Soumi answered on Jul 28 2020
ACCOUNTING AND SOCIETY
In the cu
ent report the ethical activities of the employees of an organisation is discussed with a special reference to Commonwealth bank of Australia. As the level of ethical activities determine the social image of an organisation, the report explores the grounds on which an organisation tends to evaluate the actions of its employees, who are a very important stakeholder. In order to authenticate the a
ay of arguments put forward in the report, the agency theory, legitimacy theory and the managerial stakeholders’ theory has been used as evaluation parameters. Based on the analysis of the case study, it became obvious that retail employees at Commonwealth Bank of Australia pose very chance of creating problem for the organisation and the managerial board of the organisation just take measures to prevent the occu
ence of similar acts.
Table of Contents
1. Based on Dollarmites Case Study 4
i) Critically evaluating the Action of Commonwealth Bank of Australia (CBF) Staffs, using Agency Theory Approach 4
ii) Critical Assessment of the Activation of Dollarmites Youthsaver Accounts by CBA Staffs, using Legitimacy Theory Approach as Parameter 5
2. Comprehending the probable ways, Key Stakeholders would have reacted based on the use of Managerial Stakeholders Theory 7
In modern society the banking system gives the economic stability to a country’s internal and external cash flow as well as economic refinement. In a banking organisation, the distribution of employees is done on the basis of a core set of instructions and it is expected that each employee performs their task accordingly. Alongside creativity, efficiency and skills, the moral abidance is also valued. However, over time, employees point out loopholes in banking system and use these zones for their own gains. As the employees seek their personal gain, the upper management, clashes on the grounds of moral hazards and business ethics. In the cu
ent report, the conflict between personal gains to that of moral organisational hazards is shown and evaluated on the basis of theories relating to the issue at hand.
1. Based on Dollarmites Case Study
i) Critically evaluating the Action of Commonwealth Bank of Australia (CBF) Staffs, using Agency Theory Approach
The main frame of the agency theory rests on the balancing of the interests of the shareholders of an organisation and its agents. The agency theory proves to be relevant in case of banking organisations also. As stated by Raberto et al. (2018), in banking organisations the shareholders do not interact with the customers and rely entirely on the action of the agents. It is worth consideration that the agents are expected to perform within the norms of the banking rules and regulation. The agency theory explores the conflict that arises out of the difference in actions leading to the personal interest of the agents on one hand and on the other the interest of the entire organisation. The theory sheds light on the aspects that drives the agent of an organisation to adopt means that are not beneficial to the organisation and focus only on the personal gain of the agent, often exploiting the loopholes in the rules and regulations.
In the given case study, the retail staffs of the Commonwealth Bank of Australia are seen activating inactive accounts to meet their periodic target that enables them to achieve bonus. As affirmed by Ingves et al. (2018), in case of target oriented jobs, employees tend to meet their target by unethical means, often exploiting the gap in the legislature to fulfil their targets. It is worth the mention that opening an account and activating it, requires a minimum investment of $5000 and the money s invested by the bank in the market, in return of which it offers a considerable amount of interest benefit to the account holder (Commonwealth Bank of Australia, 2018). Considering the profit CBA will make out of the activated accounts, it might appear that, the actions of the retail staffs were in the favour of the organisation. As opined by Riyadi and Santoso (2018), the shareholders of a bank should not be bothered about the activation of inactive accounts by its own retail staffs as the bank will benefit from the invested money and it should introduce a self-responsible clause to its employees if any account holder creates and issues regarding the action, technically creating a win-win situation.
Despite the profit CBA will make with the money in the activated accounts, it is worth mention that the activation of accounts, without the prior consent of the parents of the children, holding the Dollarmites Youthsaver Accounts, could lead to severe issues. As affirmed by Johnson et al. (2018), performing an action on will, without the consent of a person, whose, name, asset or resources are used could lead to legal accusations. Although a number of people holding Dollarmites Youthsaver...