Understanding Organization: Theory and Practice

Running head: UNDERSTANDING ORGANIZATION: THEORY AND PRACTICE
UNDERSTANDING ORGANIZATION: THEORY AND PRACTICE
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1UNDERSTANDING PRGANIZATION: THEORY AND PRACTICE
Introduction
In this essay, the discussion will be on analyzing Commonwealth Bank of Australia
(CBA), a multinational bank from Australia, with two organizational theories. The main aim
is to demonstrate the understanding of the organizational theories by applying them to a solid
context as well as developing an appreciation of the value of the limitations of the to-be-
discussed theories and to understand the need for personal discernment and judgement in
evaluating the differences and variations in those perspectives. The purpose will be to
recognize the diverse and contested complexity in practical context, through the analysis of
Commonwealth Bank of Australia. It was founded in the year 1911 and the headquarter is in
Sydney. The bank has its operations across Asia, the United Kingdom, the United States of
America and New Zealand. It supplies lots of monetary services which includes retail,
business and institutional banking, insurance, management of assets, investment, broking
services and many more. CBA is the largest company which is listed in the Australian
Securities Exchange. It is also the largest bank in the Southern Hemisphere. Catherine
Livingstone is the Chairman and Matt Comyn is the Chief Executive Officer as well as the
Managing Director of the company. The bank has more than 1,100 branches and 4,300 ATM
which are operational worldwide.
Organizational Theories
Proper financial planning has become very much important in helping the people of
Australia to meet the economic objectives. There are lots of ethical risks related to the
arrangement of the financial advices and other factors that might have influenced the ethical
decision making by the financial planners and compliance officers in their specific roles in
the banking industry. Though the bank is popular in Australia and outside the country as well,
it is involved in many misconduct and unethical behavior. To research about the cases
thoroughly, there is a need to study two organizational theories, and evaluating and judging
the scenarios individually (Baxter and Vater 2014).
Organizational Theories
These are the theories which are a set of suggestions or schemes or just a proposition
that helps to explain or predict the ways of behavior by the groups and individuals in various
organizational arrangements. Over the years, organizational theories have advanced into a n
unique social science discipline. It can be termed as a body of writing and thinking that helps

2UNDERSTANDING PRGANIZATION: THEORY AND PRACTICE
to describe, analyze and influences the on goings on the organizations. It helps to provide a
supporting body of knowledge that actually enables to investigate and develop leadership and
management theory. There are many theories which helps to explain the organization and its
structure. But the two theories which will be taken in this essay are Neo-Classical
Organization Theory and Modern Organization Theory (Douglas and Leite 2017).
1. Neo-Classical Organisation Theory:
This classical theory of organisation primarily focuses on the attention on the physical
and mechanical variables of functioning of the organisation. The variable test actually didn’t
produce any beneficial outcomes. George Elton Mayo’s The Hawthorne Studies and
associates found out that the actual reason of human behaviour exceeded absolute physical
variables. These researches concentrate the focus on humans in the organisation. With the
development of productivity and the improvement of worker educational level, the extremely
strict regulations and mechanical organization models defended by another organization
theory termed as Classical Organization Theory (Schlagwein, Thorogood and Willcocks
2014).
New-classical approach is included in two points:
1. Organisation of Commonwealth Bank of Australia must be explored in socially,
economically and technically, and
2. The social process of group attitude can be comprehended through human relations in the
organization of Commonwealth Bank of Australia.
This theory actually looks the formal and informal forms of organisation as an essential and
crucial part. The behavioural approach pursued in the theory is another addition of new-
classical intelluctual. The base of classical theory can be named as division of work,
introduction of departments, co-ordination and human behaviour but these figures were
considered as changed by people who behaves freely or inside the framework of the informal
organisation.
The main suggestions of neo-classical theory are given as follows:
1. The organisation commonly is a communal system made up of various communicating
segments. But this actually lacked in CAB, as they were very poor in communicating with
their customers as well as stakeholders when they were held for controversies. In 2018, they
lost the records of the accounts of 20 million users, which included the names, addresses,

3UNDERSTANDING PRGANIZATION: THEORY AND PRACTICE
account numbers and the bank statements in between 2000 and 2016. They decided to not
inform their customers about the data breach, though the media broke the story and the
customers were furious on CBA as they lacked the minimum form of after sales service and
customer retention, which is very much important in banking and finance industry.
2. Informal organisations live within the established organisation. They get influenced by and
also influence each other. This helped the bank as people are communicating within
themselves, which helped to organise the plans and properly implementing it into the banking
structure. But, the tenure of informal organizations is very less so it also harmed to take
important decisions, which hampered in customer retention as well as acquiring new
customers.
3. As an independent being, human behaviour is an outcome of work related social factors.
This also affected the work culture of the bank as it is a multinational organization spread
over many continents and the employees have to maintain the factors related socially in each
of the place where they are operational.
4. Motivation is a complicated procedure. Several factors like the socio-psychological ones
act to stimulate humans in workplace. This actually helps CBA as there is a lot of pressure in
the banking and financial industry and the employees have to cope-up with the ever
increasing work pressure and client satisfactions to be faced.
5. There is a constant battle between organisational and individual goals. These goals are
needed to be harmonised. This often created a problem as the problems faced by the
employees were ignored by Ian Nerev, the CEO and MD of the organization in between 2011
and 2018. Some financial planners put their own interests and goals ahead of their clients.
The organization mainly aimed at earning more and more revenue and that they achieved on
every month of the year, the only thing they concerned is that whether they are earning that in
ethical manner or not.
6. Team-work leads to greater productivity. CBA follows this principle and this reflects on
the amount of revenue they earn every year, and the number of accounts they maintain
globally.
7. Man’s approach is sometimes not balanced. Many a times his behaviours become illogical
when it comes to rewards gained from work. This actually happened in CBA and this resulted