WSU 300053: Ethical Dilemma Report - Commonwealth Bank of Australia

This report examines the ethical dilemmas faced by the Commonwealth Bank of Australia (CBA). The report begins with an executive summary and table of contents, followed by an introduction that defines ethical dilemmas and highlights their importance in business. The core of the report describes the specific ethical dilemmas at CBA, including fraud by financial planners, encouragement of unethical behavior through sales incentives, and issues related to money laundering and corporate governance. The analysis and evaluation section explores how factors such as age, professional designation, and the organization's sales culture influenced ethical decision-making. The report analyzes the impact of organizational factors like remuneration and performance measurement policies. The conclusion summarizes the findings, emphasizing the influence of individual and organizational factors on unethical behavior and recommends that the banking and financial industry focus on corporate culture, ethical decision-making, and leadership. The report includes references using the WSU Harvard system.

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Ethical Dilemma
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Executive Summary
Ethics are important in business as it define the right and wrong doing. Nowadays businesses are
facing more ethical challenges. This report consists of highlights the challenges or ethical
dilemmas that businesses face and for that Commonwealth Bank of Australia case is analyzed.
The report followed a format and below sections includes the dilemmas or challenges that
organization faces due to lack of ethics and unethical behavior of employees further these
dilemmas are analyzed and recommendations are given followed by a brief conclusion on the
case.

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Table of Contents
Introduction......................................................................................................................................3
Dilemma Description.......................................................................................................................3
Analysis and Evaluation..................................................................................................................4
Conclusion and Recommendations..................................................................................................5
References........................................................................................................................................6

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Introduction
Ethical dilemma is a situation in which person is confused between two choices neither of which
is acceptable according to ethical perspective. Ethics in business are important aspect to be
considered and it is essential to take decisions in the business on the basis of moral values
(Duska, 2008). Looking into the case of Commonwealth Bank of Australia (CBA), this is
amongst the one of the four biggest banks in Australia. Ethical dilemmas in this case are related
to the unethical behavior of individuals who are working in the organization and the way
organization supports its top management by covering the misconducts (Eyers, 2014).
Dilemma Description
Ethical dilemma that are identified in the case of CBA are, fraud by the financial planners of the
organization, CBA encouraged unethical behavior of their employees and tried to hide the
misconduct done, and lastly falsifying documents and partial disclosure of facts to the public are
some ethical problems that CBA faced. Firstly, financial planner of organization acted
unethically and lack of ethics in decision making led to serious consequences to the image of
organization in the banking industry in Australia as “financial planner of CBA placed elderly
retiree’s savings into high-risk investment products, contrary to instructions; lack of disclosure;
and falsifying of documents” (Ferguson, 2015).
Secondly, CBA provided bonuses and incentives to their financial planners for completing their
sales target that led to the encouragement of unprofessional behavior and unethical ways of
doing work in the organization. CBA favored this ethical misconduct because it benefitted the
organization as CBA sales increased due to unethical behavior of employees. “Ethical dilemma
is the most central issue and the one that is the driver behind the individual behavior of financial
planners and that has then caused the follow through effect on CBA, by the bank then trying to
minimize the damage to its reputation by attempting to cover up the issues”.
Further ethical problem that CBA faces is related to money laundering and corporate governance
and accountability policies of the organization in banking industry. “The lender was accused of
breaching anti-money laundering rules”.

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Analysis and Evaluation
Ethical reasoning and decision in this case of CBA is affected by age, professional designation
and experience as these factors impact on the financial planners of the organization and induce
them to act ethically in order to achieve their targets. The reason of these ethical problems that is
analyzed from the case is that organization sales culture environment impacted greatly on
individual personality traits and influenced them to work unethically in order to achieve the
target (Henn, 2009). Further, the performance measure technique that was used by CBA to
measure the performance of financial planner was inappropriate. “When analyzing the individual
behavior of financial planners it is clear that some financial planners struggle in the grey area of
putting their own interests and goals ahead of their clients”.
The financial planners of the organization were doing there task as “profit maximization is the
rule of business” and from the perspective of CBA’s financial planner they all were doing their
jobs by increasing the sales of company and they argued that they were working within the
organization framework through that it is analyzed that organization policies and framework is
important consideration in implementing ethics in the organization. In case of CBA, the policies
and rules that organization followed was not as per the banking industry norms of Australia and
the financial products that organization was offering didn’t match with the needs and objectives
of its clients.
The ethical factors are related to individual level and organizational level, the organizational
factors that influenced employees of CBA to behave in unethical manner was remuneration and
performance measurement policies of organization, ethical culture, ethical climate and leadership
style. However, individual factors that influenced ethical decision making was age, experience,
cognitive ethical reasoning and professional designation. Further it is also analyzed that ethical
culture of the organization was inappropriate as ethical culture promote unethical and ethical
behavior of an individual in the organization. Ethical culture and ethical climate of CBA was not
in favor to banking industry of Australia. Further leadership style was also questionable at CBA,
because leaders were not aware about the unethical behavior of financial planner they got to
know after whistle blowers came forward. “When considering organizational control business

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ethics can be defined as the structural health of an organization and the ability of an organization
to outperform its competition” (Smith, 2010).

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Conclusion and Recommendations
In conclusion, after reviewing and analyzing the case of CBA and knowing the ethical dilemmas
that organization faces it is concluded that “the ethical behavior of individuals who are employed
as financial planners are influenced by their own ethical beliefs and morals and also by the
culture of the ‘sales focused’ industry that they work in”. It is known that in case of CBA,
individual factors and organizational factors influenced the financial planners to behave
unethically. It is recommended that “the banking and financial industry should not be relying on
regulation to bring unethical behavior under control, but should consider their own corporate
culture and focus on ethical decision making in their organizations”. It is also advised that top
level managers should focus on adopting better style of leadership to promote ethics and integrity
and to implement the framework or policies and processes to support ethical behavior (Oates &
Dias, 2016). Further, organizational sales culture, personal belief of financial planners and
advisors, lack of control of organizational processes and lack of ethical leadership from the side
of managers crested the unethical environment in the organization and resulted in ethical
dilemmas.

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References
Duska, R. F., 2008. Contemporary reflections on business ethics. Netherlands: Springer.
Eyers, J., 2014. The man who blew the whistle on CBA. [Online]
Available at: http://www.afr.com/business/banking-and-finance/financial-services/the-man-who-
blew-the-whistle-on-cba-20140627-je1mp
[Accessed 29 August 2019].
Ferguson, A., 2015. CBA compensation scheme closes amid anger, frustration. [Online]
Available at: http://www.smh.com.au/business/comment-and-analysis/cba-compensation-
scheme-closes-amid-anger–frustration-20150702-gi3fv7
[Accessed 29 August 2019].
Henn, S. K., 2009. usiness ethics : A case study approach. US: John Wiley & Sons.
Oates, G. & Dias, R., 2016. Including ethics in banking and finance programs: teaching “we
shouldn’t win at any cost. Education and Training, 58(1), pp. 94-111.
Smith, J., 2010. thics and financial advice: The final frontier. Melbourne: Victoria University
and Argyle Lawyers Pty Ltd.