The Conduct of Lloyd Banking Group - Assignment Example

? Analysis of Lloyds banking group Introduction Lloyds Banking Group was established in 1995, as a retail bank with its premier location in the United Kingdom. The organization was known as Lloyds TSB Bank Plc on its establishment. The group had been operational as Lloyds Bank since 1765 before its merger with the TSB bank, and it carried out its operations in Birmingham. The TSB group, on the other hand, was established in 1810 and was ranked among the biggest four clearing banks in the country alongside Lloyds Bank. Lloyds TSB Group acquired HBOS in 2009 and was effectively renamed Lloyds Banking Group, the name it uses in its operations up to date. The Banking Group had been largely successful in its operations, and it was evidenced by its expansion through mergers and acquisition. The mergers and acquisitions were carried out in attempts to consolidate its customer base and network. However, the bank was among the institutions that were affected by the financial crisis in late 2008. The effects of the financial crisis on the bank were severe and thus requiring its bailout by the government under strict conditions (Chambers and Mcmillan et al. 2010). The conditions set for the bank by the government in order to conform to the European Union established standards included the sale of some of its branches as well as renaming of the bank by the end of 2013. The paper gives an in-depth analysis of the organization’s code of conduct and the ethical implications of the company’s international operations. The organization’s code of conduct The organization’s vision sets out the tone for the establishment of its code of conduct at the personal and business level. The organization’s vision is for the banking group to be recognized as the best bank for customers. The banking group has its presence all over the United Kingdom. The large presence necessitates it to set out clearly defined rules and procedures to be followed by their large workforce in serving their customers. The code of conduct by the banking group has been split into two, and they include the code of personal responsibility and the code of business responsibility. The code of personal responsibility of the organization was established to outline the treatment of its customers (Group Corporate Affairs 2013, pp. 1-13). The general code of conduct for the organization has been designed to ensure that the five pillars of the organization are incorporated. The pillars that govern the operations of the organization include being the best company employees can work for, reducing the environmental impact of the organization, placing customers at the front of the organization’s activities, investing in communities as part of the corporate social responsibility (CSR), and working responsibly with external stakeholders. The company’s employees and any person who acts on their behalf are acquainted to the code of conduct towards their consumers. The compliance of the codes of responsibilities on a personal level contributes largely to the delivery of the five pillars and achievement of the company’s vision (Group Corporate Affairs 2013, pp. 1-13). Employees and agents are expected to understand the codes of conduct and carry out their transactions in line with the codes. The management expects employees and agents to keep vigilance over their colleagues and act responsibly by reporting those who persistently violate the laid down rules. The organization has set up mechanisms that ensure the identity of whistleblowers is not revealed. All cases of violation are investigated with stringent measures taken against guilty parties. The organization’s code of conduct firstly dictates the relationship between the customers and its staff. The employees and agents of the organization are supposed to think about the customers first in all their actions. The designing and delivery of products to customers by the organization's staff should always place importance on their customers’ needs and changes in the global market (Group Corporate Affairs 2013, pp. 1-13). The second regulation of the organization entails understanding and anticipating the needs of customers in the service process. Customers should be treated with fairness, respect, honesty, integrity, and professionalism. The third regulation affecting the organizations employee’s relations with its customers dictates the delivery of promises made to customers and other colleagues. It is the personal responsibility of every team player of the organization to keep promises and take responsibility in case of any failure. Dealings with customers demand that employees take ownership of the issue and not as the responsibility of the bank in order to ensure excellent service delivery. The second aspect of the codes of personal responsibility dictates that all operations carried out in the organization should be kept simple (Group Corporate Affairs 2013, pp. 1-13).The first step towards achieving simplicity is through ensuring that every employee is easy to do business with and lacks complications in their character. Secondly, any person engaging in business on behalf of the banking group should have the ability to communicate clearly and openly with the customers, stakeholders, and colleagues. The organization insists on avoidance of technical jargon when dealing with its customers for effective delivery of services. Thirdly, it is the responsibility of every employee to identify any available opportunity to simplify the company’s processes. The code of conduct dictates that it is the personal responsibility of the company’s staff to work to get things right first time and every time. The third aspect under the codes of personal responsibility entails the making of a difference together as an organization. Colleagues are expected to take it upon themselves to work together in the delivery of service to customers. All the employees of the organization and its agents are expected to put efforts to work in harmony. The company’s employees are expected to use the feedback they get from customers to help the organization in improving its services. The code of conduct outlines the personal responsibility of all individuals transacting business on behalf of the organization towards the treatment of people fairly. Individuals are expected to contribute positively to their communities. Employees are required to ensure that their actions comply with all the legal requirements, and they should ask for advice in case of doubt on the legality of any transaction. The actions taken by individuals on behalf of the group have ramifications on the organization, and thus it is the individual responsibility of all employees to reflect on their actions and the possible consequences (Group Corporate Affairs 2013, pp. 1-14). The group’s code of business responsibility complements that of individual responsibility by outlining the expectations of business relations between the group and its stakeholders. The code of business responsibility has been designed in line with the company’s five pillars discussed previously. The customers form the core responsibility for the organizations financial obligations. The code indicates that the customer’s finances are made available at request as well as provision of other financial services such as advancement of loans on a fair and equitable manner. The company’s aim is to be among the best employer and employment decisions include diversity and inclusiveness as outlined by its code of business responsibility (Group Corporate Affairs 2013, pp. 1-14). The group further follows human rights regulations as stipulated in its code of conduct through respecting human rights in every transaction. The code of business conduct further addresses the group’s adherence to proper behavior at work, redundancy, and fair and competitive rewards for its employees and stakeholders. The code of business conduct outlines that the group encourages training and development of its staff and that it is unethical for any member of management to muzzle an employee’s right to advance their career. The organization’s operations take into account the need for the working environment to be safe for the health and wellbeing of its employees as well as the customers. The group’s code of conduct establishes the channels to be followed when dealing with its shareholders, suppliers, financial relationships with other organizations, regulators, media relations, and the government. It is the responsibility of the organization in totality to engage with the above-mentioned groups with fairness, transparency, and mutual respect as outlined (Group Corporate Affairs 2013, pp. 1-14). Integrity forms the core purpose of all the business functions and thus issues related to bribery, money laundering, sanctions, fraud, gifts and improper payments are strictly discouraged and carry heavy penalties (Bloomfield 2013. The company places importance in strict adherence of established tax and competition laws to avoid jeopardizing the group’s future. Top priority is given to the protection of data and maintenance of confidentiality between the bank and its clients. The ethical implications of the company’s international operations Lloyd Banking Group has a number of branches in Europe and thus its operations in the international market require different strategies due to the differences in society. Countries around the globe have different values that are dear to them, and thus the operations of any company in a foreign country must conform to the norms and business practices in the host country. Lloyd Banking group is faced with different challenges that require it to establish different sets of ethical strategies to avoid the violation of the accepted principles. International business ethical issues emanate from the differences in laws, political systems, culture, and economic development in various countries (Dannemann and Vogenauer 2013). The operations of the banking group in Scotland for example cannot apply the same practices it does in London because of variations in the above-mentioned factors. The first ethical implication that faces Lloyd Banking Group in its European market is the issue related to employment practices. Employment practices differ from country to country in terms of qualifications, minimum wages, unions, and the working conditions (Peacock and Rizzo 2008). The issue that faces the banking group is on the standards to apply, as the working conditions in a host nation can be superior or inferior to those in the United Kingdom. Working conditions that are superior to those in the home nation pose a challenge in cost to the banking group and the lowering of such standards as prescribed in the host country to match those of the home nation would affect the banking group negatively. Situations where the working conditions are superior make it difficult for an organization to carry out its operations in that country due to the high costs involved in the running of a business. The challenges posed by a country whose working conditions are inferior to those in the home country are lesser in comparison to that which is superior. However, Lloyds being a multinational group has the responsibility of treating its employees equally and fairly and thus, its standards should be similar regardless of the country. Ethical issues related to employment practices abroad make it difficult for the banking group in its international engagements. The second major issue that faces Lloyd Banking in its international operations is related to human rights in the host country. Human rights play a pivotal role in the determination of a company’s strategy and thus the banking group has an obligation to adhere to the human rights conditions of a foreign country. Human rights conditions might be favorable, and in other instances, they might lack satisfaction. Multinational organizations are expected to respect the universally acceptable human rights and thus the banking group is faced with ethical issues in setting its institutions in countries where human rights are violated (Kline 2010). The group’s standards are compromised if the host country does not adhere to the preservation of human rights, and the result would be negative to the overall image of the company globally. It is of importance for a company to consider the human rights conditions of the host country before engaging in any business. The banking group’s operations do not have many implications on the environment, but ethical considerations dictate that every company has a role to play in ensuring the conservation of the environment they operate in as part of their corporate social responsibility. The group is faced with the challenge of determining their level of engagement in locations where environmental pollution is rampant and the negative image the banking group suffers from having its operations in such a locality (Bouma and Jeucken et al. 2001). It is the responsibility of the company to engage other stakeholders in the international community in efforts to reduce pollution. International operations of the group are faced with ethical issues related to the corruption levels of the host country, which contravene the group’s ethical standards. Corruption is a reality that is inherent in many countries that has existed in history and in the present day. There are obstacles that face a company in the establishment of its operations in foreign countries whose regimes are corrupt and ridden with many bureaucratic processes that result in unethical engagements (Mckeen-Edwards and Porter 2013). The political aspect of a country is a determinant of the transactions of the group in the host country and therefore the group should consider its engagements to ensure that there lacks ethical breaches. The banking group is faced with ethical implications in the capacity of its operations and thus moral issues arise. The group’s structure and size could pose a risk to smaller banking institutions in the host country from pushing them out of the market. The company has the moral obligation to carry out its activities within acceptable competitive levels and not to take undue advantage of its size in gaining business ground. The group is expected to carry out its transactions in a manner that promotes competition and advocate for the provision of better services to customers. The group is obliged by the dictates of morality to give back to different societies. Societies differ in their needs from one nation to another and it is the obligation of the company in compliance to its moral statutes to give back to the community through addressing particular needs. The company’s management is tasked with the responsibility of ensuring that the group’s business ethics are combined with its set of personal ethics to be followed in its branches (Vallance 2009). The parent company should establish a guideline to ensure that international business operations meet the required ethical threshold. Conclusion Lloyd Banking Group has established its own codes of conduct that regulate how its activities are carried out by individuals and the business as a whole. The code of conduct dictates the relationship between the company and its stakeholders. The conduct of the company in its international operations reflects on the image of the whole group and thus it is necessary for it to uphold acceptable ethical standards. References 1. Bloomfield, S. 2013. Theory and practice of corporate governance. Cambridge: Cambridge University Press 2. Bouma, J., Jeucken, M. and Klinkers, L. 2001. Sustainable banking. Sheffield: Greenleaf Pub. 3. Chambers, M., Mcmillan, J. and Phillips, R. 2010. Chambers UK. London: Chambers & Partners 4. Dannemann, G. and Vogenauer, S. 2013. The common European sales law in context. Oxford: Oxford University Press 5. Group Corporate Affairs. 2013. CODE OF BUSINESS RESPONSIBILITY. London: Lloyds Banking Group. pp. 1-14. Available through: Responsible.Business@Lloydsbanking.com http://www.lloydsbankinggroup.com/media/pdfs/lbg/2012/Code_of_Business_Responsibility.pdf [Accessed: 30th July 2013] 6. Group Corporate Affairs. 2013. CODE OF PERSONAL RESPONSIBILITY. London: Lloyds Banking Group. pp. 1-13. Available through: Responsible.Business@Lloydsbanking.com http://www.lloydsbankinggroup.com/media/pdfs/lbg/2012/Code_of_Personal_Responsibility.pdf[Accessed: 30th July 2013] 7. Kline, J. 2010. Ethics for international business. New York, NY: Routledge 8. Mckeen-Edwards, H. and Porter, T. 2013. Transnational Financial Associations and the Governance of Global Finance. London: Taylor and Francis 9. Peacock, A. and Rizzo, I. 2008. The heritage game. Oxford: Oxford University Press 10. Vallance, I. 2009. Banking supervision and regulation. London: The Stationery office Read More