Questionable Practices at Commonwealth Bank of Australia: A Report

This report analyzes questionable organizational and management practices at the Commonwealth Bank of Australia (CBA). It examines incidents of misconduct, fraud, and money laundering, as revealed by the Royal Commission. The analysis utilizes stakeholder theory to assess the impact on various stakeholders, including customers, employees, and the government, and bureaucracy theory to understand the organizational structure and management decisions. The report critiques the limitations of these theories and offers recommendations for CBA to improve transparency, empower employees through whistleblowing, and implement leadership changes. It concludes that the lack of employee feedback and whistleblowing mechanisms contributed to the unethical practices, highlighting the importance of stakeholder needs and strict organizational rules.

Running head: QUESTIONABLE PRACTICE
QUESTIONABLE PRACTICE
Name of the Student:
Name of the University:
Author Note:

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Introduction:
The aim of this paper is to discuss the questionable practice of the management of
reputed organisation of Australia namely the Commonwealth Bank or CBA. In this
organisation the incidents leading to two question in the organisational and management
practices along with the judgements of the managers will be discussed through relevant
organisational theories. In order to understand why the management is making questionable
decisions and undergoing questionable practices will be understood through two
organisational theories mainly the stakeholder theory and the Bureaucracy theory. Both of
these theories will be e revealing insights into the organisational practices in Commonwealth
Bank of Australia. There are limitations of these theories which will be criticized in this paper
and it will be concluded through discussion of recommendations or strategies which the
Commonwealth Bank of Australia can take to overcome this type of issues in the future.
Description of a chosen organisation:
The Commonwealth Bank of Australia for CBA is a multinational Bank ok that has
operations across various countries of Asia United States United Kingdom and New Zealand.
This company provides range of financial services that includes retail, institutional banking,
superannuation, fund management, insurance, broking and investment services. The
Commonwealth Bank is one of the largest Australian listed company in Australian securities
exchange that has the brands like Bankwest, ASB bank in New Zealand, Colonial First State
Investment, CommSec or Commonwealth securities and Commonwealth insurance. This
bank is the largest bank in the southern hemisphere (Bandara et al. 2019).
This organisation was established in 1911 by the Australian government and it is one
of the “big four” Australian banks. In 2005 the Commonwealth Bank of Australia has
established strategic cooperation with two of the reputed Chinese banks and established a

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representative office in India also (Willcocks and Reynolds 2015). This that the organisation
is expanding in a rapid manner which is supported by the perfect decisions and initiatives by
the management practices however these positive consequences are marred by some negative
incidents. In 2018 the royal Commission into misconduct in the banking superannuation and
financial services industry has found a negative culture in this Bank which included
allegations of deception, fraud and money laundering by the employees and managers of
Commonwealth Bank of Australia.
Definition of theories and justification for choice:
The stakeholder theory is one of the most important Organisational Management
principles includes the interest of the multiple constituencies affected by the business entities
such as the employees, customers, suppliers, creditors, local communities and other
associated stakeholders (Miles 2017). This particular theory addresses the morals as well as
values of the management of an organisation. The stakeholder theory relates to the corporate
social responsibilities, social contract and market economy which align the operations of the
organisations with the interests of the stakeholders.
The stakeholder theory includes both the market based view and as well as resource
based view that add a socio-political level in the operation of the organisation (Jones,
Harrison and Felps 2018). The stakeholder theory defines the perspective of the stakeholders
of the company and then analyse the conditions under which the management can treat these
stakeholders in a proper way. In the field of Management the stakeholder theory succeeded in
suggesting that the needs of the stakeholders must be put in the beginning of any action
(Cunliffe and Luhman 2012). This theory is important to discuss the issues related with
unethical practices of the managers in Commonwealth Bank of Australia. This is due to the

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fact that there are various stakeholders associated with the successful operation of this
company which can be only understood through the stakeholder theory.
According to the theorist Max Weber the bureaucracy e is the most efficient way to
establish an organisation and its administration. According to the Bureaucracy theory the
rules, process, standardized processes and requirements, number of Departments,
responsibility and divisions of the employees, professional and the impersonal interaction
among the employees are taken care by the bureaucratic nature of the organisations (Beetham
2018). This type of structure is indispensable for the large organisation like CBA in
structurally performing every types of tasks by the great number of employees. This theory is
important to understand the expansion process of the organisation and it include
responsibilities of the managers in maintaining authority to impose rules (Cunliffe and
Luhman 2012).
Description of how theories reveal insights into the organisation/ its practices:
Since 2008 the Commonwealth Bank of Australia has been accused to support
fraudulent behaviour of the management that had led the company to face the wrath of the
APRA. There are some incidents that involved CBA which led AUSTRAC's legal actions
relating to two bridges of contracts and other conduct related issues. these unethical incidents
included the mis-selling of the margin loans to the retail customers for investing in the
financial products, misconduct by the financial Advisors in in the Commonwealth financial
planning which is a part of the banks wealth business, taking fees for no service in the
financial advice, using outdated definition of heart attack in the young ones products sold by
Commonwealth insurance. In addition to this the problems of anti-money laundering
breeches and mis-selling of credit card insurance by the employees are the charges recorded
against the organization.

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Both the stakeholder theory as well as Bureaucracy theory can analyse incidents in
depth. According to the Bureaucracy theory the bureaucrats or the management people will
be at the top most layer of the organisation who will be regulating activities as the official
duties. In the case of Commonwealth Bank of Australia the management only had the
authority to impose rules but these were manipulated by the management itself. In this case
the bureaucratic theory opens that rules can be respected on the basis of the establish methods
therefore any type of unethical incidents must be pointed out and placed before the board of
directors.
Stakeholder theory here relates to the fact that whatever the management for powerful
employees of Commonwealth Bank of Australia have done actually affected the interests of
the stakeholders of this bank. This case the customers are the main vulnerable people who are
in the receiving end. As the customers do not have any direct connection with the operation
of the company therefore they cannot take direct measure against these people. The managers
who are associated with this type of questionable practices are being accused by the media
but it is already too late. This is the reason why incident of money laundering and unethical
breeches have taken place in the organization and a huge amount of money which is public
property has been ruined. The employees as the stakeholders have also been affected by this
type of questionable practices because the reputation of the company had been affected so
also the value and share in the market. This has direct connection with the career growth of
the employees associated with CBA and their validity is being questioned in the job market.
Similarly the interest of the government of Australia as well as of the other countries where
the firm operates are the stakeholder of CBA whose authority is being questioned.

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A critique of the limitation of theory:
Both of the organisational theories have limitations like the stakeholder theory is
based on the compromise and balanced interest of the stakeholders associated with the
company stock however it is the negotiation process of the dialogue for dealing with conflicts
between the interests of the stakeholders. On the other hand the criticism of bureaucratic
theory includes that is EDT and infix ability of rules in the bureaucratic organisations. In
addition to this the Bureaucracy in words lot of planning and prepare work which leads to
waste of effort and time. The rules and formalities in bureaucratic theory leads to unnecessary
delay of the decision making process for which the actions and operations of the organisation
may suffer. In this present day of competitive business the scope of utilising human resource
management is increasing but according to the bureaucratic theory the power accumulation in
one particular group directly opposite this scope of utilising HR (Dolan and Rosenbloom
2016). Finally the Bureaucracy theory is criticized for its rigidity in coordination and
communication within the workplace.
Discussing recommendations or strategies:
In order to cope up with the situation the Commonwealth Bank of Australia must
focus on the transparency of communication and decision making process in the organisation.
In this regard the control theory of organisation can be applied for overcoming such issues.
In this regard, the control mechanism of the company can be mentioned. According to this
theory, control mechanism has to be imposed in all levels of the organisation.
Firstly the changes in the policies for accumulating power and maintenance of
Hierarchy must be introduced. The flatter the structure is the more transparent the
organization will be.

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Secondly the whistle blowing process can effectively empower the employees of the
ground level regarding the revelation of unethical processes in the higher level management.
Finally, the leadership change is a necessity. The change of CEO in the company will
rejuvenate the trust and dependability of the employees, customers and other stakeholders
effectively.
Conclusion:
Therefore, it can be concluded that, in the field of Management the stakeholder theory
succeeded in suggesting that the needs of the stakeholders must be put in the beginning of
any action. On the other hand bureaucratic theory details the importance of strict rules in the
organizations. As there are no employee feedback process in CBA or whistleblowing method
presented in the human resource, therefore the unethical incidents and questionable practices
by management had been taking place for long.

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Continuing Controversies: Classic Readings and Continuing Controversies. Routledge.
Jones, T.M., Harrison, J.S. and Felps, W., 2018. How applying instrumental stakeholder
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