Introduction
The Commonwealth Bank of Australia (CBA) is one of the leading banking institutions of Australia. It not only has a strong established roots in Australia, its business operations are also scattered to neighbouring New Zealand and also the United States, the United Kingdom, and also across different Asian countries. The bank by focusing on its core market has been working continuously on improving its business operations and customer services by incorporating changes into its organisational structure. There are about 17 million customers served by the bank across the world. Among those, about 7 million are the one who are termed as digital customers. The ATM network of the bank is the largest one in Australia. There are about 50 thousand people working for the bank. Majority of the work force is from Australia while, there are employees from 15 different countries. Moreover, the bank earned a profit of about 9,000 million during last year (Commonwealth Bank of Australia , 2019).
From gender equality perspective, the bank has around 45 percent women employees at managerial positions. To have positive working environment the bank offers flexible working options to its employees with variety of employment contracts. As for as the shareholders are concerned, the bank has majority of stakeholders from Australia and they enjoy about 80 percent of the net cash profit returns. From the operations perspective, according to Catherine Livingstone, chairman of the bank the last year was a challenging one to the organisation. Recently, a penalty of about 700 million was imposed by AUSTRAC (Australian Transaction Reports and Analysis Centre) on the bank. She understands that the penalty imposed on the bank due to compliance issue, there is compromised situation regarding market confidence on the bank. The penalty imposed on the bank points out that there are certainly issues with the bank from organisational behaviour and leadership perspective (Commonwealth Bank of Australia , 2019).
It is understood that overall outcomes of an organisation are influenced due to organisational behaviour and also the decisions made by its leadership; therefore, the practices of the organisation are reflection of organisational behaviour and leadership of the organisation (Ahmad, 2010). As a whole, this report will focus on the bank from organisational behaviour and leadership perspective. Specifically, this report is divided into five main sections. Following section will describe and analyse the organisational behaviour in the bank. It is followed by literature review related to issues identified in the bank. The next section will evaluate possible alternatives to address the situation. Second last section will be consisted on recommendations to the bank. At the end of the report, the analysis will be summarized under conclusion section.
- Organisational Behaviour or Leadership Issue
For the time being, CBA is going through a rough time period because, AUSTRAC has accused the bank of money laundering. The bank also witnessed a public inquiry by the Royal Commission that lasted for a year. The bank also have to face an inquiry from APRA (Australian Prudential Regulation Authority). The focus of the inquiry is related to governance, accountability, and culture prevailing in the bank. The scandals lead to appointment of a new CEO, Matt Comyn who is an insider and working for the bank for last 19 years (Commonwealth Bank of Australia , 2019).
The new CEO is facing a tall task of addressing a large number of breaches in the banking transactions related to anti-terrorism and money laundering laws. The change in the leadership in the bank took place when AUSTRAC accused the bank of money laundering and the previous CEO, Ian Narev decided to retire. The change in the CEO has further damaged the reputation of the bank which was already jeopardised due to the breaching of the serious laws. The appointment of an insider as the new CEO is aimed at mitigating shareholders’ concerns. The new CEO has two tall tasks to address; one, address inquires and second, rebuild bank’s brand image. The CEO is also facing another challenge of addressing disruption caused by technology in the businesses operating in Australia. Moreover, the bank has enjoyed margins and profits from housing boom for many years and the new CEO will have to end this boom and dependence also. The bank also have to clear frauds amounting to about 625 million (Commonwealth Bank of Australia , 2019).
To address above mentioned challenges, the CEO will have to incorporate changes into the organisational structure and culture of the bank but, it would require very serious efforts and effective strategic decisions. The approach adopted by the new CEO is to collectively approach towards addressing the accusations and the court cases (Dalakoura, 2010). The leadership style and approach has been appreciated by the board of the bank as supported by the chairman. She understands that the leadership style adopted by the CEO is very effective and will help in the defence of the bank during AUSTRAC’s proceedings (Commonwealth Bank of Australia , 2019).
Recently, Sydney Morning Herald published reports regarding leadership and activities of the CEO which suggest substantial changes in organisational structure of the bank. The reports substantiated as the bank released three top executives which included technological, institutional, and HR executives. However, after the release the bank now faces the challenge of recruiting suitable candidates for the vacant posts as well as for the post of head of retail banking (Yeates, 2019). - Literature Review
It is evident from the previous section that the bank is facing issues related to organisational behaviour and leadership. To address the issues, there is need to review related literature. Let’s have a limited related review to extract possible solutions to address the issues.
Classical theory
Industrial Revolution lead to businesses’ expansion across the world. The era lead to development of the classical theory. The theory doesn’t focuses on the employees’ well-being rather, it focuses on improving efficiency and productivity of a business (Nam Nguyen, 2011). Indeed, classical theory is a mixture of bureaucratic, administrative, and scientific management theories. According to classical theory, the prevalence of a clear hierarchal structure leads towards a bureaucratic organisation. However, if an organisation such as CBA adopts this theory then the organisation will become an organisation with impersonal relationship, rigidity, and fixation of rules like the organsations which adopted the theory (Robbins, 2013).
The bureaucratic organisational behaviour’s drawbacks in current business practices were identified by Ahmad (2010). They reflected upon the negative effects of impersonal, mechanical, and rigid management structure to organisational efficiency. They highlighted that bureaucratic organisational structure leads towards lack of interpersonal communication and coordination among employees that ultimately leads towards slow down of productivity. On the other hand, it is argued by Robbins (2013) that application of bureaucratic organisational structure can be beneficial to large organisations with no change expected in the organisation for upcoming few years. Moreover, it is stressed by the author that there would be no employee capability exploitation irrespective of not meeting employees’ needs.
Scientific management theory
The main focus of the theory is on employee performance. Under the theory, the performance of the employees is evaluated as per established competencies and productivity. The theory stresses upon focusing on four principles. First, dictating on a defined working approach. Second, scientific evaluation of performance and identification of any training gaps. Third, focusing on development of team building with effective cooperation to meet organisational objectives. Last but not the least, focus on equitable division of labour (Suppiah, 2011).
Despite the benefits of the theory, it was criticized by Robbins (2013) owing to the fact that it requires excessive control of management and capital. The main drawback identified in the theory is lack of space for creativity and analysis of issues such as the serious situation faced by CBA at the moment.
Neo-Classical theory
This theory recommends another type of organisational behaviour management and leadership. Its main focus is on management practices’ behavioural aspects. This theory stresses that it is not enough to just focus on technical issues in organisational behaviour rather, it is important to focus on economic and social aspects of the behaviour. However, it stresses that there is need to address both formal and informal aspects before the theory is implemented. The theory highly stresses to focus on human motivational and relationship needs. Overall, the theory requires to focus human relations, coordination, labour division, and departmentalisation. This theory is supported by Robbins (2013) by stating that it is essential to have interactions between different departments of an organisation to develop a positive organisational behaviour.
Administrative Theory
All the organisational theory components are combined under this theory. It stresses upon management principles which are applicable universally. Henri Fayol believed that human and behavioural factors within an organisation are seriously important for effective organisational management (Al-sharafi, 2013). The theory focuses on minimising time to complete a process by making improvement in employee efficiency and structure of management. The theorist believed that minimisation f time to complete a process will help in meeting organisational objectives quickly. In the current situation of CBA, the theory fits more relevant. According to the theory, effective management of organisation behaviour gives space to the managers to make changes and organised supervision that ultimately leads towards improved organisational productivity (Jenkins, 2015).
Robbins was in favour of the theory as they considered administrative theory better than the previous scientific management theory. He argued that the administrative theory leads towards improved management practices and gives space to adopt newer practices which are very important for CBA in current situation. It will help organisations such as CBA to improve current management processes, solidify process of standardised work, and also will promote better work culture. - Alternative Solutions
Issue
Currently, the main issue faced by the bank is to rebuild its brand image that is seriously damaged due to the scandals. The limited related literature review results in lack of any suitable framework to the bank to tackle its current issues such as rebuilding its brand image. Therefore, there is need to explore modern management practices to provide alternative solutions to the bank to tackle its issues.
Operational research
To change organisational culture and behaviour in CBA, it would be useful for the bank to conduct research into its current operations. The business administration in the bank that is a complex problem, it can be converted into a mathematical problem with defined organisational behaviour and goals. The research will identify and incorporate into a mathematical expression the variables which disrupt the organisational behaviour. The mathematical expression will analyse relationship between different variables and organisational behaviour and identify the variables responsible for problem in the organisational behaviour of the bank (Huhtala, 2013). To predict possible issues, probability will be used; accordingly, management practices will be adopted. This technique will help the bank in gaining insights into the problems in the operations and providing solutions to the bank. The technique will help in identification of possible problems with allocation of tasks, employee selection, promotion, and retirement of employees as well to improve overall organisation behaviour at the bank.
System approach of management
The organisational departments’ components are interrelated under this theory. Therefore, while incorporating changes into organisation behaviour, it is important to consider all aspects of a business. This approach will be useful for CBA as this approach stresses upon dealing business practices in each department separately. Under this approach, CBA will have to operate as open business enterprise with welcome to appropriate change by considering change in business environment (Larsson, 2010).
IT and computation technology
Computational systems of today are very powerful. They are able to simulate a business process. This technology is useful in identification of a problem and then working on the problem to generate possible solutions. Researchers have developed a solution to tackle organisational behaviour and leadership related issues. It is termed as Computational Organisation Theory (COT). It helps in study of human behaviour in an organisation such as CBA (Martin, 2012). It is fact that organisations such as CBA are heavily dependent on humans for their success and the humans are subject to constant learning. They acquire knowledge and information and incorporate changes into their behaviour accordingly. This technique can be useful for CBA to collect data related to behaviour of the humans in the organisation and get insights to ultimately improve organisational behaviour as a whole that will help in rebuilding its brand (Martin, 2012).
Contingency theory
It is another alternative that can be adopted by CBA to address its current issues especially, rebuilding its brand. Under this solution, there will be focus on leadership and management style in the organisation. To address the issue of accusations, rebuilding brand and ensuring stakeholders’ trust would require multitude of strategies. There is need of organisational behaviour change by considering internal as well as external factors in the bank. The new CEO has already accepted the situation and is collectively working on it to address the issues. However, the main focus of the CEO must be on gaining customers’ trust. By considering the volatile nature of the banking industry, it is important for the CEO to not depend on a particular management and leadership strategy. The contingency theory is best recommended to the bank as it allows to adopt change and not depending on any particular management and leadership style (Martin, 2012). - Recommendations
In the current situation, CBA requires a serious change in its organisation behaviour. Substantial change can have serious implications to an organisation. Therefore, it is important to take decisions while considering changing internal and external business environment. The contingency leadership theory is best suited to CBA in its current serious situation. It will be very effective to the bank in managing all kinds of risks to the bank (Robbins, 2013).
Under this strategy, CBA will focus on specialized decision making where there will be need of a certain ability to make specialised decisions. In this way, it will help in minimising the time required to complete a decision, hence, it will not negatively affect overall organisational performance. This leadership style would not require the leadership and management to stick to a particular leadership or management style rather, they will adopt leadership style by considering the situation and assessing possible solutions to a particular problem. However, it is important to understand that there is difference between situational leadership and contingency leadership style. Situational leadership style adopts situations. On the other hand, the contingency style doesn’t adopts situations rather, it adopts impending change. Another positive of the contingency leadership style is that is not rigid to a particular leadership style (Martin, 2012).
Moreover, under the strategic contingency theory, there will be focus on efficiency of the leader rather, on the personality traits of a leader. This strategy also will be effective to CBA in its current challenging situation. This strategy also stresses upon the leaders and managers to adopt to a particular leadership or management style by considering needs of change to improve overall organisational behaviour (Robbins, 2013).
The contingency theory of Fiedler is really advantageous to CBA in the current situation. There is lot of literature available in the support of the theory. This theory helps in identification of capabilities of a leader and the situations where the capabilities will be utilised. Under this approach, there will be no single person responsible to take all decisions without taking inputs from the stakeholders. Rather, this approach has flexibility. Under a certain situation, a leader or manager would take input from all the stakeholders and will take final decisions by considering all the inputs and consulting with the people affected with the decision. This approach will motivate the people as they will consider themselves to be part of the organization as their inputs are valued. On the other hand, this technique will be really useful where extreme decisions are needed to be made related to a particular change. In this way, the process of change would be relatively smooth as the people will consider that they are the part of the change because they were included in the process of making decisions regarding the change. This aspect will be really helpful to CBA in the situations where it has to take decisions related to extreme decisions as the bank really needed to go through a serious change by considering its current situation (Martin, 2012). - Conclusion
The Commonwealth Bank of Australia (CBA) is one of the leading banking institutions of Australia. Currently, the main issue faced by the bank is to rebuild its brand image that is seriously damaged due to the scandals. The limited related literature review resulted in lack of any suitable framework to the bank to tackle its current issues such as rebuilding its brand image. However, the contingency theory of Fiedler is really advantageous to CBA in the current situation. Under this approach, there will be no single person responsible to take all decisions without taking inputs from the stakeholders. Rather, this approach has flexibility. Under a certain situation, a leader or manager would take input from all the stakeholders and will take final decisions by considering all the inputs and consulting with the people affected with the decision. This approach will motivate the people as they will consider themselves to be part of the organization as their inputs are valued. On the other hand, this technique will be really useful where extreme decisions are needed to be made related to a particular change. In this way, the process of change would be relatively smooth as the people will consider that they are the part of the change because they were included in the process of making decisions regarding the change. This aspect will be really helpful to CBA in the situations where it has to take decisions related to extreme decisions as the bank really needed to go through a serious change by considering its current situation.
References
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