MGT60031 Swinburne: Managing Complexity at Commonwealth Bank

This essay examines the challenges faced by managers at the Commonwealth Bank of Australia (CBA) in navigating a complex business environment influenced by government regulations and internal organizational dynamics. It discusses the impact of the Australian government's regulatory interventions, particularly the Banking Royal Commission, on the bank's operations and profitability. The essay further analyzes the managerial functions within CBA, drawing upon Henri Fayol's five principles of management—planning, organizing, commanding, coordinating, and controlling—to assess how managers can effectively address organizational issues and strategically position the bank for future growth amidst increasing complexity and regulatory scrutiny. The report concludes that Fayol’s five principles of management is considered to be the best possible solution for CBA to mitigate its expense issue and balance the revenue effectively with the help of the managerial decision making.

Running Head:MANAGING IN A COMPLEX WORLD
MANAGING IN A COMPLEX WORLD
Name of the Student:
Name of University:
Author Note:

1MANAGING IN A COMPLEX WORLD
Introduction
Commonwealth Bank of Australian is considered to be one of the leading banking and
finance company in Australia. This public bank has more than 1000 branches with over 4300
ATMs. As per the report of Chalmers and Worthington (2019), in 2017 the organisation
collected a revenue of AU$26 billion. Based on this understanding, it can be argued that
Commonwealth Bank shared a huge market capitalisation in Australia. However, the
organisation faced severe issues like money laundering, bank fraudulence and so on. Amidst of
the severe issues regarding bank fraudulence and money laundering issues, it became a serious
threat to the Australian government to take adequate measures in order to prevent further bank
frauds and money laundering issues. In this context, this report is going to discuss, the role of the
government in influencing the banking business activities and the way it affects the managerial
role in Commonwealth Bank of Australia.
Discussion
Government and regulation
As per the government regulation in Australia, it became an important aspect to deal with
the growing illegal banking business in the country. As a result of that the advisory committee of
the government suggested a separate body to investigate misconduct in banking, superannuation
and the financial service industry. The Banking Royal Commission was set up in this context in
2017. However, the Australian financial regulation was monitored and controlled by two
separate bodies that already enacted a number of measures to prevent further illegal activities in
Australia. The Australian Securities and Investments Commission (ASIC) and Australian

2MANAGING IN A COMPLEX WORLD
Prudential Regulatory Authority (APRA) were the principle regulatory bodies entitled to create
transparent regulatory framework for the banking and financial transaction all over the country
(Howell 2015, p. 544).
ASIC has the responsibility to integrate the market and the consumer protection and
regulation of investment banks and financial companies. In this regard, ASIC also introduced an
autonomous function in the name of External Dispute Resolution schemes (EDRs) (Cummings
and Durrani 2016, p. 32). Based on this there are basically two EDRs that are currently activated
in Australia in terms of the Financial Ombudsman Service and the Credit and Investment
Ombudsman. Both the body are non-governmental not for profit organisations funded by banks
and financial advisers.
On the other hand, APRA is a governing body with the purpose to provide licensing and
prudential service facility of Authorised Deposit-taking Institutions (ADIs), insurance companies
and the superannuation funds (Salim, Arjomandi and Seufert 2016, p. 121). All the listed
countries have to report to APRA on a periodic basis and APRA is also responsible to set
guidelines for the banking and financial organisations who are neither licensed nor regulated
under the Banking Act. Moreover, both of those autonomous governing bodies are also
connected with the Australian Competitor and Consumer Commission (ACCC) in order to
provide better transaction environment in the banking and finance sector of Australia (Liu 2015,
p. 433).
Despite of such rigorous and detailed regulatory structure and responsible organisations
that are entitled to provide effective environment for banking, the Royal Banking Commission
was came in permanence. The draconian advices and regulatory advices of the Royal Banking

3MANAGING IN A COMPLEX WORLD
Commission created huge problem for the banking and financial institutions (Ellis, Haldane and
Moshirian 2014, p. 176). In this context, it can be stated that as APRA is funded by the banking
and financial organisations that cost became hiked due to the introduction of Royal Banking
Commission. It affected the cost effectiveness of the Banks and in such a consequence the
banking institutions started cut off jobs over the year. As per the report of Salim, R., Arjomandi,
A. and Seufert (2016) it can be seen that there are more than 40,000 employees terminated due to
the cost increase but it is not enough to balance the revenue of Commonwealth Bank. It also puts
pressure on the profitability of banks especially the leading ones like Commonwealth Bank of
Australia.
Managerial functions
In order to understand, the managerial functions it is important to understand the five
functions of management model by Henri Fayol. Based on the Fayol’s theory, there are five
principle elements to make an effective management set up in terms of planning, organising,
commanding, coordinating and controlling.
Planning
According to Khorasani, S.T. and Almasifard (2017) planning is one of the important part
of the management to set out for the right path. In this regard, it is important for a manager in a
banking sector to figure out the potential opportunities of establishing better market
capitalisation. The process is highly essential in terms of making an effective measure in order to
sustain in the competitive market. As the Australian market is highly competitive and cutting off
jobs is not the ultimate solution therefore the manager must focus on an effective alternative. In
this regard, the alternative can be identified in terms of expanding the business. The marketing

4MANAGING IN A COMPLEX WORLD
team with the managers must conduct an in-depth research on the market opportunities and get
clear perception regarding the best market to expand the business.
Organising
Planning is not the ultimate task for the manager in order to mitigate the dire situation. It
is also associated with organising or planning the entire process by constructing a proper and
efficient team. In addition to this, it is also associated with the practice of managing the team
efficiently in order to get the expected outcome. From the research of Witzel, M. and Warner
(2015) it can be stated that the role of the manager is to run a smooth and effective team structure
that is intertwined with the organisational objectives. Good division of function with detailed
structure is relevant in this regard that connotes the effectiveness of the team effort and helps the
organisation to expand both horizontally and vertically. Based on this understating, the manager
of Commonwealth Bank of Australia should also put a deep emphasis on the leadership quality
as B. Dent and Bozeman (2014) argued that for a better team effort it requires better leadership
ability. The Contingency theory of leadership is highly relevant and pragmatic in this regard. As
per the contingency theory, the high adaptive ability and understanding the capability of the team
members is referred to be the best resort for a team leader. Therefore, the manager in
Commonwealth Bank of Australia should focus on the same concept.
Commanding
As per the research of B. Dent and Bozeman (2014) it can be identified that there are
some effective measures that can contribute to the success of a manager. In this regard, the
special elements are integrity, communication and the decision on regular audits are the major
contributing factors for making effective commanding ability. In this regard, Kitana (2016)
ascribed that keeping focus on the verbal and informal communications are highly effective in

5MANAGING IN A COMPLEX WORLD
this regard coupled with the motivational initiative of the leader. As far as the scenario of
Commonwealth Bank is concerned, the role of the manger is highly associated with the practice
of motivating the employees to analyse the market in one hand and guiding them to set on the
right path on the other. As a result of that it becomes effective for the manager to manager the
team effectively.
Coordinating
Besides this, coordination is also identified as a key factor for the team leader to prepare
the team effectively and function better. It is resembled with the practice of harmonise and
procuring positive influence to the employees so that they can get motivated and disciplined in
an effective manner. For the manager of Commonwealth Bank of Australia, it is also essential to
communicate, coordinate and control the team so that it can be considered an important player
for expanding the business further (Kitana 2016, p. 16). Besides this, it is also significant to
know that the role of the CBA manager is to encompass different techniques to coordinate a
diverse workforce effectively.
Controlling
As per the theory, the final and essential part is associated with controlling the entire
team. This is the most crucial part because the entire success factor of the organisation is vested
on the effectiveness of controlling. Therefore, the managers must have clear idea regarding the
importance of the task and carries out effective measure in order to get expected outcome (Haque
and Rehman 2014, p. 261). Henceforth, the manager in Commonwealth Bank of Australia should
also deal with controlling the entire team and monitor the activities of individual team member
so that he can find out any flaw within the system.

6MANAGING IN A COMPLEX WORLD
Conclusion
From the above discussion, it can be claimed that the external environment in terms of
the government interference or regulatory intervention has a great deal of impact over the healthy
business environment of an organisation. In this context, the Commonwealth Bank of Australia
also faces the same threat as the additional initiative by the Australian government in terms of
implementing the Royal Banking Commission increases the expenses for business. Therefore, a
proper contingency plan should be taken by the manager in order to generate strategic advantage
for further business orientation. Henceforth, Fayol’s five principles of management is considered
to be the bbest possible solution for CBA to mitigate its expense issue and balance the revenue
effectively with the help of the managerial decision making. The five principles provides a clear
layout about the responsibilities of a manager to expand the business of CBA effectively. From
that point of view, it can be concluded that the report is highly effective and pragmatic enough to
understand the managerial role to mitigate organisational issues effectively.

7MANAGING IN A COMPLEX WORLD
Reference
B. Dent, E. & Bozeman, P., 2014. Discovering the foundational philosophies, practices, and
influences of modern management theory. Journal of Management History, 20(2), pp.145-163.
Chalmers, S. & Worthington, B. 2019. Banking royal commission calls for compensation,
crackdowns and an overhaul of financial regulators, Viewed 16 March 2019,
<https://www.abc.net.au/news/2019-02-04/banking-royal-commission-report-at-a-glance/
10777188>.
Cummings, J.R. & Durrani, K.J., 2016. Effect of the Basel Accord capital requirements on the
loan-loss provisioning practices of Australian banks. Journal of Banking & Finance, 67, pp.23-
36.
Ellis, L., Haldane, A. & Moshirian, F., 2014. Systemic risk, governance and global financial
stability. Journal of Banking & Finance, 45, pp.175-181.
Haque, S. & Rehman, N., 2014. Modern organization theory: analyzing the complexity of
coordination and cooperation in the modern organizations. International Journal of Management
and sustainability, 3(5), p.261.
Howell, N.J., 2015. Revisiting the Australian code of banking practice: is self-regulation still
relevant for improving consumer protection standards. UNSWLJ, 38, p.544.
Khorasani, S.T. & Almasifard, M., 2017. Evolution of management theory within 20 century: A
systemic overview of paradigm shifts in management. International Review of Management and
Marketing, 7(3), pp.134-137.

8MANAGING IN A COMPLEX WORLD
Kitana, A., 2016. Overview of the managerial thoughts and theories from the history: Classical
management theory to modern management theory. Indian Journal of Management
Science, 6(1), p.16.
Liu, H., 2015. Constructing the GFC: Australian banking leaders during the financial
‘crisis’. Leadership, 11(4), pp.424-450.
Salim, R., Arjomandi, A. & Seufert, J.H., 2016. Does corporate governance affect Australian
banks' performance?. Journal of International Financial Markets, Institutions and Money, 43,
pp.113-125.
Salim, R., Arjomandi, A. & Seufert, J.H., 2016. Does corporate governance affect Australian
banks' performance?. Journal of International Financial Markets, Institutions and Money, 43,
pp.113-125.
Witzel, M. & Warner, M., 2015. Taylorism revisited: Culture, management theory and
paradigm-shift. Journal of General Management, 40(3), pp.55-70.