Barclays Ethical Issues - Business Plan Example

Barclays Ethical Issues Introduction Barclays is UK multinational bank that offer financial services. The banks headquarters are in London and has operations in retail, wholesale and investment banking. The bank also deals with wealth management, credit cards and mortgage lending. The company has established its operations in over 50 countries globally with over 48 million clients. End of 2014, the bank had over 132,300 employees worldwide with revenue of £25.288 billion. Table1. In the appendices shows the financial breakdown of the company as of the same year. The bank has a history of over 300 years and this can be traced back in 1690, when Thomas Gould together with John Freame started trading as blacksmith bankers in London. Later in 1736, James Barclays joined the bank as a partner. The bank later went into funding companies in their operations and they first one was in 1819 when the bank funded Stockton and Darlington. In 1900, a merger between 20 banks led to the birth of Barclays Bank. The bank made a step by being listed in the London Stock Exchange in 1902. See Table 2 from appendices for Barclays Stock exchange general information. It was the first bank to launch a Credit Card in the UK in the year 1966 and the Debit Card later in 1977. The first personal bankers were introducing in 1987 Barclays (2015). Goal The bank has set its goal to be the Go-To Bank for all its customers, the colleagues and also the stakeholders. Attaining this will enable the bank to build a lower-risk, better performing bank Propose Is to help people achieve their ambitions in the right way; this entails individuals, businesses, countries, corporations and society need access to efficient banking services Table 1 shows the financial performance of the bank in the last four years. Its performance has been inconsistent with a fall from £24.87 billion in the previous financial year to £22, 64 billion in the last financial year. Barclays Business Strategy Business model and value creation The goals and the purpose of the business are centered on the banks customers and clients. The bank has its focuses on four core business which include; Personal and corporate Barclaycard Africa Investment bank According to Ndamela (2015) the bank is intensifying its expansion the continent by making more applications for licenses in several countries. The bank has applied for a commercial banking license in Nigeria and one for an insurance business in Kenya. Business model Products and services As an international bank, Barclays offers different sets of products and services based on; Retail banking, Corporate banking Wealth management Investment banking Target customer Individuals Corporations Institutions Governments Small and big businesses Competitive advantage The banks competitive advantage is based on three main aspects; Quality, scale and diversity of our businesses Character and relationships of its employees In line with this strategy the Africa Banking and Personal and Corporate Banking (PCB) businesses have been integrated regionally, to ensure they are able to deliver specific and targeted solutions to people in the businesses. The bank also performs operations in other selected markets globally in order to support the needs of their clients. The bank operates shared service model for Central Functions in order to support the four core business clusters. By improving how the bank pools its resources the bank has been able to take advantage of synergies by sharing ideas and cooperation from cross-functional working groups of staff. Strategy and operating environment Banking environment continues to change and this means that banks have to come up with new tactics and strategies to counter or keep up with the changes in order to remain relevant in the market. The Barclays risk management framework helps the bank come up with activities, tools, arrangements and techniques that can be used to single out manage and monitor real and potential risks that arise due to the changes. The bank is also involved in the managing human rights risks through its environmental and social risk procedures and also be integrating issues concerning human rights in its business decision-making. Transform Program This is as strategic program rolled out in 2013 to act as a vehicle for the banks strategy to reshape the bank in order to generate sustainable revenue and at the same time meet the needs of all its stakeholders. The three phase strategy is aimed at transforming the operations of the bank and gives it a face that is more appealing to the normal person. Summary of the overall ethical policies and CSR actions of Barclays Ethical policies Barclays principles have been based on honesty, integrity and plain-dealing. The bank has been working on rebuilding the trust of its customers, its clients and stakeholders. Butler (2010) says that is important for business to have regular review of its strategies and policies as a way of ensuring the business does not loss contact with the reality in the market. The Transform program from Barclays has the ultimate goal to make Barclays the partner of choice for all its stakeholders, or what the bank refers to ‘Go-To’ bank. Corporate Social Responsibility (CSR) Barclays has been supporting the needs of its clients and the communities whey it has its operations. The Citizenship Plan which was launched in June 2012 has eve loving and developing set of commitments which the bank targets to deliver by the end of this year. Citizenship Plan is made up of three commitments which include: The way the bank does business Contributing to growth Supporting the local communities Analysis of the overall ethical policies and CSR actions of Barclays Ethical policies Barclays bank has a new purpose which is to “help people achieve their ambitions – in the right way”. The purpose is supported by the following core value: • Respect: respect and value colleagues, and the their contribution to the bank • Integrity: act ethically, fairly, and openly in operations. • Service: put our clients and customers at the centre of operations. • Excellence: utilize skills, energy and available resources to deliver the best results. • Stewardship: passionate about leaving things better than found. Corporate responsibility (CSR) Citizenship plan The bank is implemented Citizenship plan alongside other decision-making tools in order to facilitate its move beyond legal, compliance and regulatory concerns, to put into consideration broader social impacts and opportunities. Its commitments are The way the bank does its business Sustainability risk and lending: This program has been design to monitor any risks to the financial status of both the clients of the bank as well as the operations of the bank. According to Bessis (2014) financial institutions play a key role in forecasting and controlling financial crisis through their analytical tools and systems. Managing our environmental impact The issues of global impact and environmental conservation can lead to great harm. As a way of the bank participating social activities, the bank has policies that help reduce the risks related to pollution and degradation of the environment. Hay et al. (2005) say that every company and business has a role to play in conservation of the environment as a key stakeholder. Human rights: During the South African apartheid period, the bank was under criticism for being actively involved. This led to demonstrations and protests against the bank. Since then, the bank has been in forefront to uphold the rights of people regardless of race or color. Contributing to growth Lending: Supporting job creation and economic growth through provision of credit services. By offering the credit services, people are able to grow economically and this will be reflected in their social lives. The creation of jobs does not just empower the youth economically, it also gives them a more respectable social status. Urip (2013) adds that job creation can be considered to be an act of CSR depending on the impact the job will have on the individual and the community around them. Increasing access to finance: The bank has set up innovative and sustainable financial services for its customers and clients. By doing this, the bank has won the confidence and trust of the customers. This leads to brand association and ambassadorship. Social innovation Innovation: The bank has been in the front line in banking with developing the worlds first ATM, and UKs first Pingit which allows people to send money through their mobile phones. The society is excited about new and innovative ideas. Many people would want be associated with such innovations. Osburg & Schmidpeterthe (2013) say that the interdependence between CSR and Social innovation is creation of a sustainable future for the community. Farnando (2009) adds that corporate world plays a key role in innovation by funding research programs based on creative ideas. Supporting the communities Community Program The bank has been investing finances, skills and time to go into partnership with respected and recognized NGOs to develop charity work. The community program enable the future generation develop all the necessary skills required to attain goals. The program focuses on improving the disadvantaged young peoples businesses and enterprises. Lakin & Scheubel (2010) say that corporate community involvement can be seen as a way through which a company is able to win the loyalty of the community. Nonetheless, the benefits to the community are much high than what the company gets. Many community based initiatives by corporate have led to great development. Contreras (2004) adds that the corporate world has been very instrumental in developing many communities through CSR projects and program. This has been done though investments in community based initiatives in health, education, youth empowerment among others. Employee program The bank has been supporting its employees by giving them opportunities to utilize their professional skills and expertise in a range of social activities such as volunteering and fundraising. Azulay (2012) say that companies need to grow with time and the best way to do this is by making their employees grow through training and development. Conclusions and discussions General review of Barclay’s ethical policies and CSR The bank is turning a new page by introducing the Transform program. This will help the bank achieve its goal of becoming a more ethical business in a very competitive market. The move comes after a dark moment for the bank after being fined for manipulating Libor rates. However, ethical issues continue to haunt the bank. Barclays have been criticized for employing unsuitable staff and positioning them in very high skilled roles. According to Essvale Corporation (2006) the banking sector is one of the most sensitive industries as it deals with finances which if not given the best proficiency, the outcome may cause so much damage. This makes people question the integrity and level of excellence the bank claims to have. According to Pickett (2013) a single error in the banking industry, no matter how small it may seem, will always have a negative financial implication either to the bank or the customer. However, this is not a unique problem to Barclays as other competitors have been found to have ethical issues. In the year 2008, one of the other major banks HSBC was fined a total $1.9 billion in relation to drugs money laundering in Mexico. There has been a concern about the intentions behind Barclays CSR program. Their main intentions seem to be part of the business plan and a marketing strategy. In as much the community benefits, the morals behind might be selfish. According to Louche, Idowu & Filho (2010) business and corporate take advantage and try to buy the community by investing extensively in CSR. Whether the community benefits from this is not a question but this can be viewed as form of manipulation and extortion. Wolf et al. (2015) adds that CSR plays very significant role in boosting and improving the image and brand of a company. But looking at the circumstances that surround CSR, one may be tempted to think that the companies doing this are making losses. In reality, majority of the people who benefit from such programs eventually end up being loyal customers. Ethical issues with supplier chains Premier foods supply chain Premier food is one of the leading branded food producers that supplies a range of retail, wholesale and foodservices. With over 4,500 employees, the company is listed in the London Stock Exchange and is a constituent of FTSE small Cap Index. Currently, the company is under huge debts and is focusing on its major brands. The company was found in 1975 by Harry Solomon & David Thompson as Hillsdown Holdings. Premier foods supply chain as an ethical supplier As a supplier of consumable good, there is need to have high standard in it operations products. The company is committed to ensuring that they have treated with respect and that their safety as well as health and basic human rights are not violated but are protected and promoted. The company has a responsibility to act and trade with its customers in an ethically without compromising the quality of services and products. Coff (2008) says that supplier chain has an advantage of missing the direct link with the consumers but nonetheless, this should not be used as an excuse to compromise the quality of services and products they offer. Sanders & Wood (2015) add that supplier chains have to be linked to their consumers not just to get feedback concerning their products and services but also to create customer relations. The company has worked to present itself as an ethical supplier through the following strategies; Employing staff that have attained the minimum age Free and willing employment Practicing on health and safety of the employees Encouraging freedom of association as well as collective bargaining for its employees Paying the employees in accordance to the minimum wages Giving employees free time out of working hours Terms of employment have given deep considerations to the needs of the employees. By implementing the above actions, the company has the following objectives; Improving and increasing the sales of their customers and the consumers by improving the quality of the products so that the price may not be the only reason for buying the products. Improve on ethical issues in order to attract more ethnically based investors Maintain loyalty and motivation of the employees by treating them fairly and ensuring safety in their workplace and ensuring that they have an opportunity for personal growth. Enhance trust in the business by improving good relations with stakeholders and being completely transparent with them in regard to the companys operations and activities. Recommendations As a supply chain dealing with food products, there are many risks that come in its operations and the company has a role to play in ensuring that the ethical issues do not affect the operations of the company. The source of the products and the ingredients used to make the food products are but some of the areas that may bring about ethical contention. Strict guidelines should be laid to ensure that in no way the ingredients or the source of the products have violated the set standards by the government. According to Winn (2006) as a way of protecting the public, the government sets standards for business to guarantee that services and products provided do not have any form of harm to their physical and mental health. According to Nestle (2013) the government as a regulator has a duty to set policies that not just moderate businesses but also ensure quality and best standards. The following are recommendations that should be considered; Employee related code of ethics should be formulated that will guide all members of the staff including the executive Create awareness among the employee on importance of ethically right performance in the workplace. Mentorship program with individuals and firms that have history of good ethics should be introduced The company should formulate more policies that are not just based on its operations but all the stakeholders. The company should enhance its relationship with its customers as a way of creating a room for feedback. Further relationships should be created to the final consumers of the products to enable the company get direct feedback on ethical issues regarding their products. Reference list Top of Form Top of Form Top of Form Top of Form Top of Form Top of Form Top of Form Azulay, H. (2012). Employee development on a shoestring Alexandria, VA, ASTD Press, c2012 Barclays. (2015, January 1). Our History Retrieved May 9, 2015, from Barclays: http://www.barclays.com/about-barclays/history.html Bessis, J. (2014). Risk management in banking Hoboken, N.J., Wiley Coff, C. (2008). Ethical traceability and communicating food Berlin, Springer Contreras C., M. E. (2004). Corporate social responsibility in the promotion of social development: experiences from Asia and Latin America. Washington, DC, Inter-American Development Bank. Essvale Corporation. (2006). Business knowledge for IT in investment banking: a complete handbook for IT professionals. London, Essvale Corp. Bottom of Form Financial Times (2015, May 9). Equities Retrieved May 9, 2915, from Financial Times: http://markets.ft.com/research/Markets/Tearsheets/Business-profile?s=BARC:LSE Francis, R., & Mishra, M. (2009) Business ethics: an Indian perspective New Delhi, India Tata McGraw-Hill Hay, B. L., Stavins, R. N., & Vietor, R. H. K. (2004) Environmental protection and the social responsibility of firms: perspectives from law, economics, and business. Washington, DC, Resources for the Future International Conference On Business Ethics, Corporate Governance And Corporate Social Responsibility, & Fernando, A. C. (2009) Corporate ethics, governance, and social responsibility: precepts and practices. Delhi, Pearson Power. Lakin, N., & Scheubel, V. (2010) corporate community involvement the definitive guide to maximizing your business societal engagement Sheffield, U.K., Greenleaf Pub Louche, C., Idowu, S. O., & Leal, F. W. (2010). Innovative CSR: From risk management to value creation. Sheffield, UK: Greenleaf. Ndzamela, P. (2015, March 4). Barclays Africa eyes faster expansion. Retrieved April 30, 2015, from Business Day: http://www.bdlive.co.za/business/financial/2015/03/04/barclays-africa-eyes-faster-expansion Nestle, M. (2013). Food politics how the food industry influences nutrition and health Berkeley, Calif, University of California Press Pickett, K. H. S. (2013). The internal auditing handbook Hoboken, N.J., Wiley Sanders, N. R., & Wood, J. D. (2015) Foundations of sustainable business: theory, function, and strategy. Urip, I. (2013). CSR strategies corporate social responsibility for a competitive edge in emerging markets Hoboken, N.J., WileyBottom of Form Winn, J. K. (2006). Consumer protection in the age of the information economy Aldershot, Hants, England, Ashgate Wolf, R., Issa, T., & Thiel, M. (2015) Empowering organizations through corporate social responsibility Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Appendices Table1 Currency in British Million Pounds Dec. 2011 Dec. 2012 Dec. 2013 Dec. 2014 Total Revenues 25466 21697 24870 22649 Gross Profit 25466 21697 24870 22649 EBT (Excluding Unusual Items) 6249 2412 5107 5306 EBT (Including Unusual Items) 5770 797 2868 2256 Net Income 2924 -624 540 76           Source: (Financial Times, 2015) Table2 Barclays General Stock Information EPIC BARC ISIN GB0031348658 Market Cap. 41.36 billion £ Shares in Issue 16.75 billion Sector Banks Exchange London Stock Exchange Currency Sterling Pence Indices FTSE 100, FTSE 350, FTSE All Share Source: (Yahoo Finance, 2015) Read More