Successful innovation in a majority of the companies across the globe are linked to transformational leadership. Transformational leaders particularly facilitate innovation within their companies and hence the tendency of the companies to remain innovative. The use of intellectual stimulation and inspiration motivation is, thereby, vital to the success of organizational innovation. Furthermore, transformational leaders encourage creative ideas in their firms. They have visions that motivate their teams and hence increasing their teams’ willingness to accomplish more beyond their expectations, which challenges them to assume innovative techniques in their roles. The resultant heightened motivation is prospective of facilitating organizational innovation.
Narev’s leadership played a vital role through donation of the achievement at Commonwealth Bank of Australia. Narev possessed leadership competence that was necessary in matching him to circumstances at the bank. His leadership was essential in the organization since it assisted in managing the company in a successful manner and make healthier working relationship. In the case of Commonwealth Bank, its workers are striving to make it the best financial facility provider firm in Australia by impressing a viable leadership competency. In the year 2004, the financial institution (Commonwealths Bank) devoted a number of significant approaches that could make the company to have development program and effective leadership (Koziuk, 2017). Key approaches of the organization were to recognize and comprehend inspirational chaperons, expand ordinary management approach and create adaptable and flexible programs. The development and Training programs were put in place with the aim of introducing leadership abilities at every stage. The results of the programs designated that with the aid of training, the leaders of diverse stages could improve their abilities to tackle an extensive scope of conditions (Anthony and Hartley 2014). Training skills are viewed to be vital and an essential area of operative leadership structure. Therefore, the trainings is deliberated as a substantial charge played by Commonwealth Bank. The organization has put in place programs to develop leadership abilities of its employees thus the task has shown the organization’s seriousness targeting its management and worker interactions therefore, in this situation the path goal theory of leadership is perceived. The path goal theory states that a helps his her subjects in attaining their objectives, guides and support them to make steps towards the right path to accomplish all the ideas of the business (Robbins et. Al. 2014). Contacts between leaders and employees are pleasant at the Commonwealth bank.
Several researchers have shown the positive relationship between transformational leadership and innovation. A majority of the studies establish the relationship in research and development and in projects. Currently, the topic of innovation and transformational leadership has also become a key topic in research. A study by Jung, Chow, & Wu (2003) among Taiwanese companies found that transformational leadership is important and impacts positively on company innovation especially in research and development. This indicates the high importance of transformational leadership in innovation.
Transformation leadership may also impact on the innovation market success. Leaders with strong visions of the innovation showcase a sense of confidence and power and hence will strive until the innovation becomes successful at the market (Millson, 2014). Such leaders further motivate their employees to ensure the success of the innovation.
Creative leadership is similarly a concept that is emerging as significant in today’s innovative businesses. Creative leadership promotes imagination and inventive qualities that impact employees (Blaskova and Trskova, 2017). They motivate employees to work to their best in creative works. Basically, employees who are not inspired to wrap their minds around problems are unlikely to come up with unique solutions. Therefore, good leaders are those that can do more to challenge and hence inspire progressive creative work.
Success in innovation at commonwealth Bank of Australia has primarily been driven by its leadership. Its leadership recognizes innovation as the only thing that will ensure that the bank remains relevant in the future (Pearce, 2016). The bank’s CIO further recognizes that while upholding its history, it must be capable of accepting new ideas. Its employees must, therefore, be open and curious about new things and hence experimenting them.
The bank’s leadership is furthermore transformative and creative and one that recognizes the need for collective innovation. The employees are particularly enabled to think around and come up with solutions to drive development of new applications that with meet customer needs (Pearce, 2016). The bank has furthermore demonstrated leadership through its partnerships that that have geared innovation. Particularly, the bank has collaborated with Xero and OnDeck to provide thousands of customers with easy access to financing and hence stimulating better customer satisfaction (Productivity Commission, 2016).
Scandals at Commonwealth Bank of Australia
There are three significant areas which are linked to each other that showcase that CBA portrayed characteristics of unethical behavior to its clients and the way performed business:
- The instructions were simple. But by falsifying documents and improper disclosure, the highly ambitious financial planners acted unethically and contrary to instructions by investing in high risk products especially for the savings of the elderly. In this process, they even forged documents for their own benefit. (Ferguson A, 2016)
- 2CBA encouraged the unethical behavior as the financial planners were rewarded with commissions and bonuses for achieving sales target. It gave rise to a culture of incentives based on sales and not client satisfaction. CBA even threatened their employees of losing their jobs if targets were not met. (Ferguson & Vedelago, 2013)
- CBA not only showcased unethical behaviour but on top of that also tried to cover up their acts. An example is Don Nguyen who was suspended for a month in 2008 even though CBA was aware of his misconduct in 2006. After his suspension, he was promoted to Senior Financial Planner despite his wrong-doings. Despite whistle Blowers like Jeff Moris, the compliance team at CBA did not react to the numerous red flags raised. Whistle Blowers not only reached out to the management of CFP, but on numerous occasions in 2008 and 2009 reached out to ASIC. However, ASIC did not react to this information at all (Eyers, 2014).
The statements published after this scandal saw CBA employees chanting how they want to do the right thing and amend what they had done wrong. They express their concerns and improve on the learnings from the review carried out by ASIC. They stressed on how the future efforts and approaches would be fare, well-planned and rigors. Ian Narev, head of the Commonwealth Bank apologized to the customers for their financial loss and distress which was caused by his employees’ misleading advice. The bank further paid compensation of over $52 million because of faulty advice given to its customer through the years 2006 to 2010. CBA gave rise to a program called the Open Advice Review Program which helps the affected customers to review their past advice and offer clarifications as seem fit by any expert individual. To prevent such scandal from happening again in the future, the CEO, Ian Narev made changes to the culture, management and systems of the Financial Planning business and ensured that high-quality level of advice is provided to its clients. A significant change that was adapted by CFP was basically not relying on sales target as a measure of performance. The assessments were now made based on customer satisfaction, level of customer service & behavior within the team. These changes were mainly revolving around stopping the trail of commissions for any advisor so as they may be able to cross the boundaries of the legislation required by the industry. It was always important for CFP employees that they learn from the scandal and constantly strive for improvement in their processes (Peter Kell, 2013).
Any organization should always concentrate on their corporate culture and ensure that decisions are surrounded and backed by ethics and values. This can only be brought about when there is strong leadership who works with integrity and has the power to implement ethical frameworks and dialogues to inculcate and carry forward this culture and work-ethic.
Evidently, creativity and innovation go hand in hand with the success of organizations. Creativity lays the foundation of innovation while innovation brings about distinction in the company. The commonwealth Bank of Australia is extensively a replica of application of creativity and innovation. It has particularly integrated the concepts of good leadership, customer focus and entrepreneurship into innovating products and services that are aimed at meeting the ever changing customer needs. This has made the bank to remain very innovative despite the rapid changing trends in the market. Seemingly, creativity and innovation are the basic elements of every successful move by organizations. It can, therefore, never be undermined in the strategic definition of organizational direction.
Eyers, J. (2014, June 28). The man who blew the whistle on CBA. Retrieved from The Australian Financial Review: https://www.afr.com/business/banking-and-finance/financial-services/theman-who-blew-the-whistle-on-cba-20140627-je1mp
Ferguson, A. (2015, July 3). CBA compensation scheme closes amid anger, frustration. Retrieved from The Sydney Morning Herald: https://www.smh.com.au/business/comment-andanalysis/cba-compensation-scheme-closes-amid-anger–frustration-20150702-gi3fv7
Ferguson, A., & Masters, D. (2014, May 5). Banking Bad – Four Corners. Retrieved from Australian Broadcasting Corporation: https://www.abc.net.au/4corners/stories/2014/05/05/3995954.htm
Ferguson, A., & Vedelago, C. (2013, June 1). CBA covered up misconduct by rogue financial planner. Retrieved from The Sydney Morning Herald: https://www.smh.com.au/business/cbacovered-up-misconduct-by-rogue-financial-planner 20130531-2nh9x.html
Ferguson, A. (2016, May 18). Former CBA planner charged as victims kept waiting. Retrieved from Sydney Morning Herald: https://www.smh.com.au/business/banking-and finance/formercba planner-charged-as-victims-kept-waiting-20160517-gox5k4.html
Oates, G., & Dias, R. (2016). Including ethics in banking and finance programs: teaching “we shouldn’t win at any cost”. Education + Training, 58(1), 94 – 111.
Koziuk, V. (2017). Central Bank Independence and Financial Stability: Orthodox and Heterodox Approaches. Visnyk of the National Bank of Ukraine, 2017(239), pp.6-27.
Millson, M. (2014). Exploring the Nonlinear Impact of Organizational Integration on New Product Market Success. Journal of Product Innovation Management, 32(2), pp.279-289.
Blaskova, M. and Trskova, K. (2017). Creative leadership and motivation of university employees. New Trends and Issues Proceedings on Humanities and Social Sciences, 3(4), pp.23-34