Organizational and Management Practices

This report discusses about the organizational as well as management practices and their importance within the framework of the modern day organizations. The report undertakes this discussion in the light of the management and the organizational practices followed by the Commonwealth Bank of Australia for the process of providing banking services to the customers.

Running head: ORGANISATIONAL AND MANAGEMENT PRACTICES
Organizational and Management Practices
Name of the Student:
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Executive Summary
This report discusses about the organizational as well as management practices and
their importance within the framework of the modern day organizations. The report
undertakes this discussion in the light of the management and the organizational
practices followed by the Commonwealth Bank of Australia for the process of
providing banking services to the customers. The report begins by providing an
overview of the concerned bank and also discusses about the organizational and the
management practices followed by it. The report undertakes a detailed analysis of
these practices on the basis of the stakeholder theory and the stewardship theory.
Lastly, the report ends with recommendations that the concerned bank the
concerned bank can use, namely, the use of effective organizational culture and also
the various precepts of the stakeholder theory within the framework of their
organization.

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Table of Contents
Introduction...................................................................................................................3
Commonwealth Bank of Australia................................................................................3
Questionable Organisational and Management Practices...........................................4
Analysis of the management practices.........................................................................5
Recommendations........................................................................................................6
Conclusion....................................................................................................................7
References...................................................................................................................8

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Introduction
The management as well as the organizational practices followed by a
particular business enterprise not decides the kind of organizational cultural that
would be followed within the framework of that particular organization but at the
same time determines to a large extent the prospects of the concerned organization.
At the same time in the present times it is seen that the various organizations in
order to increase the amount of profit or the revenue gained by them often take the
help of unethical organizational as well as management practices which although
provides diverse kinds of benefits to them in the short term basis yet in the long term
proves catastrophic for the concerned organization. This can be seen as the end
result of the focus of the various organizations of the present times to earn a higher
amount of profit and thereby to further enhance the growth rate of their organization.
However, instead of contributing in a significant manner towards the growth of the
organization they often adversely affect the prospects of the concerned organization.
A pertinent example of this particular aspect can be seen in the recent fate of the
company Volkswagen which because of the unethical practices that it used to utilize
had to face not only the ire of the customers but at the same time had to bear
significant financial losses as well. This report will discuss about the questionable
management as well as organisational practices followed by the Commonwealth
Bank of Australia for the process of their growth.
Commonwealth Bank of Australia
The Commonwealth Bank of Australia founded in the year 1911 is the largest
banking institution of the Southern Hemisphere and is known for currently offering a
wide range of banking services to the customers starting from simple financial
transactions to housing loans, business loans, insurance services and others
(Commbank.com.au 2018). The bank under discussion here, headquartered in
Sydney is currently operating in Australia, Asia, New Zealand, USA, UK and some of
the other major nations of the world and is generally regarding as one of the "big
four" banks of Australia along with National Australia Bank (NAB), Wespac and ANZ
(Commbank.com.au 2018). The bank was fully privatised in 1966 and is the largest
organisation of the nation of Australia listed on the Australian Securities Exchange

4ORGANISATIONAL AND MANAGEMENT PRACTICES
(Commbank.com.au 2018). The concerned bank has a net market value of more
than $93.5 billion as of 2018 and is the 71st largest organisation of the world as per
the net annual revenue generated by it (Forbes.com 2018). The bank under
discussion here has more than 1100 different branches in the different parts of the
world and its annual profit for the year 2017 was A$26.005 billion which is one of the
highest ones within the banking industry (Forbes.com 2018). In addition to these, the
bank under discussion here is at the same time one of the largest private recruiters
of the world and as the statistics of 2017 has more than 51,800 in its diverse
international locations including Australia (Commbank.com.au 2018).
Questionable Organisational and Management Practices
The banking institution under discussion has come under criticism from
various cauldrons because of the questionable as well as unethical organisational as
well as management practices that it has been following for the process of its
business operations not only in the nation of Australia but in the other parts of the
world as well. The findings of the Royal Commission in the year 2017 are pertinent to
note in this particular regard which not only found the concerned bank guilty of
money laundering, neutral behaviour towards the various acts of terrorism, putting
the bank accounts of millions of users from all over the globe at risks (ABC News
2018). In addition to these, the commission at the same time found out that in order
to sell various kinds of insurances as well as loans to the customers from the diverse
parts of the world the bank took the help of various kinds of fake documents and at
the same time did not even bother to verify the authenticity of the documents
submitted by the customers (ABC News 2018). At the same time it was found that
the concerned banking institution sold illegal or fake life insurances to the customers
from the diverse countries of the world which are worth more than $44-billion
(Doherty 2018). In addition to these, there are various kinds of corruption charges
against the employees of the concerned organisation who took bribes from the
customers to get their loans and other kinds of transactions passed (Doherty 2018).
It is pertinent to note that these practices were followed by the concerned to
not only outrival their banking rivals not only in the nation of Australia but in other
foreign locations as well and at the same time to earn a much amount of revenue as
well (Macdonald, Burke and Stewart 2017). However, in this particular context it

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needs to be said that these management practices just like the ones followed by the
company Volkswagen provided only short term benefits to the concerned banking
institution and in the longer run adversely affected the prospects of the banking
institution under discussion here (McIlroy 2018). It is pertinent to note that the
concerned banking institution has to pay a huge penalty of A$709 million to the
national government of Australia for setting the money laundering dispute that was
registered against it in addition to the other kinds of penalties (ABC News 2018).
Analysis of the management practices
The management practices used by the Commonwealth Bank of Australia for
the process of earning an enhanced amount of revenue has not only adversely
affected the prospects of the concerned banking institution but at the same time was
completely unethical. The precepts of the stakeholder theory of management of the
different stakeholders of a particular organization which was propounded by Ian
Mitroff in the 1983 book entitled “Stakeholders of the Organizational Mind” are
significant to note in this particular regard (Christensen et al. 2015). As the theory, an
organization needs to take into effective consideration the entities of moral as well as
ethics not only for building sound relationships with the stakeholders who are
associated with it but at the same time for the effective management of such
relationships (Christensen et al. 2015). Furthermore, the organizations at the same
time have the moral as well as the ethical responsibility to follow the kinds of
strategies or measures which are likely to provide the maximum amount of benefits
or rewards to the stakeholders who are a part of their business (Hernandez,
Guarana and Halgin 2016). The management practices used by the Commonwealth
Bank of Australia when viewed in the light of this particular theory becomes totally
redundant and at the same time it needs to be said that the managers as well as the
leaders of the concerned banking institutions were not responsible enough in the
actions or the decisions that they made within the framework of the concerned
institutions (Oates and Dias 2016). Furthermore, had the managers as well as the
leaders of the concerned banking institution being responsible enough then they
would have taken into effective consideration the interest the stakeholders and
sought to enhance the growth rate of the institution through the effective

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engagement of the stakeholders and also by winning their loyalty and trust (Oates
and Dias 2016).
An analysis of the management practices of the concerned banking institution
in terms of the Stewardship theory would also reveal insightful details. The
Stewardship theory was proposed by Davis, Schoorman and Donaldson in the year
1997 in their article “Toward a stewardship theory of management” (Schaltegger,
Burritt and Petersen 2017). The primary assumption of this particular theory is the
fact that the managers when left alone act as the stewards of a particular
organization and thereby seek to bring about the growth of the concerned
organization through following the kind of strategies or measures that are likely to
enhance the spirit of cooperation among the employees (Schaltegger, Burritt and
Petersen 2017). Furthermore, it is also argued that the managers tend to take the
help of a collectivist, trustworthy as well as pro-organizational culture which the
employees to not only perform in a much better manner but at the same time
perform their job roles taking the help of the entities of ethics and morals
(Macdonald, Burke and Stewart 2017). The managers of the Commonwealth Bank of
Australia clearly failed to take the effective consideration the basic assumptions of
this particular theory and it is a result of this particular fact that rather than a
collectivist, trustworthy as well as pro-organizational culture a corrupt as well as
competitive culture fostered within the organization wherein the employees were
completely comfortable to use unethical means for gaining more capital (Glinkowska
and Kaczmarek 2015). In this regard as well it can be said that the management
team of the concerned banking institution failed to perform their job roles in an
effective manner.
Recommendations
The Commonwealth Bank of Australia in order to regain the status that it used
to once enjoy in the banking sector needs to only stop the unethical usage of the
above mentioned practices but at the same time needs to follow various kinds of
measures or strategies to resolve the issues that they are facing currently. The first
thing that the concerned banking institution can do is to integrate an effective
organizational culture within its workplace which not reduce the amount of corruption
but at the same time require the employees to work in an ethical as well as collective

7ORGANISATIONAL AND MANAGEMENT PRACTICES
manner taking into effective consideration the banking guidelines provided by the
national government of Australia. Furthermore, the integration of an effective
organizational culture will at the same time help in the improvement of the
performance of the employees since it is seen that a congenial workplace culture
can affect the performance level of the individuals in a positive manner.
The Commonwealth Bank of Australia at the same time can take into effective
consideration the precepts of the stakeholder theory and focus on increasing the
amount of net revenue earned by them through winning the loyalty as well as the
trust of the stakeholders. Furthermore, the effective use of this particular theory will
at the same time help the concerned organization to significantly expand their
business by effectively taking into consideration the various demands and the
requirements of the stakeholders who are a part of their business.
Conclusion
To conclude, the use of effective organizational as well as management
practices are very important within the framework of the modern business world and
provides various kinds of benefits to the various organizations like the opportunity to
gain extra revenue, improvement of the brand or the market image and others. At the
same time it is seen that there are various organizations which use unethical
practices because of the quick benefits that they provide to the concerned
organization. However, it is pertinent to note that the use of these practices provide
only short term benefits and in the longer run can adversely affect the prospects of
the concerned organization as becomes apparent from the case of the
Commonwealth Bank of Australia. Thus, it can be said that the various organizations
need to take the help of the diverse measures or strategies which are unpinned by
moral as well as ethics.

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References
ABC News. 2018. How the Commonwealth Bank laid the groundwork for a royal
commission. [online] Available at:
http://www.abc.net.au/news/2017-08-07/commonwealth-bank-laid-the-groundwork-
for-royal-commission/8779598 [Accessed 13 Sep. 2018].
Anitha, J., 2016. Role of Organisational Culture and Employee Commitment in
Employee Retention. ASBM Journal of Management, 9(1).
Christensen, J., Kent, P., Routledge, J. and Stewart, J., 2015. Do corporate
governance recommendations improve the performance and accountability of small
listed companies?. Accounting & Finance, 55(1), pp.133-164.
Commbank.com.au. 2018. Personal banking including accounts, credit cards and
home loans - CommBank. [online] Available at: https://www.commbank.com.au/
[Accessed 13 Sep. 2018].
Doherty, B. 2018. 'Ruthless, careless and irresponsible': readers share their banking
nightmares. [online] the Guardian. Available at:
https://www.theguardian.com/australia-news/2018/apr/21/banking-royal-commission-
australia-readers-share-experiences [Accessed 13 Sep. 2018].
Elsmore, P., 2017. Organisational Culture: Organisational Change?: Organisational
Change?. Routledge.
Forbes.com. 2018. Forbes.com [online] Available at:
https://www.forbes.com/companies/commonwealth-bank/#256b2e365d02 [Accessed
13 Sep. 2018].
Glinkowska, B. and Kaczmarek, B., 2015. Classical and modern concepts of
corporate governance (Stewardship Theory and Agency
Theory). Management, 19(2), pp.84-92.

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Hernandez, M., Guarana, C.L. and Halgin, D.S., 2016. An Empirical Examination of
the Performance Outcomes of Stewardship Behavior. In Academy of Management
Proceedings (Vol. 2016, No. 1, p. 10495). Briarcliff Manor, NY 10510: Academy of
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Macdonald, I., Burke, C. and Stewart, K., 2017. Systems leadership: Creating
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McIlroy, J., 2018. Bank scandals fuel calls for completely new system: Why we
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Oates, G. and Dias, R., 2016. Including ethics in banking and finance programs:
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Schaltegger, S., Burritt, R. and Petersen, H., 2017. An introduction to corporate
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