Commonwealth Bank: Ethical Issues and Learning Organization Report

This report provides an in-depth analysis of the Commonwealth Bank of Australia (CBA), focusing on its ethical issues, scandals, and learning organization processes. The report begins with an executive summary and table of contents, followed by an introduction to the bank and its background. It explores the learning organization process, including structural roles and the application of learning organization models, such as Peter Senge's five disciplines. The report then evaluates ethical issues faced by CBA, including unethical behavior by financial planners and falsification of documents, and assesses past ethical scandals like money laundering and data breaches. Current barriers to organizational learning are identified, such as biases and resistance to change. Recommendations are provided for CBA to become a more ethical learning company, including an analysis of needs and an ethical training plan. The report also discusses CSR programs and concludes with a summary of findings and recommendations, supported by a comprehensive reference list. The study emphasizes how leadership and organizational structure impact learning and ethical behavior within the bank.

LEADERSHIP AND LEARNING ORGANISATIONS
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Executive summary
In this report, different theories, models and frameworks of learning organizations re-
discussed in a proper way. Whole report is structured on commonwealth bank of Australia,
which can face different ethical issues and scandals at past. This has impacted on reputation
and revenue collection of this company. Different ethical issues and scandals of these
banking organizations are discussed in this report. In addition, barriers to learning in this
organization are analyzed in a proper way. Different corporate social responsibilities of this
firm are discussed and other CSR policies recommended. Recommendations are also given to
become an ethical learning company. At the end of this study, conclusion has been drawn
from the overall discussion.
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Table of Contents
1.0 Introduction..........................................................................................................................4
1.1 Background of company...................................................................................................4
2.0 Learning organization Process.............................................................................................4
2.1 Structural roles of organizational learning.......................................................................4
2.2 Applying Learning organizational models.......................................................................5
3.0 Evaluation of ethical issues..................................................................................................6
4.0 Assessment of ethical scandals............................................................................................6
5.0 Evaluation of current barriers...............................................................................................7
6.0 Recommendation for becoming ethical learning company..................................................8
6.1 Analysis of needs..............................................................................................................8
6.2 Ethical training plan..........................................................................................................8
6.3 Implementation.................................................................................................................8
6.4 Evaluation.........................................................................................................................9
7.0 CSR programs......................................................................................................................9
8.0 Conclusion............................................................................................................................9
Reference list............................................................................................................................10
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1.0 Introduction
Learning organization refers to companies that provide opportunities to all active members to
learn consistently in order to improve professional and personal skills. Commonwealth Bank
of Australia is continuously transforming their leadership styles and organizational structure
for ensuring learning of its employees. This study focuses on the evaluation of leadership and
business management of the Commonwealth Bank.
1.1 Background of company
Commonwealth Bank of Australia (CBA) is a multinational bank and its headquarter is
located in Sydney, Australia. At present they have 51800 employees those who perform
different duties worldwide (Commbank.com.au, 2019). Different services provided by this
organization include financial services, business institutional banking, and funds
management. This organization is considered as largest firm that is enlisted in ASE
(Australian stock exchange). Main vision of this banking organization is to secure and
enhance wellbeing of customers by providing excellent financial service. Hence, they have
built a customer-focused culture by increasing their sense of responsibility. They try to follow
participative leadership style that helps to impart knowledge to employees.
2.0 Learning organization Process
2.1 Structural roles of organizational learning
Organizational structure of CBA contributes to the learning process of their employees. As
opined by Rahim (2017). Clear understanding of roles, as well as responsibilities, helps
leaders to support organizational learning of members of organizations. Proper guidance of
leaders helps to learn of their subordinates and this aspect helps this organization to achieve
goals of their business. Executive director of finance department has mentioned that
leadership is all about developing and managing team. Leaders of this firm choose and place
right people for appropriate designations (Commbank.com.au, 2019). After that leaders of
this firm provide guidance to employees and encourage them to learn new skills.
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2.2 Applying Learning organizational models
Application of LO framework within organization is an effective practice of encouraging
members of organization to learn continuously. According to Storey (2016), five dimensions
of LO have been mentioned by Peter Senge and this model is being applied by leaders of
large organizations to support learning within workplace. Five disciplines are system
thinking, mental models, and development of shared vision, personal mastery and team
learning. Leaders of CBA compromise vision of organization and individuals in order to
develop shared vision. Sharing same vision engages employees in achieving organizational
goals. System thinking refers to evaluation of issues of overall system of business. As stated
by Frese and Keith (2015), this practice helps managers and leaders to understand the process
of mitigating issues through continuous learning of employees. Peter Senge has described
mental model as concept of employees regarding values of organization. CBA is a flexible
organization and they are able to accept as well as adopt new mental models. Leaders of CBA
focus on team learning to ensure success (Commbank.com.au, 2019). They provide values to
all team members and motivate them to learn within organization. Personal mastery takes
place in case of self-development. As mentioned by Pisano (2017), employees of CBA
understand their gaps and learn new skills in order to mitigate gaps. This approach helps this
company to improve performance and enhance generation of maximum revenue.
Figure 1: Five Dimensions of Learning Organization
(Source: Influenced by Pisano, 2017)
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3.0 Evaluation of ethical issues
This organization is facing different ethical issues, which includes poor behavior of financial
planners. They behave unethically and places savings of retirees in risky investments. In
addition, falsification of documents is also done by employees that are another ethical issue.
It shows a gap in leadership as proper guidance is not achieved that has impacted in behavior
of planners. As mentioned by Usman and Hameed (2017), in learning organization leaders
help to improve behavior of subordinates. Leaders of CBA promote unethical behavior by
providing huge incentives to financial planner. This has created a sales-based culture and
scope of learning has diminished. Moreover, leaders of this organization try to cover any type
of misconduct performed by any employee. This is another ethical issue that can impact on
customer satisfaction rate and decrease competitive advantage. Hoch et al. (2018)
contradicted that leadership needs to point out gaps in performance of subordinates and
provide the opportunity of correction.
Main cause behind unethical practices of CBA is the lack of sincerity to maintain corporate
norms within workplace. Leaders and managers are not maintaining corporate norms and
employees are following their footsteps. This aspect is leading to occurrence of unethical
norms. Mr. Sedgwick has mentioned recommendations for banking organization and 9th
recommendation have mentioned to follow ethical standard along with focusing on
consumers (Royalcommission.gov.au, 2019).
4.0 Assessment of ethical scandals
In 2015, several customers of CBA have been arrested by the charge of money laundering.
Around $3 million banking receipts have been found, which was printed from CBA deposit
machines. This proves failure of this large multinational bank because they have not taken
proper step to solving the problem of this scandal. According to espoused theory of learning
organization, a firm needs to have proper guidelines for problem-solving (Yazdani and
Murad, 2015). These guidelines can be followed by employees to solve problems.
Remuneration report of CBA has been released in 2016 and the management of this company
was aware about the money laundering scandal. Investigation has taken place at that time as
this issue has been resulted in civil penalty proceeding by Australian transaction report and
training center (Royalcommission.gov.au, 2019). Criminals use intelligent deposit machines
of CBA to deposit higher illegal amount and it causes money laundering. CBA has faced
humiliation and criticism from all stages of business due to their money laundering scandal.
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In addition, CBA is facing another scandal of data breach of customers. Medical information
is private documents, breach of which has decreased security of consumers (Abc.net.au,
2019). This ethical scandal has taken place due to negligence of employees of CBA. It has
been mentioned in the Royal Commission Report that banking organization such as, CBA is
liable to breach report data on annual basis. Lack of knowledge in employees regarding
process to secure shared database is the main cause behind this ethical scandal. This scandal
can be analyzed by system theory of learning organization. As said by Mo and Shi (2017),
systems theory helps to analyze impact of a context and evaluate connections. Hence, impact
of action upon others can be analyzed by the help of this theory. These scandals have
impacted on brand image of this organization and impacted in revenue rate.
Figure 2: Theories that support Learning Organization
(Source: Influenced by Pisano, 2017)
5.0 Evaluation of current barriers
Commonwealth Bank of Australia is currently facing different barriers regarding
organizational learning. One of the essential barriers is biases while performing action. As
opined by Çelik et al. (2015), biases in action impacts on performance of an organization and
decreases productivity. Bias gives rise to different problems like wastage of time, improper
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reflective observation and inefficient decision making. In addition, Serrat (2017) argued that
biases while performing any action reduces certainty of getting perfect results.
Another barrier in organizational learning is resistance during change. CBA has failed
records in past during implementation of any change in the organization (Commbank.com.au,
2019). However, the essential stakeholders were involved during incorporation of the change.
Different changes like technological change, leadership transition, and change in working
hours has failed due to improper planning. As opined by Rahim (2017), leaders and managers
in an organization need to take positive approach during implementation of change.
Resistance can be eliminated through motivation and regular discussion.
6.0 Recommendation for becoming ethical learning company
6.1 Analysis of needs
It is important for leaders to communicate with employees in order to understand their
viewpoints towards ethical learning. This aspect may help leaders of CBA to understand
needs of ethical learning practices within organization. On another hand, customer
satisfaction level and their feedbacks need to be analyzed. This action will help to understand
gaps in performance of employees and needs of learning. It is recommended to overview
repetitive ethical scandals of this company. This aspect may help them to identify their
mistakes and develop strategies accordingly to avoid this kind of issues in future.
6.2 Ethical training plan
Action Duration
Training regarding provision of respect to
others
2-3 Weeks
Asking employees to cooperate with other
team members
1-2 Weeks
Training for respecting cultural background
of others
2-3 Weeks
Training for developing moral in employees 1-2 Weeks
Asking employees to express their opinion
in all situations
1-2 Weeks
Table 1: Ethical Training plan
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(Source: Designed by Author)
6.3 Implementation
Engagement of leaders and employees are essential in case of implementation of ethical
training plan. Leaders and managers of CBA are responsible to inform employees regarding
the training program arranged by the company. Employees need to cooperate with the
management in order to help this company to become ethical learning company. Employees
are liable to attend training program for learning ethics regarding business practices. They
need to understand importance of ethical learning and its effect on business performance.
6.4 Evaluation
Effectiveness of ethical learning training program needs to be evaluated by the management
of CBA. Survey on employee morale can be conducted on regular basis. On another hand,
performance of individual employees after training program needs to be monitored. In
addition, evaluation of business performance can help to measure impact of ethical learning
training program on employees.
7.0 CSR programs
CBA has taken different CSR initiatives that include financial education for children. This
can help children by increasing their ability to money management. In addition, they have
also initiated the program of face to face financial education program. This can help
community especially students by increasing their ability to manage money. CSR report of
this firm also includes climate change policy. They have supported the mission of zero-
emission by 2050 (Commbank.com.au, 2019). However, different other CSR programs like
increasing knowledge of community regarding scams like money laundering and improving
motivation of employees regarding ethical business process must be included.
8.0 Conclusion
From the above discussion, it can be concluded that learning process in an organization helps
to increase efficiency of employees. It has been mentioned that cooperation from employees
can help to improve their own professional and personal skills. Leaders and leadership style
impacts on learning process of a large organization. Gaps in leadership style in CBA have
given rise to different ethical issues and scandals. This can be mitigated by following
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different ethical learning theories and concepts. Recommendations may help this company to
become ethical learning organization.
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Reference list
Abc.net.au. (2019). Commonwealth Bank customers' medical data exposed to potential
privacy breach. Available at: https://www.abc.net.au/news/2018-12-03/commonwealth-bank-
medical-data-exposed-potential-privacy-breach/10563414 [Accessed on 25th April 2019]
Çelik, S., Dedeoğlu, B.B. and Inanir, A., 2015. Relationship Between Ethical Leadership,
Organizational Commitment and Job Satisfaction at Hotel Organizations. Ege Academic
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Commbank.com.au. (2019). About us. Available at: https://www.commbank.com.au/about-
us/careers/fresh-perspectives/leadership.html [Accessed on 25th April 2019]
Frese, M. and Keith, N., 2015. Action errors, error management, and learning in
organizations. Annual review of psychology, 66, pp.661-687.
Hoch, J.E., Bommer, W.H., Dulebohn, J.H. and Wu, D., 2018. Do ethical, authentic, and
servant leadership explain variance above and beyond transformational leadership? A meta-
analysis. Journal of Management, 44(2), pp.501-529.
Mo, S., and Shi, J. 2017. Linking ethical leadership to employees’ organizational citizenship
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Business Ethics, 141(1), pp.151-162.
Pisano, G.P., 2017. Toward a prescriptive theory of dynamic capabilities: connecting
strategic choice, learning, and competition. Industrial and Corporate Change, 26(5), pp.747-
762.
Rahim, M.A., 2017. Managing conflict in organizations. Abingdon: Routledge.
Royalcommission.gov.au. 2019. Final report. Available at:
https://www.royalcommission.gov.au/sites/default/files/2019-02/fsrc-volume-1-final-
report.pdf [Accessed on 20th May 2019]
Serrat, O., 2017. Building a learning organization. Knowledge solutions (pp. 57-67).
Springer, Singapore. Available at: https://link.springer.com/chapter/10.1007/978-981-10-
0983-9_11 [Accessed on 25th April 2019]
Storey, J., 2016. Changing theories of leadership and leadership development. In Leadership
in Organizations (pp. 33-58). Routledge.
Usman, M. and Hameed, A.A., 2017. The effect of ethical leadership on organizational
learning: Evidence from a petroleum company. Business & Economic Review, 9(4), pp.1-22.
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Yazdani, N. and Murad, H.S., 2015. Toward an ethical theory of organizing. Journal of
Business Ethics, 127(2), pp.399-417
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