IHRM Report: Challenges in Australian Banking System (987145)

This report delves into the human resource management (HRM) challenges within the Australian banking system, particularly for new managers. It begins with an overview of the Australian banking system, highlighting key features and the current issues, including corruption charges, unethical practices, and the impact of the Hayne Report. The report explores specific HRM challenges such as leadership issues, change management resistance, poor employee perception, and remuneration concerns. It examines the political response to the Hayne Report, including government and banking industry reactions, and discusses the effect of recommendations on employment. The report concludes with recommendations for new managers to navigate these challenges, emphasizing the need for ethical practices, improved organizational culture, and effective change management strategies. This report provides a comprehensive analysis of the HRM landscape within the Australian banking sector, offering valuable insights for those entering the industry.

Running Head: IHRM
International HRM (987145)
Report
System04104
5/12/2019

IHRM
1
Table of Contents
1. Introduction...................................................................................................................................2
2. Overview of Australian Banking System........................................................................................2
3. Features of Australian Banks.........................................................................................................3
4. Current Issues and Challenges.......................................................................................................3
5. Political response on Hayne Report...............................................................................................5
5.1 Response of Federal Government and Opposition Federal Government....................................5
5.2 Response of banking Industries on Royal commission................................................................5
5.3 Effect of Recommendation on Employment in banking sector....................................................6
6. HRM issues and Challenges in Australian Banking system for a new manager..............................6
7. Recommendations.........................................................................................................................7
8. Conclusion.....................................................................................................................................7
References.............................................................................................................................................9

IHRM
2
1. Introduction
Australian Banking system is the backbone of Australian financial economy. This
industry is known for its fair practices and reliability of people on Australian banks. The
Australian banking system is consists many small, medium, and large size banks which are
part of Australian banking system. Apart from this, some overseas and international banks are
also operating their banking operations in Australia through locally incorporates subsidiary
branches. However, from last two years Australian banking organisations are facing strong
corruption charges in the country for doing unethical practices and frauds with investors and
their customers. In such circumstance, it is tough for a new foreign bank manager to join
Australian banking organisation from other countries. This report discusses the various
human resources issues and challenges that a new manager will have to face in Australia.
This report also discuss about the Current HR problems and issues in the organisation. In the
last part of this report, some recommendations has been discussed for a new manager that
how he/she can deal with such type of HR challenges and issues in the Australian banking
organisations.
2. Overview of Australian Banking System
Australian banking history is almost two century old. The First Australian bank was ‘New
South Wales Banks’, which was opened in 1817 in Sydney. The second banks were
established in London by the British government in 1847, named Australasia over the name
of Australia (Reserve Bank of Australia, 2018). The name of this bank was further change by
the Australian government and now it is known as ANZ Bank (Australia and New Zealand
Bank). However, in current days the Australian Banking system revolves around big four
banks of Australia, which are Commonwealth Bank (17 million customers), Westpac
Banking Corporation (13 million customers), National Australia Bank (9 million), and ANZ
bank (8 million customers) (Reserve Bank of Australia, 2018). These four banks almost cover
the whole banking industry and all other small banks, financial institutions, mutual banks,
corporate societies, and credit unions are directly or in-directly affected from these four banks
and from their decisions. In present days, the Australian government is focusing on
privatisation of banking organisations because of increasing competition in the banking
sector.

IHRM
3
There are two major bodies in the Australian banking system that regulate and monitor
the Australian banks and their financial operations. These two regulatory bodies are APRA
(The Australian Prudential Regulation Authority) and RBA (Reserve Bank of Australia).
RBA is responsible for monitoring the banking activities and their operations in providing
loans and deposit money of people as an investment, while APRA is responsible for
managing funds of various financial organisations. APRA is currently managing 3.7 trillion
funds of different financial institutions and organisations (APRA, 2019). It also monitors the
fund of Australian people who invest their money in the banks as their savings or in form of
investment.
3. Features of Australian Banks
The major features of Australian banks are as follow:
1. Provide Loans: Australian Banks are responsible for proving loans to the customers.
There are various types of loans that a bank provides to its customers. For example,
personal loans, house loan, car loans, education loans, agriculture loans, business
loans, etc.
2. Insurance products: The Australian banks are also selling various insurance plans to
the people such as health insurance, life insurance, injury insurance, car insurance,
etc.
3. Contribution in Australian Financial system: The Australian banks are backbone
of Australian financial system because the major banks of Australia currently hold
55% of total assets of Australian financial organisations (Reserve Bank of Australia,
2018).
4. Increasing number of Banks: The numbers of banks in Australia are increasing
every day as the numbers of small banks are increasing. Apart from this, some small
credit institutions and financial organisations are also converting themselves in mutual
banks (Landmann & Hess, 2018).
4. Current Issues and Challenges
The Australian banking organisations are currently facing strong corruption charges. The
major banks of Australia were involved in corruption, unethical culture, fraud, briberies,
charging fees for no service etc. However, the Australian governments ordered in last year for

IHRM
4
investigation and make a commission for investigating such issues. The name of the
Commission was “Royal Banking Commission’. In the month of February 2019, Royal
Commission submitted its final report on investigation (which is also known as “Hayne
Report”) (SBS News, 2019). The report includes following issues in Australian Banking
sector, which are discussed below:
1. Corruption, Fraud, and Unethical behaviour of Banks: The royal commission
included in its report that there are many financial institutions and banks including
ANZ banks and Westpac banks were involved in corruption charges. The top officers
and staff were involved in taking money in form of bribes. People in the banks were
involved in frauds and taking bribe for their works (Atkins & Charlton, 2019).
2. Charging Fees for no service: Most of the banks and financial institutions were
involved in charging unnecessary fees for those services, which were not provide by
the banks to their customers. For example, charging money for maintaining account
balance and keeping transaction records, which the person did not transact in that
particular time (Legg, 2019).
3. Poor Culture of Banking organisations: Banks were operating their business in
very poor work environment and the infrastructures of banks were not up to the mark.
Banks were lacking in using proper technology and there is no concept of security in
banking organisations (Royal Banking Commission, 2018).
4. Misuse of Customer funds and mislead Regulatory bodies: The Australian banks
were using the investment funds of people in wrong places without their consent. For
example, Banks use the deposits of people in other financial institutions or in
speculative financial market. However, the banks were not stopped here and further
they provide wrong information to the regulatory bodies of Australia and mislead
them by inappropriate and false information (Royal Banking Commission, 2018).
5. Involvement of top leaders of the banks and other financial organisations: In the
final report of Banking Royal Commission, it has been found that the top executives
and officers of the banks and financial organisations were also involved in corruption
and unethical bank practices. Everything was happened under their nose and they
were fully aware about these uncultured and unethical practices (Royal Banking
Commission, 2018).

IHRM
5
These issues in Australia banking sector is really a challenge for the new manager who
will join the Australian banks. In such circumstances, it will be tough for a new manager to
deal with these issues and challenges where the top executives and leader were involved in
corruption and unethical practices of banks.
5. Political response on Hayne Report
Both Federal government and opposition federal government in Australia were surprised
with the final report and investigation results of banking royal commission. There were 76
recommendations were discussed in the Hayne report to improve the current situation of
banks. The Hayne report mainly focuses on cultural development in the banking industry.
Banks suggest the government to reform the banking industry from top to bottom process,
because there were many leaders and top executives of the organisation were also involved in
fraud and corruption (Jennett, 2019).
5.1 Response of Federal Government and Opposition Federal Government
After receiving the recommendations of Royal Commission report, the federal
government of Australia is bringing a strict law and punishment for those people who
involves in any type of banking corruption or any unethical practices. The Australian
government will treat these types of people as a criminal and currently making provisions that
if any will found to be guilty the offense will be treated under the criminal offense. Apart
from this, the government also corporate enforcement body that will monitor the activities of
banking organisation and report about it to directly the regulatory bodies and government.
However, the government is also working to bring strategy of “free for all” instead of “fees
for no services.”
5.2 Response of banking Industries on Royal commission
The banking industry is facing strong allegation of frauds and corruptions. The image
of banks in the mind of Australian people is currently ripped off. Therefore, banks need to a
strong and effective reform policy in the organisation and change the organisational culture,
thus people in the organisation will not involve in any unethical practices or any uncultured
activities. In order to follow the recommendations of Hayne report, banks are also bringing
some strategies and strict policies for people who involved in any misleading activities.
Banks are promoting ethical practices in the organisation; provide trainings to its employees,
focusing on improving the organisational culture. Apart from this, banks will take strong

IHRM
6
action against those people who found guilty or caught in any unethical practices or bribery
(Hargovan, 2019). It may be inform of suspension or termination of employees from the
organisation. Although the major focus of the banks is on improving the organisational and
work culture in the organisation.
5.3 Effect of Recommendation on Employment in banking sector
At present time, the image of banks is not good in the mind of youth people or in the
mind of those job seekers who wants to make their career in banking industry. The
recommendations help the banks to improve its image in the mind of people and youth
generation who wants to start their career as banker. It means, implementing the
recommendation will definitely affect the employment opportunities in the banking sector
and encourage people to join banks as their banking profession (Gilligan, 2019).
6. HRM issues and Challenges in Australian Banking system for a new
manager
The Australian banking sector is facing many issues from last couple of years. However,
apart from cultural and ethical problems in the organisations there are several other human
resource issues in the banks, which can be a strong challenge and create many other problems
for a new manager in Australian banks. Among these many problems, issues of leadership,
issues related to change management, issues related to engagement of employees, and issues
related to work environment are major challenge for a new manager.
1. Issue of Leadership: In the Australian banks, it has been found that many leaders
were involved in corruption and doing unethical practices. This issue demotivate
employees including manager as well. A new manager will definitely face challenges
to deal with leadership issue in the organisation because it also affects the moral of
employees.
2. Issues related to Change management: In Australian banking system, people are
not accepting change immediately rather they resist change. For example, if a new
manager wants to change the work environment and bring some new policy in the
organisation to improve the overall performance of the organisation, people generally
will deny accepting the change. The previous experience of people about their old
leaders is also a major cause behind this rejection (Marsh & Phillips, 2019).

IHRM
7
3. Poor Perception of Employees: As many people in banking industry observe the
corruption process and involvement of leaders, it is not easy for a new manager to
motivate them for the works. Motivating them for honest and ethical culture in the
organisation is also a major stuff for a new manager in Australia (Legg, 2019).
4. Remuneration and Reward system: The remuneration policies in Australian banks
are not adequate rather it is somehow biased towards the top executives and manager
of organisation. Thus, a low salary of employees could be a major concern for a new
manager because people will not give their best until they will not get proper
remuneration for their work value (The Business Times, 2018).
5. Poor Working Environment: In current situation, the banking industry of Australia
is suffering from various corruption charges. This resulted in poor moral and low
confidence among employees. Thus for a new manager, it will be difficult to improve
the working conditions of the organisations and motivate people for their work.
7. Recommendations
Based on the above study, there can be few recommendations given to a new manager
who will join the Australian banking organisation:
1. New manager should first understand the organisational culture and its people. After
that, the manager should try to know about the past incident and issues that bank
faces. It will help to understand the current challenges and issues of the organisation.
2. As currently banking organisations in Australia are facing strong allegation about the
unethical practices and work culture, the new manager should promote the cultural
development in the organisational people. Manager can provide training and
development programs to the organisational people to avoid any such type of mistake
of unethical act in the organisation.
3. Manager should not tolerate any wrong and false conduct of any person in the
organisation. If any superior or organisation leader found to be guilty, manager should
complain it about the top regulatory bodies.
4. Manager should motivate people for accepting change and tell them why change is
necessary for the organisation and for their selves as well.
5. Set a good salary standard that will provide proper worth or employee’s work in the
organisation.

IHRM
8
8. Conclusion
As current Australian banking, system is facing from strong corruption and fraud charges
and industry is trying to reform the industry, it is very tough for a new manager to perform
the managerial job in the organisation. However, if manger will promote the culture in the
organisation and motivate people for giving their best to the organisation, it may be effective.
Although motivating people and encouraging them towards the work is also a crucial job of a
manger, because people in banking industry are facing hopeless and demotivated. A strong
ethical and professional relationship with work and with organisational people (including
leader and executive of the bank) will definitely help the manager to establish himself as a
role model for other employee and it will also motivate the employee towards the work.

IHRM
9
References
APRA (2019). Industry Supervision [online]. Retrieve from:
https://www.apra.gov.au/supervision
Atkins, S., & Charlton, P. (2019). Chartered secretary: The banking royal commission final
report: Culture and governance implications. Governance Directions, 71(2),
65.
Gilligan, G. (2019). The Hayne Royal Commission–just another piece of official
discourse?. Law and Financial Markets Review, 1-10.
Hargovan, A. (2019). Chartered secretary: Banking royal commission final report: Cultural
issues and implications. Governance Directions, 71(3), 128.
Jennett, G. (2019). Banking royal commission delivered a manifesto for political action, so
when will we see it? [online]. Retrieve from:
https://www.abc.net.au/news/2019-02-05/kenneth-hayne-royal-commission-
report-labor-versus-liberals/10779476
Landmann, H. & Hess, U. (2018). Testing moral foundation theory: Are specific moral
emotions elicited by specific moral transgressions?. Journal of Moral
Education, 47(1), 34-47.
Legg, M. (2019). Litigation: Haynesplaining: Lessons for litigators from the banking Royal
Commission. LSJ: Law Society of NSW Journal, (53), 70.
Marsh, T., & Phillips, G. (2019). The Hayne report–one giant leap forward for Australia. Law
and Financial Markets Review, 1-5.
Reserve Bank of Australia (2018). Equity and Diversity [online]. Retrieve from:
https://www.rba.gov.au/publications/annual-reports/ead/2018/pdf/diversity-
initiatives-and-profile.pdf
Reserve Bank of Australia (2018). Our Role [online]. Retrieve from:
https://www.rba.gov.au/about-rba/our-role.html

IHRM
10
Reserve Bank of Australia (2018). The Australian Financial System [online]. Retrieve from:
https://www.rba.gov.au/publications/fsr/2018/apr/australian-financial-
system.html
Royal Banking Commission (2018). Royal Banking commission into Misconduct in the
Banking, Superannuation and Financial Services Industry: Interim Report:
Vol. 3 [online].
https://financialservices.royalcommission.gov.au/Documents/interim-report/
interim-report-volume-3.pdf
Royal Banking Commission (2019). Royal Banking commission into Misconduct in the
Banking, Superannuation and Financial Services Industry: Final Report: Vol.
1 [online]. Retrieve from:
https://www.royalcommission.gov.au/sites/default/files/2019-02/fsrc-volume-
1-final-report.pdf
Royal Banking Commission (2019). Royal Banking commission into Misconduct in the
Banking, Superannuation and Financial Services Industry: Final Report: Vol.
2 [online]. Retrieve from:
https://www.royalcommission.gov.au/sites/default/files/2019-02/fsrc-volume-
2-final-report.pdf
SBS News (2019). Banking sector crackdown hits parliament [online]. Retrieve from:
https://www.sbs.com.au/news/banking-sector-crackdown-hits-parliament
The Business Times (2018) More than half of Westpac shareholders vote against exec pay
[online]. Retrieve from:
https://www.businesstimes.com.sg/banking-finance/more-than-half-of-
westpac-shareholders-vote-against-exec-pay