Ethics in Decision Making for Banking Industry: A Brief Overview
Organizations require taking numerous decisions in their business environment in their day to day operations. Working in an organization would require the following of a certain ethical model or a framework while taking such decisions. The business ethics outlines acceptable behavior that organizations usually expect to receive from the employees (Anz.com.au. 2019). Business ethics and strong decision making are helpful in helping companies to select the best of business opportunities. This assignment discusses the ways by which the business decisions are undertaken within a certain organization. The organization chosen for this particular assignment is Australia and New Zealand (ANZ) Banking Group. ANZ banking group is considered as among of the largest banks in the world. Their business serves around 5.5 million customers and their own assets of around AUD$27 billion (Anz.com.au. 2019). They employ around 28,100 employees and they are represented in their primary markets of New Zealand and Australia along with Asia, UK/Europe, United States and Pacific. This assignment presents a literature review on how ethics are relevant for business decisions; it relates the same with the given organization.
The relevance of ethics for business decisions- Literature review
According to Baselga-Pascual, Trujillo-Ponce and Vähämaa (2018), it has been found that ethics has been considered as a subject that has inspired a huge number of debates in the industry of banking especially the one that belongs to the list of best banks such as ANZ Banking Group. Ethics in the business decision making has been a vital subject of interest during every financial crisis since the year 1980, in this time the corporate greed was usually said to be high, regulators and governments had hardly addressed the morals in banking in the regulatory proposals. According to researchers like Foo (2017), the ethics in decision making had been introduced for bringing about rules that would need banks to boost the balance sheet as well as boost up their reserves. This had been intended to make the field more resistant to their future shocks which is similar to the shock that had been faced by Lehman Brothers’ collapse and hence reduce the panic of risk along with systemic failure.
As per Avkiran (2018), ethics as well as trust had been a very crucial topic for the banking industry. They are described as the engine of the success of this particular industry. Various fraudulent financial practices are a part of a specific culture which believes in bending various rules for their personal gain. As per Martin, Kelly and Jones (2016) the banking industry performs various functions that are very vital, one of these functions include mobilization of various financial resources from the locations where they are not actually needed to the areas that mostly need them. These functions need to be effectively carried out, the economy will be able to mobilize a meaningful level of savings and it would also ensure that these funds would be effectively directed towards a viable project.
Ethical Principles for Banking Industry
Ignorance of ethical practices and disrespect for various banking principles are manifested in various forms in this particular area. According to Bodle, Brimble and Weaven (2018), the banking industry must follow various ethical principles religiously for avoiding various issues include complying with pertinent applicable laws in course of various duties, the banks must inform their customers regarding the risks and benefits of products as well as services that had been offered to them, they must provide fair as well as neutral services to the customers that buy the same services. The bank industry must not disclose any data regarding banks or their customers; they must not take any decision that would affect their services or the reputation of the bank.
Organizational rules and policies to ethics in decision making
The ANZ Banking group has structured a list of guiding principles which set the standards for the way they carry out their business. It is mandatory for every employee to comply with their code of conduct and it is applied equally to the temporary or permanent employees, consultants and contractors (Lehnert, Craft and Singh 2016). The leaders within the organization understand the actual importance of trust and the requirement to demonstrate the commitment to maintaining their ethical infrastructure for the purpose of decision making. In this regard, bakers usually take personnel as well as policy initiatives for putting ethics in front and center.
The code of conduct that is followed by the organization represents the standards that are followed by them in order to carry out their business. It is usually a requirement that all the employees of NYZ comply with their code of conduct and it is equally applied to all the employees (Lentner, Szegedi and Tatay 2015). The Non-Executive Director’s Code of Conduct guides the non-executive directors of the organization for perusing their ethical standards in the interests of their stakeholders, customers, employees, communities in which they operate. The organization follows various policies that are utilized for the purpose of decision making such as changing their organizational strategies, prevent fraud and illegal activities and many more. Some policies include Anti-Barbery and Anti-Corruption policy, Counter Terrorism Financing Policy and Anti-Money Laundering, Global Fraud Policy, Whistleblower policy and many more. Some more policies are ANZ Employee Indemnity Policy, ANZ Privacy Policy, ANZ Sanctions Policy Summary, ANZ Directors Disclosure, of Interest Protocol and Procedures for Handling Conflicts of Interest and some more (Anz.com.au. 2019). All the policies are utilized by the organization for various purposes which finally lead to decision making for different departments.
ANZ Banking Group’s Code of Conduct and Policies
The organization follows these policies and code of conduct for decision making by utilization of various steps, the steps that show that the organization considers ethics in its business decision making are as follows
Defining problems: defining problems is considered to be most important in the organization, this helps them to identify desired outcomes. The way they define their problem shapes their understanding of the causes and where they need to look for solutions. Defining the problems help the organization in stating their problems clearly (Musbah, Cowton and Tyfa 2016). An example of this is that previously the loan department was responsible for handling all kinds of loans and this created confusion regarding the interests on different sort of loans and their tenure to repay the amount and many more, hence the problem was put forward and it was found that a single department for the loan section is the major problem.
Seeking relevant assistance, support and guidance: after the issues are defines, it is vital to look for resources that would assist in taking decisions (Xu, Loi and Ngo 2016). Resources might include people such as mentors, external colleagues, coworkers, family, friends and many more along with organizational codes and professional guidelines.
Identifying the alternatives: In this step the organization does not limit itself to various obvious alternatives or the steps that have already worked in the past (Wittmer 2016). They always welcome better alternatives, they freely accept numerous solutions for a single issue.
Evaluating the alternatives: They readily evaluate the alternatives and identify the likely negative as well as positive consequences for every alternative (Dane and Sonenshein 2015). In this step the organization consults with resources including written standards and guidelines, this helps them to understand which consequences are of lesser or greater import.
Making the decision: After the organization has selected the best alternative, the decision is undertaken for solving the issue (Lehnert, Park and Singh 2015). In case the organization has faced the issue in a team environment, this step helps the organization in presenting a proposal to the team along with a clear definition of the issue; a proper list of the alternatives which had been considered is presented along with a clear rationale for the solution that has been proposed.
Implementing the decision: After the decision is taken, it is implemented within the organization.
Evaluating the decision: After the decision has been implemented, the organization evaluates if the decision had solved the detected issue (Schwartz 2016). This is considered to be an important step because, if the decision has not solved the issue, they try other alternatives for that purpose.
Steps for Ethical Decision Making at ANZ Banking Group
Is ethics relevant for small business?
Ethics is relevant for every industry irrespective of their field and sizes. Ethics can be implemented in small businesses by concentrating on the basics of ethics. Some basic features of ethics that can be followed by small businesses include being honest, being honest with their employees would result in more trust among the customers (Bazerman and Sezer 2016). If the organization withholds data or proper recognition for the work that has been done properly, it has the chances to cause a rift between the organization, the employees and any vendor or client. Disgruntled employees might lead to adverse actions and hostility with the environment at the workplace. Rippling the trust pool might result in adverse actions and make it difficult for the organization to achieve success. The second ethical factor to be considered by small businesses include integrity, the integrity of an organization is put to test with tough deadlines and undoable tasks, staying honest during tough conditions is usually tough for various organizations (Schwartz 2016). Suppose Facebook has introduced a feature where organizations can post regarding its whereabouts even after they have actually taken place, this can be followed by the organizations if they miss a certain deadline for posting about a particular activity but it stands against their ethical judgement. The organizations must maintain vigorous integrity for withstanding such temptation in order to ensure trust among the ones in the company.
Fairness is one more ethical measure that must be followed by small business, for example while establishing various security measures for their business, weather it is regarding the surveillance of the building or digital security for the emails and credit card numbers, the organization must be fair to everyone who has been impacted by the choices that have been made by the organization (Martin, Kelly and Jones 2016). The organization must take decisions after considering the perspective of the employees, customers and clients, this will help them to undertake effective decisions. Loyalty is a principle that comes along with a caveat. Loyalty must be followed by an organization considering the fact that their capacity to follow their other ethical principles is not compromised. Suppose if an organization fires an employee for the fact that another employee would be provided a chance to promote, is not an ethical step to follow, hence loyalty towards any aspect must not compromise the ethical practices that have already been followed by the organization. The most important step that has to be followed by small businesses is that their principles must abide by the laws. In some cases they can set specific rules and laws related to their organizational operations and are also important to be within the decided regulations (Bodle, Brimble and Weaven 2018). Common contracts can be set in order to protect their own business but it must also be considered that they do not infringe on other’s rights as well. In case the organization gets confused regarding these matters, they can consult with their lawyer or moral compass for resolving the issues.
Ethics in Small Businesses
Conclusion
From the above assignment, it can be concluded that ethics in making business decisions has become a vital concept. Considering both the topics this assignment discusses the importance of ethics in decision making process carried out by the organizations. The organization chosen for this assignment is ANZ banking groups. The assignment discusses the relevance of ethics for business decisions; a literature review along with discussion has been presented in the assignment. It further discussed the relevance of ethics for business decisions in the chosen organization, it analyses the rules and policies followed by the organization. It also presents various steps that are followed by the organization for the purpose of using ethics in decision making. At last the assignment discusses regarding weather the concept of ethics is relevant for small businesses. From the discussion it can be concluded that ethics is relevant to all the organizations irrespective of their size of the field of work. Every organization carries out the process of decision making at numerous stages and hence it is important for them to consider certain code and policies of ethics for that purpose.
References
Anz.com.au. 2019. ANZ Personal Banking | Accounts, credit cards, loans, insurance | ANZ. [online] Available at: https://www.anz.com.au/personal/
Avkiran, N.K., 2018. Systemic Risk and Productivity of the Major Australian Banks. Theoretical Economics Letters, 8(11), p.2157.
Baselga-Pascual, L., Trujillo-Ponce, A., Vähämaa, E. and Vähämaa, S., 2018. Ethical Reputation of Financial Institutions: Do Board Characteristics Matter?. Journal of Business Ethics, 148(3), pp.489-510.
Bazerman, M.H. and Sezer, O., 2016. Bounded awareness: Implications for ethical decision making. Organizational Behavior and Human Decision Processes, 136, pp.95-105.
Bodle, K., Brimble, M., Weaven, S., Frazer, L. and Blue, L., 2018. Critical success factors in managing sustainable indigenous businesses in Australia. Pacific Accounting Review, 30(1), pp.35-51.
Dane, E. and Sonenshein, S., 2015. On the role of experience in ethical decision making at work: An ethical expertise perspective. Organizational Psychology Review, 5(1), pp.74-96.
Foo, M., 2017. A review of socially responsible investing in Australia. An independent report for National Australia Bank (NAB) by the Australian Centre for Financial Studies (ACFS) at Monash Business School.
Lehnert, K., Craft, J., Singh, N. and Park, Y.H., 2016. The human experience of ethics: A review of a decade of qualitative ethical decision?making research. Business ethics: A European review, 25(4), pp.498-537.
Lehnert, K., Park, Y.H. and Singh, N., 2015. Research note and review of the empirical ethical decision-making literature: Boundary conditions and extensions. Journal of Business Ethics, 129(1), pp.195-219.
Lentner, C., Szegedi, K. and Tatay, T., 2015. Corporate social responsibility in the banking sector. Pénzügyi Szemle/Public Finance Quarterly, 60(1), pp.95-103.
Martin, D.E., Kelly, R., Jones, G.L., Machin, H. and Pollock, G.A., 2016. Ethical issues in transnational eye banking. Cornea, 36(2), pp.252-257.
Musbah, A., Cowton, C.J. and Tyfa, D., 2016. The role of individual variables, organizational variables and moral intensity dimensions in Libyan management accountants’ ethical decision making. Journal of Business ethics, 134(3), pp.335-358.
Schwartz, M.S., 2016. Ethical decision-making theory: An integrated approach. Journal of Business Ethics, 139(4), pp.755-776.
Wittmer, D.P., 2016. Developing a behavioral model for ethical decision making in organizations: Conceptual and empirical research. In Ethics in public management(pp. 57-77). Routledge.
Xu, A.J., Loi, R. and Ngo, H.Y., 2016. Ethical leadership behavior and employee justice perceptions: The mediating role of trust in organization. Journal of Business Ethics, 134(3), pp.493-504.
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