Employment Relations and HRM Report: Australian Banking 2019

This comprehensive report, written from the perspective of an HR Manager within a major Australian bank, addresses critical employment relations and human resource management (HRM) challenges impacting the recruitment of managers from other countries in 2019. The report delves into the Australian banking landscape, including key players and regulatory bodies, while also examining the fallout from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. It analyzes international HRM issues, such as sexual harassment and the need for robust HR policies, and assesses the impact of the Royal Commission's findings on the business and employment environment. Furthermore, it explores the public perception of bank managers and how the findings of the Royal Commission has affected the Human Resource Management practices, including recruitment, employee screening, and incentive structures. The report concludes with recommendations for navigating these complex challenges and adapting HRM practices to maintain ethical standards and ensure the long-term success of the banking sector. The report aims to provide a clear understanding of the issues and offers insights into the necessary changes within the industry.

Australian Banking Overview: Royal Commission Report

Table of Contents
Executive Summary.....................................................................................................................................3
Introduction.................................................................................................................................................3
Analysis.......................................................................................................................................................3
Banking in Australia................................................................................................................................3
Regulatory and Monitoring Agencies......................................................................................................4
The Royal Commission in Banking.........................................................................................................4
The CEO of the Commonwealth Bank....................................................................................................4
International HRM Issues........................................................................................................................4
Sexual Harassment..................................................................................................................................5
Findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial
Services Industry.....................................................................................................................................5
Reactions of the Government, Opposition and Banking Industry........................................................6
Business and Employment background in the Banking Sector Following Royal Commission Report 6
Bank Manager: Overview and Public Perception....................................................................................7
Impact of the Royal Commission Findings on the Human Resource Management.................................7
Recommendations.......................................................................................................................................8
Conclusion...................................................................................................................................................9
References...................................................................................................................................................9
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Executive Summary
The Banking system is one of the most important systems of the economy of any country. Any
untoward event regarding this industry has its ripple effects on the whole economy. The
Australian Banking system is also going through a tough phase after the expose of a number of
financial scandals in recent times. The whole economy is shaking under the impact and most
importantly people’s trust has been tested. The following report analyzes the effect of these
scandals and the findings and recommendations of the Royal Commission report. The whole
thing is also viewed through the lens of the business and employment background of the sector
and also as a challenge to the human resource management of the banking sector.
Introduction
The Banking industry in Australia is going through a tough and testing phase following the
emergence of a number of financial scandals that a number of reputed banks. The final report of
the Royal Commission which came out in the month of February this year further exposed the
illegal practices that the bank staffs were involved in. The following report is concerned with the
issues of employee relations and the human resource issues in regard to the recruitment of
managers in the current Australian banking scenario. The scope of the report extends to cover all
the related issues of recruitment of mangers from different countries in this uncertain banking
scenario. The following report also discusses the various findings and recommendations of the
Royal Commission of Banking and the reaction of the government, opposition and the banking
sector to the Royal Commission’s report. This report has been specifically made in order to
discuss the impact and consequences of the recommendations made by the Royal Commission
on the employment and practice of the human resource management in the banking industry
Analysis
Banking in Australia
The banking sector in Australia is dominated primarily by four large banks namely the
Commonwealth Bank of Australia, National Bank of Australia, Westpac Banking Corporation
and the Australia and New Zealand Banking Group. There are other financial institutions and
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smaller banks but these four banks dominate the financial sector of Australia. They are major
contributor to the Australian economy. There are some other retail banks which are much smaller
in scale and operate in the regional areas. There are also some Customer owned banking
associations. The foreign banks wishing to operate in Australia have to obtain an operating
license from the APRA and can have two forms: wholesale bank or through an Australian owned
subsidiary.
Regulatory and Monitoring Agencies
The whole framework of the regulation and monitoring of the banking sector lies with the
Australian government which discharges this function with the help of some regulatory
authorities such as the Australian Prudential Regulation Authority (APRA), Australian Securities
and Investments Commission (ASIC), and the Reserve Bank of Australia (RBA). The Federal
Treasury, Australian Competition and Consumer Commission (ACCC) and the Foreign
Investment Review Board (FIRB) are some of the other monitoring authorities.
The Royal Commission in Banking
A Royal Commission formed under the Royal Commission Act 1902 is the highest level of
inquiry that can be initiated against any entity. The Royal Commission inquiry into the Banking
sector was set by the Parliament of Australia after journalists exposed some financial misconduct
in the Commonwealth Bank. Later on the other three major banks such as NAB, ANZ AND
Westpac also got embroiled in the investigation. This Royal Commission was chaired by Justice
Kenneth Hayne.
The CEO of the Commonwealth Bank
The Commonwealth Bank has been embroiled in a number of financial scandals in the last few
years. The former CEO Ian Narev was forced to resign following the scandal of money
laundering and also a failure to assess its money of being used in terrorist activities. The present
CEO Matt Comyn was then called in the Royal Commission inquiry into the financial
misconduct by the major banks of Australia. Later the bank paid $700 million in fine and also
legal costs involved.
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International HRM Issues
A large number of businesses are now operating at a global level and thus it has also sparked
many modifications in the human resource management of the company. The HR now has to
take international laws, diversity and many other global concerns into considerations while
formulating a HR policy for its staff. The basic function of HR is the procurement, allocation and
utilization of its staff. One of the most important issues in international HR is the training of the
staff. The staff needs to be managed with respect to their performance and are handling the
foreign scenario. The other issues looked into by the HR are the compensation and benefits
package of the companies towards its foreign employees. The international HR management also
looks in the issues of adjustment in the foreign country with regard to the language, rituals and
customs of the host country (Bray and Waring, 2014). The issues of currency exchange rate,
career outlook, rules and policies, governing foreign operations and the ethics and etiquette
expectations of the country are also looked into by the HR management (Wright and Lainsbury
2018).
Sexual Harassment
Sexual harassment of employees is also a very significant concern of the HR department more so
in the international scenario. In 2017, an employee of the ANZ Bank was fired over allegations
of sexual misconduct. The male employee was alleged to have said some inappropriate remarks
to a female employee of another bank at an informal event. The ANZ Bank promptly fired the
employee and also some other who were found to have indulged in drug use after office hours.
This strict HR policy and action is required to weed out inappropriate behavior from the
corporate world.
Findings of the Royal Commission into Misconduct in the Banking, Superannuation and
Financial Services Industry
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services
Industry was established by the Australian Government on 14 December 2017, to look into
complaints of misconduct in the financial industry. Justice Kenneth Hayne was made the sole
commissioner of this Commission and he tabled an interim report in September 2018. After a
large number of inquiries, seven public hearings, reviews of commission etc the final report
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along with the recommendations was submitted on 1st February 2019. The report mentions that
along with the bank the individuals associated with the banks were operating out of an individual
pursuit of gain and the idea of servicing the customer was relegated to the bins. The report also
criticizes the policy of the financial sector to reward any sale made by its profit not even
bothering to find out whether the sale was made in accordance with the relevant laws. The
charged entities and individuals acted in such a manner as they misused their power. Customers
were not properly informed about their choices(Hayne, 2019). The intermediaries through whom
many customers acted were also paid off by the entities to act in their interests. Also where the
entities got hold of information about the occurrence of some misconduct proper action was not
taken. Compensations were paid secretly and reports of misconduct were not made public. The
Commission found that the primary responsibility for the misconduct lies with the board
members, senior executives and their culture of governance (Gallagher, 2018).
Reactions of the Government, Opposition and Banking Industry
The Royal Commission report underlined 76 recommendations to improve the workings of the
financial sector and bring a semblance of transparency in the deals. The Government was quick
to respond saying that it will implement all the recommendation mentioned in the report. The
opposition party too resolved to obey the recommendations in principle. The banking sector
made wary responses and commented that they would fully look into the recommendations and
work with the government to implement them as is possible (Gittins, 2019). The NAB’s chair
Ken Henry and Chairman Andrew Thorburn initially defended their position but ultimately
resigned.
Business and Employment background in the Banking Sector Following Royal Commission
Report
After the Royal Commission report came out it had many implications on the business and
employment background in the banking sector. Many of the banks who were facing the charges
announced an employee downsizing. The demand however for candidates with compliance and
risk skill subset was on a high. There were demands from various quarters to conduct
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background checks of the banking employees (Tomasic, 2018). Moreover many bank chiefs are
reporting that employees are feeling the heat of the public anger after the royal commission’s
report came out. The employees have taken to hiding their bank employee identity when
travelling in public transport ("Bank staff feel public's wrath as banks ponders royal commission
solutions", 2018).The banking conditions are also in state of uncertainty. The recommendations
of the commission such as having a flat fee structure instead of the commission system, assessing
the borrower’s income and expenses and improving standards in the wealth sector seem
deceptively simple. The main issue will surface when deciding who will pay for these changes.
The banks have a tendency to charge their customers for additional services but in the event of
their practice of overcharging the clients already it remains to be seen what will be the reaction
of the customers to these changes (Hewett. 2019).
Bank Manager: Overview and Public Perception
The Bank Manager is responsible for supervising the working in his particular branch. He
reviews the work of his juniors and is actively engaged in training and hiring of the staff. He
reviews the financial reporting and also engages with customers. He is expected to give excellent
customer services (Anon, 2017). The public perception about the managers has been quite
favorable in Australia. They have been viewed with respect and as responsible service providers.
However, the large number of scandals exposed by the journalists and the subsequent Royal
inquiry has made a dent in the reputation of the bank managers. They are now viewed with
mistrust by the public (Shapiro, 2019).
Impact of the Royal Commission Findings on the Human Resource Management
The findings of the Royal Commission inquiry will have profound impact on the human resource
department and consequently on the working life of the manager. The bankers are feeling the
heat of the report and although they might sit down and review their approach the love of money
is going to stay in their system (Maley, 2019).The exposing of financial scandals have put the
HR policies under scrutiny and questions are asked why is that the banks find it hard to obey the
policies and act according to the ethical guidelines as mentioned in the HR policies of the banks.
The HRM will now feel the heat. They will now have the added responsibility to screen the
attendees on the mark of risk measurement (Wilson, 2018).The HR policy of recruitment
according the ability of the potential employee to generate profit in trading will also come under
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the scanner. The incentive structure for the employees will also be reconsidered. When screening
a potential employee now, the manager now must also keep in mind his other abilities such as
customer satisfaction, management skills, and also an inherent ethical value, integrity of conduct
will also have to be considered. Managers are now under immense pressure to comply with these
policies and also to keep a keener eye on the happenings in their branch. They must be more
aware of the customer-employee interactions and follow whether any employee is misleading a
customer. Employees are now also to be judged whether their exemplary performance has been
done within the ethical parameter or not. Moreover, it must be made very clear that any kind of
breach will be made public and there will be adequate iota of punishment for such. This will
increase accountability in the firm and its employees. The HR policy in the training programs
must impress upon ethics values and the need for customer satisfaction (Wilson, 2018).However,
none of these are going to work if the topmost senior executives remain in their same attitude.
The corporate structure is based on profit making and it is an inevitable reality. However, the
management must not be let this profit making turn into greed. It would not be so wrong to say
that some breaches at the lower level happen because they are aware that these will go
unpunished and that the senior management is also working on a self-interest motive. The
current scenario gives much thought to the idea of our methods of teaching our students. Along
with the conventional teaching approaches a stress on the morality of things and the distinction
between the right and wrong in the business field. (Fine, 2018)
Recommendations
The large number of scandals exposing the malpractices of the financial sector has raised the
question that how come the financial sector is plagued with so many irregularities and why this
sector finds it hard to function without complying with the different rules and policies. However,
it is has now become necessary to curb these evil practices as the time to say sorry has gone past
and people are demanding action. As an expatriate or a bank manager a person needs to
understand a number of things in order to contribute towards effective operations of the bank. As
an expatriate one of the major aspects is to understand the importance of cross cultural
management. Imbibing the knowledge of cross cultural management would help the expatriate or
the manager to crack effective relationship with the organisation and the local staffs. In order to
enhance the impact of a diverse workforce cross cultural management is extremely important.
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Hence, for a manager it is essential to implement the elements of cross cultural management in
the best possible manner. Hence, it is suggested that the manager or the expatriate should come
prepared with local understanding and global thinking strategy (McIllroy, 2017).
It is important for the manager to ensure transparent recruitment which would not only help to
get employees based on their potential but it will also help to conform with the employment
legislation which is extremely important avoid any kind of legal implications. Hence, the
manager if he is an expatriate should have proper knowledge recruitment policies and
employment legislations which would help to make effective decisions for the organisation as
well as for the employees.
Leadership is an important aspect for every manager and hence, in order to understand the
organisation and the staffs in the foreign environment it is important for them to thoroughly read
the employees. Reading the employees and their mindsets would help to implement effective
leadership which would help to drive the employees and achieve the organisational goals. The
manager will need to get involved in the training program for effective result. There have been
number of scandals in the recent past and the Royal Commissions report has showed that so the
manager would need to stand to achieve better outcomes (Oates and Dias, 2016).
Conclusion
The scope of this report which extends to examine the employment and human resource issues in
the Australian banking sector has also discussed in detail the many financial scandals facing the
four major banks of Australia since few years. The subsequent Royal Commission in Banking,
its findings and recommendations have also been discussed. The effect of these occurrences on
the business and employment background has been illustrated. One of the most discussed area
had been the area of banking and the limits to its professionalism( Smith et al, 2017). The most
noteworthy consequences are to be in the area of human resource management. The HRM will
now face a multitude of challenges in terms of employee recruitment, allocation and utilization,
along with their training programs (Kingsford Smith, 2019).The HR department has also come
under much heat in these scandals and their roles have been questioned. They now have the
added responsibility of improving their image too along with the whole financial sector.
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