maintain relationship with the employees. In order to carry out the operations of the company
and earn profits, the autocratic leader at Common wealth bank Australia directed his staff to keep
quiet about the unethical practices being carried out in the organization. The autocratic leaders
are the ones who take all the important decisions of the company and do not take advice from the
employees and the organizational members. They take decisions based on their own judgment
and opinions. They try to control the group. In case of the Common wealth bank of Australia, the
leader could have changed his decisions on the basis of the suggestions given by his fellow
organizational members and that would have improved his reputation along with that of the
bank. However he did not listen to the suggestions made by the members and rather he told them
to temper their sense of justice. This proves that he took all the decision by himself without
consulting with others. The leaders determine the culture in the organization. The autocratic
leader created a culture of not learning from past misconduct and he created a culture of
unethical practices. He was seen as a bossy character in the organization by all. The autocratic
leadership has its own advantages and disadvantages.
Evaluation of alternatives to improve the situation of the organization
In order to solve the issues faced by Common wealth of Australia, the leader needs to
create a culture of free communication and ethical praises. The company has recently been in
news for carrying out unethical practices such as money-laundering, tax evasion, selling junk
investments and others. In order to improve the image of the company in front of the public and
others the company needs to carry out activities in an ethical manner by inculcating the value of

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good ethical practices in the employees and members of the organization. In order to carry put
the same, only the leader can help because he can create the culture. If the people of the
organization see the top executives carrying out their work they will try to follow the same. The
leader along with other executives needs to change the organizational structure such atht instead
of the information flowing from only one sided, it can glow from both the sides. If the leader at
the bank had communicated and acted upon the suggestions of the different organizational
members then the company would not have entered into so many problems. A culture of open
communication will give all the people equal opportunity to give their opinions and suggestions
freely in the organization. The leader ca improve the scenario by creating an environment where
all can give their ideas and suggestions freely and that will be implemented if it is suitable to the
scenario. The leader needs to change his style of leadership from autocratic to transformational
leadership. The present scenario faced by the bank is such that it is losing its goodwill because of
the various unethical practices carried out by the bank. The leader of the bank can change this
scenario by adopting the transformational leadership style. This leadership can change the
culture of the organization in a positive way. These leaders motivate others by building good
relationships with them. These leaders know how to get the task done by the employees and
maintain good relationship with the employees. These leaders are liked and admired by the
employees and the members of the organization because they help in meeting the organizational
goals and also individual goals by aligning the two. The present scenario at the bank needs a
transformational leadership style such that the entire culture can be changed. The leader can
create a culture of ethical practices when he himself has strong ethical values. When the leader
has strong ethical values he will carry out his work in an ethical way and as a result others in the

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organization will follow him and therefore the culture of ethical practices will be created in the
organization.
Recommendation of the most suitable strategy
Figure 2: Transformational leadership model
Source: (Stone 2015 )
The Common wealth bank of Australia which was one known for its culture is now
facing a lot of cultural problems for carrying out various unethical practices. It is losing the trust
of the employees because of present unethical culture and culture of not learning from the past
misconducts of the organization. The main reason for such an organizational culture at the bank
is the leadership style used by the leader. The scenario and the culture of unethical practices can
however be changed by adopting a transformational leadership in the organization. Burke-Litwin

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has created a model to explain how the transformational can help in changing the culture of the
organization. According to the model there are for main factors that determine the change
process in the organization for carrying out a cultural and climatic change. These elements are
the external environment, transactional leader, transformational leader and the organizational
performance (Hoch et al. 2018). These all elements are related to each other and also dependent
upon each other. In the diagram, we can see that in order to have a successful organization it is
very important to have interactions with the external environment for any organization. In case
of the bank, the bank’s interaction with the external environment was not good because of its
practices. The company has not been able to meet the needs of the customers in a positive
manner because of which huge amount of losses have occurred to the consumers. According to
the model it is the transformational leader who initiates the process of cultural change in the
organization such as –he shows direction to other employees in the organization by sharing the
vision with them. The transformational leader cam help the organization in changing its culture
by changing their values, beliefs and assumptions. These leaders can help to change the culture
by helping the peopled to overcome their fears and to inculcate a value of ethical practices. A
transformational leader is one who is charismatic and he is a person of high integrity (Walker
and Aritz 2015). The followers of these leaders idolize them and so in case the leader carries out
his activity in an ethical way then the members are motivated to carry out their operations in the
same way. In case of the bank, the present leader can still handle the scenario and change its
image in front of all the stakeholders by carrying out his operations in an ethical way and
refunding the money that has been lost by the stakeholders because of the acts of the company.
By doing these activities, the leader can improve his image and change the scenario to some
extent (Narikae, Namada and Katuse 2017). The Common wealth bank needs a transformational

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leader who can help in changing the organizational culture from an unethical one to an ethical
one. The values of the leaders can help in changing the organizational culture. In order to
understand the values of the leader, the Rokeach’s model can be used. According to him the
values of the leaders can be personal values, social values, morality-based and competency-based
values. These values are related to the transformational leadership style.
Figure 3: values of leaders
Source: (Kasser 2016)
According to the above table, it model shows the value orientation of the leaders such as-
there are mainly two types of values of individuals that is terminal and instrumental values. On
the basis of these two values, the leaders values can be divided into four main categories- high
competence, high moral, high personal and high social. Terminal values are the ultimate goals of

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an individual that he wants to achieve in his lifetime and his instrumental values shows the ways
in which he will achieve his terminal values.
Conclusion
From the above discussion it can be concluded that organizational leadership can make or
break the goodwill and image of the company. The common wealth bank of Australia has been
facing any issues because if poor leadership in the organization. It has been subjected to various
allegations by the royal commission of Australia. Various leadership theories has been used in
the paper in order to understand the concept of leadership on the organization. The paper
highlights a briefintroduction about the company, a description of the various leadership issues
being faced by the company, using various theories in order to understandthe concept of
leadership and to solve the leadership issues in the organization. This study highlights the
evaluation of alterative solutions to improve to present scenario ofthe bank, it also discusses
about the various recommendations in order to improve the organizational scenario by applying
the beststrategy for improving the organizational leadership. The company needs a
transformational leader to deal with the situation faced by the company. The bank has been
involved in many scandal and unethical practices that can all be overcome with the help of
effective leader.

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