Ian Narev's Leadership Style: Laissez-faire And Transactional (Essay).

Ian Narev's Background

Question:

Discuss about the Leadership Behaviors and Subordinate Resilience.

The success of a business organization is dependent upon the leadership and the organization culture. In the recent years, the Commonwealth Bank of Australia has suffered from several cases of corporate frauds and money-laundering scandals. These cases show that there is some serious issue in corporate culture and the leadership style of the organization. Since 2011, the Managing Director and the CEO of Commonwealth Bank of Australia is Ian Narev. It is the largest company of Australia by market capitalization.

Ian joined the company as the Group Head of Business Strategy. Since 2009, Ian was given diversified job roles of Group Executive, Business and Private Banking, SME banking and CommSec retail brokerage business. He was a tenured and talented candidate focused on developing the organization culture in several different ways. He introduced new technologies to enhance the customer engagement with the organization, enhancing the employee productivity, adapting new business regulations, and developing a customer-centric and value-driven culture (Bolman & Deal, 2017). Ian is well-educated and director of Business Council of Australia and International Monetary Conference.

As the CEO of CBA, Ian promotes workplace diversity and positive organization culture at the workplace. He has a broad view and believes that diversity can increase the productivity at the workplace. He also promotes leadership and inclusion of disabled people and older people at the workplace. His initiatives have yielded positive results and resulted in high diversity in terms of religion, sexual orientation, and ethnic background (Willaims, 2015).

However, in the recent years, the organization has been plagued by different corporate scandals in the insurance industry, financial planning and the money laundering cases. It can be stated that these scandals are the results weaknesses in the leadership style and the corporate strategy of the organization (Antonakis & Day, 2017).

With the analysis of these scandals and the management intention of Ian Narev, it can be stated that the intention of the management is good; however, there are certain loopholes, which has given the middle management autonomy. They have taken certain decisions, which have resulted in negative outcomes for the society as well as for the organization. With this analysis, it can be discussed that the leadership strategy of Ian Narev is Laissez-faire leadership style (Fairhurst & Connaughton, 2014). It is a delegate leadership, in which the leaders allow the group members to take certain decisions. 

Workplace Diversity and Positive Organization Culture

However, this leadership style results in lowest productivity among the group members. The most prominent characteristics of Laissez-faire leadership style are that the employees receive very little guidance from the leaders. It also provides significant freedom to the followers so that they can take easy decisions. In this leadership style, the power is handed over to the followers; however, the leader is responsible for all the decisions (Eagly, Johannesen-Schmidt & Van Engen, 2003).

The conventional ‘Laissez-faire’ leadership style is the leadership approach, in which the leaders adopt a hands-off approach. These business leaders remain open to the different group members for consultation and feedback.

The leaders provide direction to the team members; however, the employees are allowed to complete their job with little oversight. The approach to leadership is effective, if the employees are responsible, expert and trustworthy. The leaders should feel confident that the employees of the organization have the necessary skills, knowledge and capable of managing the projects without any supervision (Skogstad, Einarsen, Torsheim, Aasland & Hetland, 2007).

However, there are certain pitfalls of this type of leadership style. The leadership style is not ideal, if the people lack the experience or the knowledge to make certain decisions. The leadership style is associated with poor job performance, leader effectiveness and lack of group satisfaction (Xirasagar, 2008). There are several negative sides of Laisez-faire style, which are lack of awareness, involvement with the group, low accountability and passive behavior towards the organization (Hinkin & Schriesheim, 2008).

The money-laundering scandal was a result of the negligence from the management of the organization. The ASIC is investigating CBA for regulatory uncompliant behavior. It is evaluating if the organization has complied by the regular disclosure laws. The organization should also immediately alert the investors of any suspicious behavior. The ASIC committee suspected that the bank might have played some foul play and has not complied with the licensing obligations. The public and the media criticized the board of the bank regarding the money laundering allegations; however, Norak rejected the criticism. He stated that the organization is very large in size and therefore, they have developed several autonomous teams, which has to be managed by the investors and the regulators (Ryan, 2017).

There were other issues as well. The public relations of the organization were not appropriate, which created several issues in the mishandling of trust and the public confidence (Butler and Johnston, 2014). There has been a lack of financial planning and foresight in the introduction of the financial policies in the organization. The financial planning scandal has led to several questions regarding the leadership style of Ian Narev and whether he will be capable of handling the financial crisis. The current decisions of the CEO states that he has very static style to handle the financial planning crisis. As a result, the customers, companies and the captains of the organization have also accused the company of hubris (Jones & Rudd, 2008).

Corporate Scandals and Leadership Style

The lack of foresight can also be perceived by the personal career growth of CEO of the organization. The career growth of Ian shows that there is lack of career planning. The current annual package of Narev is the lowest, which shows that he has not negotiated properly with the Board of Directors.

Further, it can be critiqued that Ian follows transactional leadership style. This style demonstrates a lack of vision, as the leader is focused on running the day to day operations of the organization rather than leading the organization for the future growth. The business leaders make the followers comply by the rules and regulations with the help of rewards and punishment.
These leaders set goals and explicit agreements with the followers of the organization. They also increase the efficiency and establishing routines in the organization (Amanchukwu, Stanley & Ololube, 2015). These leaders are focused on establishing rules and making the followers to work accordingly.

Diversity and inclusion are important criteria for the transactional leaders. They consciously seek diverse talent to build a competent workforce. They emphasize building and working with heterogeneous teams by understanding the significance of diversity and inclusion in the business enterprise. Ian Norak also emphasizes the importance of diversity in the organization (Harland, Harrison, Jones & Reiter-Palmon, 2005). The recruitment and the talent management department of the organization emphasize the inclusion criteria and try to select the employees from different walks of life.

Along with it, Ian Norav has also been a good leader and mentor for the employees. The mentoring relationship is crucial for the corporate to develop the human resources. It is the process, which can be used to emphasize the growth and talent of the employees. Norav has introduced a unique organization culture, in which the employees are given freedom and flexibility. They are also provided opportunity to develop their talent within the organization. There are several training and development programs within the organization, which are dedicated towards the employee growth (Eagly, Johannesen-Schmidt & Van Engen, 2003). Other than that, there are several leadership development programs, which are dedicated towards to develop the future leaders of the organization. The organization culture also promotes diversity and empowerment of the employees. The employees are given autonomy so that they can control their growth. Other than that, the organization culture of the bank is positive and flexible. The employees have a flexible work schedule. However, since the privacy and security is the major concern for the banks, proper training is provided (Chaudhry & Javed, 2012). The bank has fixed timings and the employees should follow them.

Laissez-faire Leadership Style

Conclusion

It can be concluded that the leadership style of Isan Norak is that of Laissez-faire style. . It also provides significant freedom to the followers so that they can take easy decisions. In this leadership style, the power is handed over to the followers; however, the leader is responsible for all the decisions. The employees were capable of conducting fraud, due to the freedom provided to them. There has been a lack of financial planning and foresight in the introduction of the financial policies in the organization. It also shows the issues in the leadership style of the CEO. Since 2011, he has been the Managing Director and the CEO of Commonwealth Bank of Australia. It is the largest company of Australia by market capitalization; however, his compensation has been low.

References

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Butler, B. and Johnston, E. (2014). Commonwealth Bank's Ian Narev fast to rise, but slow to move. The Sydney Morning Herald. [Online]. Available at:  https://www.smh.com.au/business/banking-and-finance/commonwealth-banks-ian-narev-fast-to-rise-but-slow-to-move-20140704-3bdug.html [Accessed on: 29 March 2018].

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Ryan, P. (2017). Commonwealth Bank: ASIC to investigate CBA over money-laundering scandal. ABC News. [Online]. Available at: https://www.abc.net.au/news/2017-08-11/asic-to-investigate-cba/8796542 [Accessed on: 29 March 2018].

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