Industrial relations: the case of Commonwealth Bank of Australia - Research Paper Example

?Industrial Relations Table of Contents Organisation Introduction 3 Problem Identification and Analysis 4 of Certain Alternatives That Might Solve the Problem 11 A Brief Analysis of the Alternatives 11 Recommendations 15 Conclusion 16 References 17 Bibliography 21 Organisation Introduction The Commonwealth Bank of Australia is regarded as one of the foremost providers of incorporated monetary services that include insurance, retail and business banking, management of various funds, institutional banking and services along with products related to share broking. The bank is recognised as one of the biggest listed companies, which operates at the Australian Securities Exchange. Expansion of business mix and that of various brands have eventually placed the company at a higher level and these aspects are considered as the biggest strengths of the bank (Commonwealth Bank of Australia, 2012). In this connection, the Commonwealth Bank possesses an extended presence along with large customer base in any bank located in Australia and also operates its business functions in huge distribution network of monetary services in Australia. Moreover, the bank also possesses a developing presence throughout the world. The bank operates its business functions through the retail banks especially operating in New Zealand, China and Indonesia and has the banking branches in Tokyo, Auckland, Singapore and Hong Kong (Commonwealth Bank of Australia, 2012). The vision of Commonwealth Bank is to deliver finest monetary services towards its worldwide customers. The company aspires to offer top returns to the shareholders along with engaging the customers to spend their money into the bank. The bank follows certain business strategies in order to attract its large base of customers by emphasising upon a number of important areas. The important areas include customer service, business banking, functional and technological excellence, team spirit and ultimately profitability (Commonwealth Bank of Australia, 2012). In this regard, the company greatly values and respects the people belonging to different social backgrounds and experiences. Moreover, the company also delivers exceptional services to its customers based upon equally dissimilar communities. In addition, the deliberate approach of the company through enhanced customer service eventually made the company to attain a few prestigious awards in the year 2012 (Commonwealth Bank of Australia, 2012). Commonwealth Bank of Australia considers the aspect of sustainability in relation to their business activities by focusing upon certain distinct core values of the community. The core values of the community include the customers, governance, people and business environment (Commonwealth Bank of Australia, 2012). Problem Identification and Analysis The aspect of industrial relations is fundamentally defined as a collective association between the employees and the management of a particular organisation. The notion of industrial relations covers certain broad areas related to industrial context such as collective bargaining, active participation of the working people in the management, industrial related issues and various regulatory laws and guidelines relating with the employees (Jackson, 1982). In terms of the industrial relations, Commonwealth Bank of Australia as an employer demonstrates certain obligations that falls under the category of ‘Fair Work Act’ of 2009. This particular Act instructs the business organisations to meet with certain minimum employment circumstances that largely include offering the pay slips, maintaining appropriate working hours through the application of minimum wages and various regulations regarding the dismissal of an employee. The Fair Work Act of 2009 briefly states that the minimum wages as well as the working situations that are provided to the working people should comply with the National Employment Standards (NES) and minimum wage or wages guidelines (O’Brien & et. al., 2008). The banks that prevail in Australia deliver broad collection of financial services for both of its retail as well as corporate consumers. The income from the retail banking generally arises from two basic sources. The two basic sources include interest on loans and transaction or service fees. Though there were presence of several banks that increased in Australia but the domestic retail market was mainly dominated by few of the banks. The Commonwealth Bank of Australia has been one of the dominating retail banks especially in the domestic market of retail banking in Australia (Meagher & et. al., 2001). From the perspective of the aspect of industrial relations, it has been observed that there are various problems that are faced by the retail banks such as the Commonwealth Bank of Australia and other leading retail banks in Australia. The employment especially in the financial services sector has declined as compared with the early years. The other problem has been regarding the fear of technological transformations due to the large growth of the financial banking services. Due to the technological transformations, the working people or the staffs could not comply with the expectations of the authority of the banks and thus generated a problem in the relations between the bank authority and the employees (Meagher & et. al., 2001). Moreover, the fluctuations particularly in the employment levels, staffing functions and increased proportion of part-time employees are few of the significant problems that are faced by the retail banks such as Commonwealth Bank of Australia. The factor of increasing amount of part-time employees in the banking services eventually generated a problem in industrial relations between the banking authorities and the staffs due to the reason that the source of income was substantially limited for the staffs as compared to full-time employees (Conley, n.d.). It has also been recognised that the introduction of new technology has made important changes and as a result the retail banks had to face number of difficulties. The technological transformations were observed especially in the business policies, organisational arrangements and several human resource standards of the retail banks. The various facets of the technological transformations had affected the retail banks while operating their business functions. The technological alterations include the diversification of the delivery channels and alteration in the processing work that varies from the ‘back office’ of branches to centralised locations. The alterations particularly in the organisational arrangements were not supported by the working people or employees and thus led towards forming strained relationship between the bank authority and the employees (Gottschalk, 2007). The retail banks such as the Commonwealth Bank of Australia also faced certain problems regarding the viewpoint of market segmentation. In the earlier days, the retail banks performed their business operations by delivering retail banking services mainly through the branches and greatly focused upon the local outlets for the customers. As a matter of fact, there was a high level of customer loyalty during the business operations in those days. However, nowadays the retail banks perform their business operations by targeting upon their selected markets. Moreover, with the execution of available latest technologies, the retail banks generally emphasise upon the delivery channels for every selected market. Due to greater emphasis upon the aspect of market segmentation, the role and the task of the employees of the banking institutions were increased by a certain level, however their accrued income did not increase substantially and thus it deteriorated the relationship between the employees and the banking authority (Meagher & et. al., 2001). The other problem for the retail banks has been regarding their working culture. The shift of the retail banks from a service culture to a culture of sales eventually raised a problem for them. At the time of service culture, the retail banks worked mainly on large number of standard transactions along with delivering better and enhanced service towards the customers. But in the sales culture, the retail banks started to work by offering sales opportunities to its customers rather than offering superior service towards the customers. As the retail banks followed a sales culture rather than service culture, the retail banks faced the problem of losing certain portion of customers due their offering of vulnerable service towards their customers. The change especially in the work culture posed crucial problems towards the working people that forced them to form an strict relationship with the banking authority (Cox & et. al., 1993). The other considerable problems that the retail banks such as the Commonwealth Bank of Australia faced include the rapid transformations in the working arrangement of the retail banks, staffing standards, reduction in the working skills of the bank employees, decentralised employment relations and seniority pay framework. In terms of the working arrangement of the retail banks, it has been observed that the processing functions of the back office of the retail banks were removed from their branches and became a centralised arrangement. As a result, due to the establishment of centralised functions, the distribution channels of relatively low cost were introduced that largely affected the retail banks by a certain extent (Regini & et. al., 1999). From the perspective of alterations that were made in the staffing standards, the part time staffs largely increased as compared to full time staffs. The retail banks took the decision of lowering the costs through slashing their branch networks and as a result, the securities of the jobs were decreased considerably. In terms of reduction in the working skills of the bank employees, it has been observed that the variety of skills performed by the working people of the retail banks diminished due to the segregation of front and back office job responsibilities (Meagher & et. al., 2001). The retail banks discarded the framework of seniority pay which eventually raised a major problem towards the retail banks. The retail banks discarded the seniority pay framework because in most of the retail banks the individuals to whom the seniority pay is disbursed were essentially based upon the income which is attained through commission rather than fixed salary. These sorts of non-salary benefits of working in a bank eventually raised an important issue towards the retail banks such as Commonwealth Bank of Australia (Kuper & Kuper, 2003). Thus, it can be stated that factors regarding the seniority pay, staffing standards and working arrangements collectively contributed towards maintaining a hard industrial relation between the banking authority and the working people or employees by a considerable level. The other noteworthy problem that was realised by the retail banks was related to the conception of employment relations. The employment relations had been decentralised and thus the relation between the management and the unions had begun to differ considerably. In this context, the relationship between the Commonwealth Bank of Australia and Finance Sector Union deteriorated tremendously at that time due to the fact that the retail banks showed little interest in the participation of the employees. As a result, due to the vulnerable relationship with the Finance Sector Union, the retail banks had to suffer the difficulty regarding the active participation of the employees in the financial institutions (Meagher & et. al., 2001). The Commonwealth Bank of Australia employs approximately 28,000 employees out of which a significant number of working people belong to Finance Sector Union (FSU) as members. Most of the working people of the bank are female and employed on a part-time basis (Fetter, 2002). The internal transformations that were introduced by the bank ultimately deteriorated the relationship between the bank and the union. Due to this deteriorated relationship, the bank became less supportive of the role of the unions in the workplace. In the year 1999, certain occurrences took place that strained the association between the union and the bank (Fetter, 2002). One of the occurrences was related to the pay system of the non-retail working people of the bank. In the mid of the year 1999, the bank started to evaluate the performance of few of its non-retail working people on the basis of a new performance pay method which was known as ‘Performance Feedback and Review’ (PFR) method. The Finance Sector Union very much opposed against the induction of PFR method. The other incident was regarding the issue of bank fees (Fetter, 2002). It was observed that one of the union officials revealed to the media that the working people or the staffs of the bank had made active participation in the market research on the issue of bank fees. In response to this issue, the bank alleged against the union that the union was disclosing the secret commercial information to the third parties i.e. the media and thus the relationship between the bank and the union continued to deteriorate largely (Fetter, 2002). Description of Certain Alternatives That Might Solve the Problem In order to solve the above problems that were faced by the Commonwealth Bank of Australia, certain alternatives can be evaluated. The alternatives that might solve the above discussed problems include delivering flexible organisational work structure, promoting better management, offering remuneration, rewards and performance pay towards the working people and delivering superior as well as enhanced staffing functions. A Brief Analysis of the Alternatives The above discussed types of alternatives might solve the problems that were faced by the Commonwealth Bank of Australia by a considerable level. From the viewpoint of delivering flexible organisational work structure, there lays utmost need for certain principles or guidelines. The guidelines or principles include promoting a sense of shared ownership amid the working force or the staffs of the bank. By promoting a sense of shared ownership, the bank could attain their expected organisational objectives relating to efficiency, productivity and delivering quality services to the customers (Meagher & et. al., 2001). Moreover, the guidelines or principles also include empowering the staffs in order to make sure that the staffs possess the sense of utmost importance as well as responsibility. Moreover, the guidelines regarding the organisational work structure must be designed in such a way that the working people of the bank must believe that the bank is the best place to work for them. Along with promoting and empowering the working people, the guidelines must also encourage the employees regarding their on-job training which might ultimately diminish the problems that are faced by the retail banks such as Commonwealth Bank of Australia significantly. In addition, the guidelines should also look forward towards establishing a flatter organisational structure along with working as a team of employees within the bank regarding the issue of staffing functions. As most of the employees of the bank are working on a part-time basis, the bank should deliberately work especially upon the staffing functions without generating any major issue (Meagher & et. al., 2001). In terms of promoting better management, the bank could introduce a well organised and one of the renowned programs i.e. ‘Financial Management Improvement Program’ (FMIP) in order to enhance the management of public service along with ensuring accountability. The introduction of this program is very much necessary for the bank because it is largely attached with delivering financial services towards its worldwide customers along with public service management (Commonwealth of Australia, 2003). The program i.e. ‘Financial Management Improvement Program’ (FMIP) could assist the managers of the bank to mainly emphasise upon ‘managing for results’ rather than directing their efforts to valuable inputs and procedures. This particular helpful function of the program could support it to attain grater resource competence along with greater effectiveness (Commonwealth of Australia, 2003). From the perspective of the ‘Financial Management Improvement Program’ (FMIP), the authority of the bank can deliver certain financial related programs towards its working people or employees such as advancing loans that comprise both medical and non-medical purposes along with providing additional incentive programs towards the working people or staffs of the bank. With regard to offering remuneration, rewards and performance pay towards the working people of the bank, a deliberate approach could be considered in order to suit their business culture along with business requirements. The bank could offer attractive remuneration, reward or any sort of simple performance pay systems instead of a composite pay system towards its working staffs. This particular approach could restrict the employees of the bank to take certain major actions against the bank in association with the large trade unions that prevail in Australia (Commonwealth of Australia, 2003). In this connection, there generally lie certain major approaches towards individual performance that is based upon performance-based remuneration. The approaches are performance-linked advancement and performance-linked bonus. The performance-linked advancement is regarded as a base salary for delivering satisfactory or higher performance and the aspect of performance-linked bonus is viewed as one-off bonus payment that is based upon the recognition of higher than satisfactory performance of the working people (Commonwealth of Australia, 2003). Finally, the offering of adequate staffing functions towards the working people or the staffs of the bank ultimately could support the bank to avoid and to settle various employment disputes while operating their business functions. The transformation of the working people from a part-time basis to a full-time basis could lead the bank to cope up with the various difficulties by a significant extent (Commonwealth of Australia, 2003). Recommendations Among the various alternatives that the bank can apply in order to cope up with several problems that it faced, the aspect of delivering flexible organisational work culture would be very much appropriate as well as beneficial on behalf of the bank. The introduction of flexible organisational work culture would act as a notion of performance management that greatly emphasises upon advancing as well as executing the various performance management procedures within the bank (Commonwealth of Australia, 2003). The aspect of performance management generally includes certain functions that make sure that the goals of any particular business organisation are constantly being met in an effective as well as in efficient way. The idea of performance management greatly emphasises upon the performance of an organisation (Bacal, 2011). The alternative of offering flexible organisational work culture could act as a performance management framework for Commonwealth Bank of Australia in order to attain their various organisational objectives as well as to resolve the different issues relating with the employees. The performance management would act as a legislative framework that will deliver certain opportunities in order to manage the suitable requirements of the bank. The aspect of offering flexible organisational work culture as a performance management direction would work for the bank in order to establish a fair as well as open performance management procedure that would cover all the issues relating with the employees of the bank (Commonwealth of Australia, 2003). Conclusion After acquiring a brief idea regarding the various difficulties that the Commonwealth Bank of Australia had already faced, certain alternatives are recognised for the bank to overcome those difficulties. The bank delivers outstanding financial services towards its worldwide customers and strives best for attaining their expected business objectives. The various problems for the bank were related with several aspects that include the organisational structure, staffing functions, employment relations and dealing with the trade unions. The bank could implement various alternatives that are available towards them such as delivering flexible work organisational structure, offering attractive remuneration and rewards, introduction of various encouraging performance related pay systems and establishing superior and enhanced staffing functions. The above discussed various alternatives would be appropriate for the bank in order to cope up with various difficulties that the bank faced along with enhancing the relationship among its working people or employees. Thus, it can be stated that by following or applying the various suitable alternatives, the Commonwealth Bank of Australia can cope up with the recognised difficulties that they have faced while operating their business functions worldwide. Moreover, the bank can form a superior as well as enhanced relationship amid its working people or employees by a considerable level. References Bacal, R., 2011. Performance Management 2/E. McGraw-Hill Professional. Commonwealth Bank of Australia, 2012. Commonwealth Bank Overview. About Us. [Online] Available at: http://www.commbank.com.au/about-us/our-company/overview/default.aspx [Accessed April 02, 2012]. Commonwealth Bank of Australia, 2012. Strategy. About Us. [Online] Available at: http://www.commbank.com.au/about-us/our-company/strategy/default.aspx [Accessed April 02, 2012]. Commonwealth Bank of Australia, 2012. Diversity. About Us. 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Regini, M. & et. al., 1999. From Tellers to Sellers: Changing Employment Relations in Banks. MIT Press. Bibliography Bray, M. & et. al., 2011. Employment Relations” Theory and Practice. McGraw-Hill. Commonwealth Bank of Australia, 2012. Awards. About Us. [Online] Available at: http://www.commbank.com.au/about-us/our-company/awards/default.aspx [Accessed April 02, 2012]. Hearn, M. & Michelson, G., 2006. Rethinking Work: Time, Space and Discourse. Cambridge University Press. Price, R., 2007. Employment Law in Principle. Thompson Law Book Company. Read More