Leadership And Culture Essay At Commonwealth Bank Of Australia Under Ian Narev's Tenure.

The essay concerns leadership and culture at the Commonwealth Bank of Australia during the tenure of Ian Narev, whose contract expired in June 2018. He was appointed in July 2011, and commenced in the role later that year. Over the subsequent seven years, the Bank has frequently been the subject of media scrutiny. Of note are three major scandals outlined below, which have not only received considerable public attention, but have resulted in questions being asked in parliament. These scandals have called into question the culture of CBA, the leadership style of Ian Narev; the competence of other senior leaders; and the decision-making capabilities of the Board.

Provided below are a series of links to media reports – print and broadcast – relating to the three major scandals to impact the Bank during Narev’s tenure.

Your essay should critically analyse Narev’s leadership and the broader leadership culture at Commonwealth Bank, and state the conclusions that you draw from your analysis.

The links below provide you with a start in your research; you should uncover other sources relating to the specific stories, and relating to leadership theory and practice. Illustrating your essay with comparisons drawn from other organisations would also be beneficial.

Note the comment about conclusions – you are being asked to state your opinion. The materials that you cite should support that opinion.

Your essay should NOT simply be a retelling of these scandals; the point of your essay is to examine the Bank’s leadership culture; the scandals are illustrations and symptoms of that culture.

Commonwealth Bank of Australia – links to media reports

Links to a series of stories regarding multiple scandals at the Commonwealth Bank:

• Money laundering

• Refusal to pay insurance policy holders

• Financial planning

www.abc.net.au/news/2017-08-11/asic-to-investigate-cba/8796542

www.abc.net.au/news/2017-09-04/commonwealth-bank-will-take-months-to-respond-toaustrac/8869706

www.abc.net.au/news/2017-08-07/commbank-response-to-money-laundering-allegationswoeful/8782316

https://internationalbanker.com/banking/commonwealth-bank-australia-midst-money-launderingscandal/

https://www.commbank.com.au/guidance/newsroom/Chairman-media-conference-transcript201708.html

http://www.smh.com.au/business/banking-and-finance/comminsure-scandal-to-hit-cba-brandagain-20160308-gndj4y.html

www.abc.net.au/news/2016-03-07/comminsure-scandal-whos-who-four-corners/7226576

http://www.smh.com.au/interactive/2016/comminsure-exposed/heart-attack/

http://www.smh.com.au/interactive/2016/comminsure-exposed/mental-health/

www.smh.com.au/interactive/2016/comminsure-exposed/terminal-illness/

www.abc.net.au/news/2014-07-03/commonwealth-bank-responds-to-financial-planninginquiry/5568504

www.abc.net.au/news/2015-10-28/cba-denying-compensation-to-victims-of-financialplanning/6892624

http://www.smh.com.au/business/banking-and-finance/victims-of-commonwealth-bank-financialplanning-scandal-and-consumer-group-choice-question-schemes-independence-and-reach20150120-12uncb.html

http://www.news.com.au/finance/business/banking/commonwealth-bank-ceo-ian-narevapologises-to-customers/news-story/496bdd1c966dbf8e1ff87f91d97b961d

http://www.smh.com.au/business/banking-and-finance/commonwealth-banks-ian-narev-fast-torise-but-slow-to-move-20140704-3bdug.html

Leadership analysis of Ian Narev

The Commonwealth Bank of Australia, one of the largest bank in Australia has come under the scrutiny of investigators in the periods since the joining of Ian Narev as the Chief Executive in 2011. There are plenty of laundering and unethical practices that the Commonwealth Bank of Australia has faced in the tenure of Ian Narev. It can be argued that at the time when Narev took the charge of the bank people thought that it would be a beneficial factor for the bank to pursue its business operations robustly and resolve the financial crisis that the Commonwealth Bank of Australia was facing before the coming of Narev (Adams et al. 2017). However, in 2014 the bank was alleged with a number of scandals in money laundering, financial planning and insurance policy. Therefore, the purpose of this essay is to point out the leadership quality of Narev and the leadership culture that the Bank is practiced. Moreover, the discussion is further developed with the broader leadership culture. For a better understanding the essay puts focus on the banking sector only to acknowledge the best leadership quality that has to be followed.

It can be argued that the leadership quality that Ian Narev was quite contradictory and was a question of biased mechanism. It was true that the entire scandals were not just an outcome of the ineffective leadership quality of Ian Narev rather the inability of his personality was considered to be an important cause behind those scandals and financial crisis. In this regard, the pertinent question arises regarding the effectiveness of the leadership quality of Ian Narev. In response to that it can be stated that the leadership quality of Narev has a close affinity with the characteristics of the Conviction leadership (Graham 2018). Conviction can be identified as a belief, idea or opinion that has an extensive impact on the success of the leaders. In other words, it can be opined that conviction is considered to be an essential aspect that can influence leadership and leads towards effectiveness and success. Without having conviction the leaders may appear to be uncertain, aimless and vague (Clinton 2018). According to Lee (2017) if leadership is a vehicle for change then conviction can be identified as the battery to propel the vehicle forward. Therefore, conviction is identified as a threshold level that is coupled with the emotional intelligence of the leaders. Most of the global leaders have a strong emotion and confidence. The role of conviction is to create a framework where the leaders can assess their personality and quality to deal with the problem with the help of conviction and taking initiatives accordingly.

Flaws regarding Conviction Leadership Practice

However, there are some flaws regarding conviction leadership practice. Narcissism is a clear reflection of this conviction theory. It can be stated that the productive narcissism is an act of the conviction leadership where the leaders are extensively relied on their own ability rather than putting importance on the team or the human resources (Johnson 2017). In this regard, Ian Narev was also get affected by the conviction leadership. For an instance, in case of the money laundering case in Commonwealth Bank of Australia, the scandal was first alarmed by CBA Chairwoman Catherine Livingstone in the second half of the 2015 (Gilligan et al. 2017). At that time the higher authority did not take it seriously and refuted such scandal. As a matter of fact, the then CEO Ian Narev told ABC News in an interview that the bank had no such information regarding the scandal. This was a deliberate move by the bank under the leadership of Ian Narev to hide the scandal by stating that if there would be any such breach then the bank might inform its investors (Blue 2016). Moreover, Narev also stated that the as a large organisation it was not possible for the management to disclose anything related to the money laundering. This is a pure example of narcissism where the CEO tried to pin down those issues just as a common problem or rumour. Ultimately, by the investigation of the AUSTRAC and ASIC it became clear that there was a breach in the secutrity protocol of the Commonwealth Bank of Australia and the bank was alleged to get the report of breach almost 54,000 occasions (Gilligan et al. 2015).

In addition to this, in case of the insurance the Commonwealth bank also faced severe challenges from the customers. It was alleged that the bank did not provide insurance benefits to the customers at the time of their needs. For an instance, in case of the James Kessel, a 46 years Australian had claimed $1 million for his heart attacks that he was deposited as a CommInsure for health insurance. Instead of giving him the money the Commonwealth Bank executive gave him only $25,000 (Dixon and Finnane 2018). This was a deliberate breach of the customer service by the company that was a very common practice of CWB. One of the major reason of such insurance fiasco is connected to the organisational culture of the Commonwealth Bank. In the words of the Catherine Livingstone there is a need of transforming the culture of the organisation in such a manner that is resembled an ethical business operation (Gilligan et al. 2015). One of the important reason behind this debacle was the attitude of Ian Narev. As far as the leadership style of Narev was concerned, it was not based on the transactional or trait theory of leadership rather the CEO Ian Narev put emphasis on his own ability to implement an effective system. As a result of that it created a communication gap between the higher authority and the low level business operations that should not be done in such a large bank like the Commonwealth Bank of Australia (Gurdjian, Halbeisen and Lane 2014).

Scandals at Commonwealth Bank of Australia

On the other hand, the financial planning scandal was also an important aspect for the decliner of the Commonwealth Bank in Australian market. It was alleged that the bank made high risk investment with the money of the customers without informing them about it. As a result of that many of the Commonwealth Bank customers suffered huge loss in their investment. In respect to this the responsibility again imposed upon the leadership quality of Ian Narev. As the Conviction leadership puts more emphasis on the individual ability rather than the team work and build up. According to Gutentag et al. (2017) business operation is not an example of individual showmanship rather it is based on team work or team performances. Therefore, it is highly important for the leader to assimilate the team in such a manner so that it will be beneficial for the team to achieve the target. As a matter of fact, in case of the Commonwealth Bank of Australia it can be seen that the leadership style of Ian Narev was very self-oriented (Gebert, Heinitz and Buengeler 2016).

Moreover, the conviction leadership develops self confidence in a profound way that also has a negative impact. The development of the self-confidence leads to over confidence and the leader tries to follow more exclusiveness in practice to achieve the target as soon as possible (Kesting et al. 2016). As a matter of fact, this feature was also characterised in the personality of Ian Narev. He was appointed as the executive at a time when the Commonwealth Bank suffered huge financial crisis. He implemented a number of measures in order to rescue the bank from further indebtedness. Therefore, Narev took the responsibility on his own ability to mitigate the challenges. In his researches, Day (2014) asserted that the role of the Conviction leadership is to cater some influences on the followers where all the responsibilities were taken by the leader only. Therefore, the followers are incapable to acknowledge their own duty. According to Kunze, De Jong and Bruch (2016) it is the role of the leaders to share transcends the responsibility into the followers so that it will be an easy way to get success as a team not an individual one. However, the unique leadership quality of Ian Narev had paid the price because of its elf-orientation that is not right in business.

There are some recommendations that the Australian Commercial Banks must follow in order to resolve problems related to the scandal and ethical issues. In this regard, the first attempt must be associate with the style of leadership. Transactional leadership is considered to be the most effective measure in this respect. Moreover, it is also important for the bank authority to incorporate the employees in the operational process more closely so that they can understand the value and objectives of the company. In addition to this, the role of the entire management is also pertinent to put more emphasis on the customer services and consumer interests for future sustainability.

Financial Planning Scandal

Leadership is considered to be an important aspect for achieving success in any work. In course of the discussion the essay tried to figure out the leadership culture in Australian Commonwealth Bank. The recent practice of leadership in Commonwealth Bank follows the Conviction style. Therefore, the essay tries to identify the detrimental impact of the conviction leadership on Australian Commonwealth Bank and recommends to follow transactional leadership to incorporate more employees in the process of operation. Henceforth, it can be concluded that the essay rightly portrays the existing leadership culture in the Commonwealth Bank of Australia and suggests to alter this practice to ensure maximum profit and sustainability in the intense competitive market.

Reference

Adams, M., Borsellino, G., McCalman, J. and Young, A., 2017. Australia’s proposed Banking Executive Accountability Regime: regulatory panopticon or fail-safe?. Governance Directions, (9), pp.528-531.

Blue, L., 2016. Financial literacy education with Aboriginal people: The importance of culture and context. Financial Planning Research Journal, 2(2), pp.91-106.

Clinton, R., 2018. The making of a leader: Recognizing the lessons and stages of leadership development. Tyndale House Publishers, Inc..

Day, D.V., Fleenor, J.W., Atwater, L.E., Sturm, R.E. and McKee, R.A., 2014. Advances in leader and leadership development: A review of 25 years of research and theory. The Leadership Quarterly, 25(1), pp.63-82.

Dixon, K. and Finnane, G., 2018. S is for stakeholders, not shareholders: The shift in board responsibility. Governance Directions, 70(6), p.322.

Gebert, D., Heinitz, K. and Buengeler, C., 2016. Leaders' charismatic leadership and followers' commitment—The moderating dynamics of value erosion at the societal level. The Leadership Quarterly, 27(1), pp.98-108.

Gilligan, G., Ali, P., Godwin, A., Hedges, J. and Ramsay, I., 2015. An Analysis of Penalties under ASIC Administered Legislation: Scoping the Issues.

Gilligan, G., Godwin, A., Hedges, J. and Ramsay, I., 2017. Penalties regimes to counter corporate and financial wrongdoing in Australia–views of governance professionals. Law and Financial Markets Review, 11(1), pp.4-12.

Graham, H., 2018. Dr Hannah Graham on Australian leadership: Integrity, relational leadership and tenacious courage of conviction.

Gurdjian, P., Halbeisen, T. and Lane, K., 2014. Why leadership-development programs fail. McKinsey Quarterly, 1(1), pp.121-126.

Gutentag, T., Halperin, E., Porat, R., Bigman, Y.E. and Tamir, M., 2017. Successful emotion regulation requires both conviction and skill: beliefs about the controllability of emotions, reappraisal, and regulation success. Cognition and Emotion, 31(6), pp.1225-1233.

Johnson, C.E., 2017. Meeting the ethical challenges of leadership: Casting light or shadow. Sage Publications.

Kesting, P., Ulhøi, J.P., Song, L.J. and Niu, H., 2016. The impact of leadership styles on innovation-a review. Journal of Innovation Management, 3(4), pp.22-41.

Kunze, F., De Jong, S.B. and Bruch, H., 2016. Consequences of collective-focused leadership and differentiated individual-focused leadership: Development and testing of an organizational-level model. Journal of Management, 42(4), pp.886-914.

Lee, G., 2017. Leadership coaching: From personal insight to organisational performance. Kogan Page Publishers.