HRM Challenges and Issues for New Managers in Australian Banks Report

This report provides a comprehensive analysis of the Australian banking system, focusing on the challenges and issues faced by new managers. It begins with an executive summary and an introduction that sets the scope of the report, followed by an overview of the history and features of Australian banking, including its key players and regulatory bodies. The report then delves into the current issues and challenges within the sector, such as ethical concerns, cultural issues, and leadership problems. A significant portion of the report is dedicated to HRM issues, including cultural diversity, leadership challenges, and workplace design concerns. The report also examines HR practices, including recruitment, reward systems, and performance management. It concludes with recommendations for addressing the identified challenges and a brief conclusion summarizing the key findings. The report highlights the importance of understanding the Australian banking environment and the need for new managers to navigate cultural differences and ethical considerations effectively.

Australian Banking
Report
MAY 4, 2019
Australia

EXECUTIVE SUMMARY
Banking system is the key part of any country’s economy. Australian banks also play an
important role in Australian banking system. Australian banking system depends on its four big
banks ANZ, CBA, NAB, and Westpac banking corporation. The Australian banking system
currently facing strong problems related to organizational culture and ethical issues. The
Australian government is taking various steps to reform the banking sector in the country. This
report analyses the current banking situation in Australia and what are the major challenges that
a new manager has to face in Australian banks. However, from last two years, large numbers of
Australian banks were under investigation. The Royal banking commission (or Hayne
commission) suggested some blunder changes in organizational culture and human resource
development in Australian banks. However, this report analyses the major Australian HR issues
and challenges that is normally face by a foreign manager. Diversity of culture and change
working conditions are some of the major issues. However, the role of leaders in banking
organization is still a problem and it was found that many top executives and leaders in banks
were also involve in corruption, fraud, bribery, and some other unethical problems. The present
work is an attempt to cover all these aspects and HR issues in Australian banking system with
some short overview and history paragraphs.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................1
1. Introduction..............................................................................................................................3
2. Body Paragraph...........................................................................................................................3
2.1 History & Overview of banking system of Australia................................................................3
2.2 The features of banking in Australia.........................................................................................5
2.3 Current issues and challenges in banking sector in Australia....................................................6
2.4 HRM issues for banking sector..................................................................................................7
2.5 HR Practices in Australian Banking system..............................................................................9
2.5.1 Recruitment process (How do they recruit people)............................................................9
2.5.2 Reward system....................................................................................................................9
2.5.3 Performance management...................................................................................................9
3. Recommendations..................................................................................................................10
4. Conclusion..............................................................................................................................10
References......................................................................................................................................11

1. Introduction
Baking sector in Australia is termed as one of the transparent and reliable sector. Australia
developed a competitive banking system in the country that consist of local banks, foreign banks,
and locally incorporates subsidiaries bank of overseas banks. This report helps to understand that
what are the major challenges and issues in Australian banks for a new foreign manager. This
report shows how a new manager will have to adjust with changing banking culture and
challenging issues. The report includes various features of Australian banks. This report is
beneficial to understand the human resource management issues and challenges in banking
sector. It also helps to understand that how a new manager in Australia will face such issues. The
purpose of this report is to find out HR issues and different challenges that a new manager will
have to face in Australian.
2. Body Paragraph
2.1 History & Overview of banking system of Australia
The first bank of Australia was New South Wales Bank, which was open in 1817 in Sydney.
Although the ANZ bank of Australia was also opened in 1835 in London under the name of
Bank of Australasia (Brown, 2018). However, todays many banks are entering in Australian
banking sector and some of the banks merges with top four Australian Banks. These four famous
banks are as follow:
1. Commonwealth Bank of Australia has more than 17 million customers and it is ranked
one bank in Australia by Bloomberg rating.
2. Australian and New Zealand Banking Groups (ANZ) has more than 8 million customers
and it secured rank 7 by Bloomberg rating.
3. Westpac Banking Cooperation has more than 13 million customers and it has secured
rank four banks in Australia by Bloomberg rating.

4. National Australia Bank (NAB) has more than 9 million customers.
The top four leaders of Australian banking system control the major financial market and
the remaining small retail banks (such as Bank of Melbourne, Adelaide Bank, Bank of
Queensland etc.) share a small part in the Australian market. However, the banking concept of
retail banking and investment banking in Australia is increasingly become unclear (Reserve
Bank of Australia, 2018). The Australian government now focuses on privatization of banks, The
Australian government and Reserve Bank of Australia allows foreign banks to enter in
Australian retail banking sector and provide wider range of banking and financial services. The
Australian government also permits the outside banks or non-Australian banks to open branches
in Australia to serve the Australian wholesale market (Fernández, 2019).
The monetary policy of Australian is control and monitored by the Reserve Bank of
Australia, which also regulates the payment system in the country. Apart from this, APRA (The
Australian Prudential Regulation Authority) monitor the issues of oversees banks, finance and
insurance companies, private health insurance friendly societies, and reinsurance companies.
APRA is responsible for managing funds worth USD 3.7 trillions of various financial
organizations, Australian depositors and bank investors, and other superannuation fund members
of Australia (Noe, Hollenbeck, Gerhart, & Wright, 2017).

2.2 The features of banking in Australia
These are some major features of Australian banking systems:
1. Australian banks are the largest part of Australian financial system which are authorised
deposit taking institutions (ADIs) that holds more than 55% of the total assets of
Australian financial institutions (as at the September quarter 2017).
2. The numbers of Australian domestic banks are increasing every day because some small
unions and credit societies convert themselves as the mutual banks.
3. The top four major banks of Australia hold almost 75% of total assets, which is held by
Australia.
4. ADIs hold $4.6 trillion capital, which is more than two times higher than Australian
nominal economy ($1.8 trillion) (Otoo, 2019).

(Source: APRA, 2019)
5. Banks provide loans and funds to individual peoples, small-scale industries, and even it
provides loan for large business organisation. Banks also provides loan for agriculture to
various farmers in rural areas. Apart from this, bank offers various product and services
such as insurance, home loans, term deposits, health insurance, education, credit cards,
personal loans, SME banking, internet banking services, agriculture, loan, and other
financial help etc. (Aldrich, Dietz, Clark, & Hamilton, 2015).
2.3 Current issues and challenges in banking sector in
Australia
The Hayne Royal Commission included in its report that the top executives and owners
of bank were involved in frauds and unethical practices in Australia. The Commission also
included in the repot that the role of top four banks of Australia in this fraud is also unavoidable.
The Hayne commission also mentioned the role of financial service giant AMP, which was also
involved in such frauds and unethical practices (Brown, 2018). For example, banks are suffering
from high NPA and low liquidity problems and it might be a big problem for a new manager to
solve this type of issues. The manager of a new country will also influenced by big four major
banks and by their operations.

For example, the big four banks of Australia share the 75% of banking sector in Australia
while the other small banks are fighting for increasing their market share and this means they
directly affect the business of other banks. The profitability of other small banks is also affected
by the other foreign and oversees banks, building societies, foreign subsidiaries branches, and
small financial institutions that provide loans to individual and small organizations (Maheshwari,
Gunesh, Lodorfos, & Konstantopoulou, 2017). However, it is considerable in mortgages that
very small number of mortgages in arrears in Australia according to Standard and Poor’s. For
example, it is also considerable that 80% of loans distributed in small-scale industries and tom
mange these funds and loans, a new manager should learn about the SMEs and business
operations. A new manager should also understand how bank failed to collect interest amount on
loans. This is a major challenged for a new manager in Australian banks. A relief for new
manager is only that past due loans are increasing very slow rate as it is increasing 0.5% every
year.
2.4 HRM issues for banking sector
Human resource management (HRM) is an important part of banking sector. However,
the human resource issues in service industries, especially in banking sector are a major problem
in Australia. Banking services has been and always be a “people business”. Therefore, quality of
service and pricing is an important factor for people. The top HRM issues in banking sector
related to Culture, leadership, engagement.

Cultural Issue: Culture is one of the key issues in Australian banking sector and it is
almost prevail in all industries. However, in banking sector culture plays an important role as
organizational diversity is directly related to culture. Changes in working ways and expectation
of change in baking organization are also part of organization culture. For example, people in
organization always fear to accept changes and it is major for a manager to motivate and
encourage people in the banks (Reserve Bank of Australia, 2018).
The Australian banking sector has a culture to adopt changes on frequent basis and if
people are not accepting the changes, the banking organization might be failure in future. Apart
from, this managing diversity in banking organization is also a problem when banks will have to
operate their business operation in overseas. For example, a new manager has to balance
coordination between their home working culture and Australian working culture. Another
example of cultural issue is that people in Australia not desperate to work overtime, while a new
manager if comes from France or China, may believe in extra work (Cooper, Wang, Bartram, &
Cooke, 2019).
Leadership Issues: According to the repot of The Banking Royal commission, the
people holds top position in the organization were involved in taking bribes and were also
involved in unethical practices. However, in such case it is difficult for a new manager to
establish a good relationship with top leaders of the organization. An honest manager should
focus on honesty and if he found anything unethical in the bank, he/she should complaint the
problem to top authorities. Establishing leadership in such scenario is a great challenge for a new
manager.
Cost and workplace design: Another major issue in Australian banking sector is ‘cost
and workplace design’. A new manager in Australia might have to face difficulties in adjusting
his working time or even manger have to face problems related to the office temperature
adjustment. However, a good example of change in working culture is that people who are
working in banking sectors have complained that they cannot manager their work because of
poor organization culture and poor workplace design. Thus, people are facing issue related to
change in workplace as people faces many transfers in same organization from one department to
another department (Tomasic, 2018).

2.5 HR Practices in Australian Banking system
Australian banks are known for their best HR practices in the banking organization. The
Australian banking sector follows equity and diversity principles in the recruitment policy.
2.5.1 Recruitment process (How do they recruit people)
Australian banking organization are hiring people from all areas including rural and
urban. The Australian banking system focuses on hiring best quality candidate for its job and
provides best salary and remuneration package to the employees. The top four banks in Australia
are known for its best human resource practices. However, the Australian banking organizations
are providing equal employment opportunities for all current and potential employees based on
their caliber and ability to performance (Reserve Bank of Australia, 2018). The banking
organization in Australia are fostering the inclusion of women, various age group peoples,
diverse culture background, Indigenous and non-Indigenous Australians and LGBT employees
within the organization. Training and development programs are the regular part of Australian
Banking system as it develops future leaders in order to increase the diversity of people who hold
top positions in the origination (Boxall, Bainbridge, & Frenkel, 2018).
2.5.2 Reward system
The Australian banks provide a transparent reward and remuneration system that is based
on merit and top performance. The Australian banks also discourage any policies or practices
that promote gender inequality in remuneration or in reward system. However, the salary of
banking CEO is very high in Australian banks, while the salary of staff is comparatively low and
not as per the work standards and value. A foreign manager has to deal with such situation when
employees and staff are facing un-satisfaction with the system and their remuneration. The
Banks in Australia does not provide competitive salary to its employees and even the increment
in the salary is not based on performance. These reward process in banks create a new manager
to motivate people in the organization. Every employee should paid proper salary and wages
according to their work value. The new anger in the company should look after this matter and
set a standard among value of work, skills requirement, and remuneration.

3. Royal commission Report and Political and Industrial
Responses
Banking sector in Australia are currently facing problems related to ethics and fraud. One
month before, the Australia Royal Commission (which was investigating the banking frauds and
ethical issues in Australia) released its final report. In that report, the top officers of Royal
commission stated that banks are involved in various unethical practices such as they are
charging fees for no services, inappropriately utilizing and misusing the investment funds of
people, provide irrelevant and false information to regulatory authorities and government bodies
etc. (Wishart & Wardrop, 2018).
Respond of Federal and Opposition Federal Party: Federal government of Australia
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. The opposition party also supports the decision of federal
government and asks for a strict law against these type of banking corruption.
Respond of Banking Industry: Banking industry is now focusing on the 76
recommendations of Royal commission and trying to improve its organizational culture.
Effect on Employment: The unethical practices of Australian government destroy its
image among the country people. The recommendation of royal commission will help to create
new employment opportunities and building image of banks.
3. Recommendations
The major problem in Australian banking system is managing culture in the organization. A
well-designed workplace culture is necessary to manage work of organizational people. Apart
from this, from last few months Australian banks were under investigation for their frauds and
unethical practices. The Banking royal commission included in its final report that banks need to
be some strong reforms in its culture and ethical practices. Australian banking is known for their
human resource practices, but banks should focus on employee’s commitment towards the
organization (Huang, Perales, & Western, 2019). Here are the few recommendations for a new
bank manager in Australia:

1. Do not tolerate any frauds, bribery, or misbehaviour of banking staff or person in the
organisation.
2. A new manager should deal with different people with different culture and diversity.
Manager should personally interact with every one and know about the person and about
their experience.
3. Promoting positive and ethical workplace culture should be the first priority of any
manager, as the Australian banks are facing strong blames for unethical practices.
4. Relationship with top leaders is a major concern. An honest manager should never
tolerate any unethical practices of top executives and should complaint about him/her to
responsible authorities.
5. Australian banking sector is known for their equality in HR programs and practices, but a
strong need of cultural development is still required in the banks. A foreign manger
should focus on these aspects.
4. Conclusion
In conclusion, the Australian banking system needs a major transform in its human resource
management. The policies related to organizational culture and ethical concerns are still
challenge for the banking organization. Banks should stop these things by promoting ethical
practices in the organization and should promote better organizational environment, thus no one
involve in any unethical practices. The banks should also take strict actions against those top
executives of the organization who are involved in any corruption or unethical practices in the
organization. The bank should also involve these things in training and development programs
that promote best organizational culture and job commitment among the current and potential
employees.