How organisational culture creates complexity of management: Barclay’s Libor Scandal BY YOU YOUR SCHOOL INFO HERE DATE HERE How organisational culture creates complexity of management Introduction The role of management in an organisation requires more than just traditional, structured management principles of leading, controlling, planning and organising…
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If management teams follow guidelines of ethical behaviour, social learning theory indicates that subordinates and co-managers in the organisation will role model these behaviours so long as there is reiteration of mission and vision and establishing an environment where ethics and moral business practices are iterated repeatedly by senior executive leadership. Therefore, establishment of an effective and moral organisational culture requires significant investment on behalf of management to appeal to sociological and psychological needs and values of employees. Fairholm (2009) identifies that in order to build a positive culture, a manager must be visionary, charismatic, and inspirational to gain followership and dedication to organisational vision or mission. The psycho-social dimensions of human behaviour are what make investigation into the Barclay’s Libor Scandal so relevant when attempting to understand how culture creates complexity of management. Barclay’s was a participant in fraudulently inflating their Libor rates in order to create the perception of better creditworthiness and to make Barclay’s appear more financially stable than the bank actually was (New 2012). These actions were designed to entice shareholder investment and ensure more profitable sales of various derivatives that were, in actuality, over-valued. If senior leadership at the organisation had developed a culture of ethics dedicated to sustaining moral business practices, manipulation of the Libor interest rate would not have occurred. The purpose of this research into the Libor Scandal is to determine how culture played a role in creating a negative reputation for Barclay’s in a variety of profitable investment markets. The research examines Barclay’s senior management team involvement in the scandal and their failures in creating an organisational culture that would have prevented public outcry and legislative investigations into Barclay’s ethical business practices. The scope of the research is an investigation into what potentially drives a need for development of an organisational culture through analysis of secondary research literature describing cultural importance and the factors that could have potentially driven Barclay’s management to dismiss ethical business practices in favour of profit gain. Research identifies that culture creates management complexity with the demands placed on managers to exceed their role of structured manager to that of a human resources-focused leader that understands transformational leadership imperatives and role modelling behaviours to gain followership and dedication to meet corporate goals. Complexity at Barclay’s Starnes, Truhon and McCarthy (2010) identifies that authentic relationships can only be developed over time, starting with a series of reciprocal acts between organisational actors that, over time, leads to trust and respect. Barclay’s maintains a subordinate population and middle management population that has a high turnover rate in which long-term, effective relationships are difficult to develop as employees and managers defect to other financial institutions for better career development. A highly centralised organisation, Barclay’s leaders utilise an autocratic management style in which policy-makers are bureaucratic and executives dictate both policy and punishments for non-compliance to
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