Cultural Change at the Commonwealth Bank of Australia - Samples

Questions: 1.An overview of the stakeholder trust crisis experienced by CBA with one to two illustrative examples? 2.Implications for business and human resource of the transformation of corporate culture from shareholder value to stakeholder value? Answers: 1. There are instances when Commonwealth Bank (CBA) had been in news for various kind of stakeholder trust crisis. One of such instances is of criminal gangs and money launderers who had illegally accessed the banks intellectual teller machines (Ryan, 2018). The consequence of the incident was a strict action from the bank's chairman Catherine Livingstone who had announced that bonuses for executives would be cut to zero (Ryan, 2018). According to Hrisch, Freeman Schaltegger (2014), the purpose of business should strictly be aligned to satisfy the trust of stakeholders, not just the shareholders. A business needs to be benefitting the customers, employees, suppliers and the shareholders. This also means that both stakeholders and shareholders need to be given utmost importance. This is only possible when the business organizations give the utmost significance to ethical practices. Alienation of such practices with corporate social responsibility: It appears as if the Commonwealth Bank (CBA) has in a way violated the corporate social responsibility (CSR). According to the corporate social responsibility (CSR), it is necessary that the business maintains a balance between the economic, legal, philanthropic and ethical responsibilities (Cha, Yi Bagozzi, 2016). The identified case seems to have violated the ethical responsibilities or else the money launderers and the criminal gangs could not have access to the bank's intellectual property. According to the CSR principle, a business should utterly meet the ethical standards which it committees to fulfill. Customer builds up a perception that they will be getting a specific kind of service from their target business. This is why it is necessary for a business to be ethically oriented or else customer will lose their trust in the employer (Story Neves, 2015). In case of CBA, the incident that has been highlighted does not at all look like as if it had just happened. It probably appears as if being planned which may or may not have the executives involved in the incident. However, allegations made on them just prove that they are under surveillance of both the bank and its customers. The announcement that the chairman had made regarding the bonus cut apparently reveals a desperate repair from the bank (Ryan, 2018). They are trying every possible step to repair the damages that have badly been done; however, time will only tell how much such strategies were helpful for the bank in winning back the trust of its stakeholders. Time will also prove whether the announcement was sufficient enough for the identified issue. The crisis at the CBA can also be aligned with the stakeholder management theory that identifies the business as satisfactorily fulfilling the interconnected needs of different stakeholders (Tantalo Priem, 2016). In the incident that has happened at the CBA, customers might find this as a violation of their values because they might distrust their security with their provider. On the other hand, employees may also feel as to being wrongly penalized if they were not the part of the highlighted crisis. Both the circumstances are in violation of stakeholder management concept. 2. Relying much on shareholders as in case of Commonwealth Bank (CBA) is a traditional thought process whereas concerning stakeholder approach is a modern way of thinking which is believed as highly suitable for a sustained business practice. By adopting the stakeholder approach, long-term value creation could be created. There are evident differences between the shareholder and the stakeholder approach. By being through the differences, the fact becomes much clearer. One of such differences is the thought process which is narrow in case of a shareholder approach while in case of stakeholder approach, the thought process is sustainable and is competitive (Fernando Lawrence, 2014). As stated in the question, if the Commonwealth Bank (CBA) transforms from shareholder to stakeholder approach then it would produce following implications for the business and thehuman resource management (HRM): Business- The business will become much more competitive and sustainability will be in the picture. The operation will be an evaluation based rather than just the operation. There will be efficient value system across the whole value-chain including also the external stakeholders (Tantalo Priem, 2016). Interestingly, management then will not be making quick decisions as they have been identified in the escalated incident in the aforesaid sections (Fichman, Nambisan Halpern, 2014). They will be rather more cautious before making any bold decision, so that, no hampers are done to the reputation. People who give importance to organizational values will then be highly preferred (Okdinawati, Simatupang Sunitiyoso, 2015). Moreover, the bottom-line focal point will be on creating values. Business success is in fact what is being created for the stakeholders, not just shareholders (Okdinawati, Simatupang Sunitiyoso, 2015). HRM- The transformation will encourage the HRM to focus on rewarding employees who create values for the organization. Employees, when motivated, will do their best work. The HRM will require identifying the different ways of motivating the employees. The HRM will be required to have a widened focus on imparting training to employees, so that; they add values to the operation. The human resource management will also be required to design policies, so that, ethical standards are maintained and so, the organizational values (Sinkovics, Sinkovics Yamin, 2014). Suggestions for advancing an ethical corporate culture: There could be a handful of suggestions for the incoming CEO of Commonwealth Bank (CBA). As understood from the facts presented by Grace Lo Iacono (2015), the incoming CEO needs to align its principles and values to its managers, senior executives, and employees. It means that the CEO would need to focus on defining the ethical principles under the guidelines of institutional thoughts on ethical behavior. It further means that if the incoming CEO fails to align its principles and values with its key constitutional values then there might be a setback. The setback would result in fewer values being produced which are never feasible with the shareholder approach being transformed into stakeholder approach. References: Cha, M. K., Yi, Y., Bagozzi, R. 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