Professor Notes about Management Theory & Practice of Westpac Banking

Question: Discuss about theManagement Theory and Practice for Westpac Banking. Answer: Introduction Organizations around the world are emphasizing on the use of sustainable business practices for ensuring their long-term growth and development. The external competitive environment is causing the need for organizations to carry out their business functions in a manner ensuring the economic, social and environmental development. Sustainability implies for businesses to consider the long-term impact of their operational activities and incorporates the use of such practices that maximizes the interests of all its stakeholders (Wilson, 2003). In this context, the present essay reflects on the sustainability of Westpac Banking Corporation that has been in the news during the past years as an example of organization carrying out its operational activities in a sustainable manner (Smith, 2014). The essay implements the theoretical concepts of sustainability to the selected organization for critically analyzing the influence of these concepts on its managerial practices. At last, the essay provides a series of recommendations to the company to enhance its sustainability. Westpac Banking Corporation Westpac Banking Corporation has been recognized as a leader in the list of Global 100 Most Sustainable Corporations in the World at the World Economic Forum in the year 2014 (Westpac, n.d.). The corporation is categorized as one of the major public bank of Australia. It is involved in providing banking and financial services to about 13 million customers worldwide. It is known to be a sustainability leader in the banking industry of Australia. The corporation has achieved this position by creating long-term value for its customers, employees, shareholders and the community. This is done by Westpac through recognizing its long-term interests and ensuring that these are consistent with resource efficiency. The responsible leadership practices have enabled the corporation to align its strategic objectives with sustainability measures that aims to protect the interest of all its stakeholders. Westpac has developed and maintained a work culture of undertaking social, environmental and eco nomic responsibility to create a sustainable future. The incorporation of sustainability as a key part of its business strategy has enabled Westpac to maximize its performance by promoting its goodwill worldwide (Westpac Group Annual Review and Sustainability Report 2012, 2012). Implementation and Evaluation of Theoretical Concepts of Sustainability Business organizations can achieve corporate sustainability through emphasizing on the theoretical concepts of sustainable development, stakeholder theory and corporate accountability theory. The theoretical concept of sustainable development recognizes the importance of achieving a balance between economic growth, environmental protection and social development for business organizations. According to the World Commission for Environment and Development (WCED), sustainable development can be stated as meeting the demands of present generations appropriately without stressing the ability of future generations to meet their needs and demands (Wilson, 2003).WECD identifies the role and responsibility of business corporations in ensuring the sustainable development of the environment, society and the economy wherein it carries its operational activities. In this context, rights theory states that human rights should be protected and should not be negatively impacted by the property righ ts. As per rights theory, business corporations should protect the human rights of its each and every stakeholder such as employees, local community and the overall societal environment impacted by their property rights. The central principle of sustainable development is also adopting such business practices that do not have any adverse impacts on the environment quality. This emphasizes the need for businesses to minimize the emission of greenhouse gases and other such toxic substance that pollutes the environment. Economic development can be achieved by business organizations through implementation of effective measures that minimizes operational risk, developing reserves and selecting the institutional options that reduces market fluctuations. Thus, it is the ethical obligation of businesses to promote sustainable development by adopting responsible business practices (Wilson, 2003). Stakeholder theory underlines the concept of promoting the well-being of each and every stakeholder by businesses to achieve sustainability. According to the stakeholder theory, the main aim for existence of nay organization is to create value for all its stakeholders. Stakeholders can be defined as group of people that are impacted by the internal and external business environment of an organization such as customers, employees, shareholders, suppliers, local community and many others (Harrison Wicks, 2013). This can be achieved by business firms through developing long-term relationships with all its stakeholders enabling them to attain success and growth. Thus, as per the theory the senior managers should ensure that their organizational functions address the need of its stakeholders effectively. The stakeholder approach in sustainability concepts stresses on the need for businesses to improve the status of the world and not only developing profits for its shareholders (Wilson, 2 003). In this regard, the major challenge that exists for businesses to achieve sustainability is to identify its overall stakeholders and developing strong relationships with them. The next challenge that exists for corporate managers is to develop strategies for different stakeholder group as they have varying goals, priorities and demands. The strategies include implementing measures such as developing safer workplace, producing high-quality products or services, compliance with all the government regulations, environment protection and ensuring social justices. These strategies will enable a business organization to manage effectively its relationships with internal and external group of people for achieving a competitive advantage (Harrison Wicks, 2013). Corporate accountability is also one of the major underlying theoretical concepts in sustainability practices. Corporate accountability incorporates the legal and ethical obligation of businesses for ensuring the development of a res ponsible behavior by maintaining transparency in their operational activities. The theory of accountability emphasizes on protecting the interests of stakeholders by complying with the corporate laws of all the jurisdictions in which an organization conducts its business operations. It emphasizes on the need for organizations to report their performance on environmental, social and economic parameters, known as triple bottom line reporting. Thus, all these theoretical concepts of sustainability has identified and evaluated the need for businesses to achieve sustainability (Keith, 2010). Critical Analysis of the Influence of Theoretical Concepts on Managerial Practices in Westpac Banking Corporation with Reference to Sustainability Westpac Banking Corporation has effectively implemented and adopted all the theoretical concepts of sustainability discussed above. With reference to the theoretical concept of sustainable development, Westpac have very well identified the significance for adopting responsible business practices that promotes social, economic and environment development (Westpacs Sustainable Supply Chain, 2015). For this purpose, senior managers of Westpac has developed a Code of Conduct that its business partners such as employees and suppliers need to follow to minimize the adverse impacts on the environment. Westpac encourages it suppliers to prioritize their environmental targets, conduct independent audits agents appropriate environment standards and incorporate the use environment friendly products. This enables the banking corporation to develop processes and services that does not degrade the environment quality in any aspect (Westpac Group Sanctions Policy, 2014). In addition to this, it is recognized as first bank to support the Green Challenge Plus program launched by Australian government, aimed at reducing the emission of greenhouse gases from the countrys industry sector (Smith, 2014). The banking corporation also has properly understood the responsibility it owes to local communities and aims to carry out operations in a manner that result in developing long-term benefits for its society. Westpac incorporates the use of a written policy for community involvement and aligning its core business strategy in accordance with the needs and expectations of the community (Westpacs Sustainable Supply Chain, 2015). It has launched a Social Change Fellowship Program that aims to improve the well-being of people of the country through inculcating a positive social change in them. This program is aimed at providing opportunity to the Australian people to explore their potential through enrolling in a personalized plan that will improve their skills a nd capabilities (Leigh, 2016). The banking corporation also adopts responsible business practices for achieving economic sustainability by emphasizing on the economic development of the indigenous areas of the countries. It is actively involved in developing sound infrastructure, promoting access to education and improving the condition of living in these areas. Westpac has introduced a micro-finance loans strategy that aims to provide funds to the business entities in these areas that does not matches the mainstream lending criteria (Enabling Prosperity: SuccessFactors ForIndigenous Economic Development, 2014). Westpac has also effectively identified all its key stakeholders and has incorporated best strategies for ensuring the well-being of the internal and external people connected with the organization. The major stakeholders of the banking corporation include customers, employees, community partners, investors and suppliers. Westpac ensures employees welfare by engaging the employees in all its decision-making practices. It is also recognized as the first Australian bank that emphasizes on employee engagement as a major part of its organizational strategy. It abides with core labor standards and provides a healthy working environment through ensuring fair treatment to all to its employees. The banking corporation also implements effective measures so that it does not violate any employment laws and regulations and protects its workers from any type of harassment, discrimination and bullying (Westpac Groups Principles for Doing Business, 2014). Westpac maintains that its banking solutions should be simple and ethical for all its customers. For this purpose, it has implemented effective strategies for being available to the customer at all time by minimizing the waiting time and resolving their problems and complaints quickly and fairly. The bank aims to generate value for its customers by respecting the customers right to privacy and adopting responsible marketing and lending practices. Customers right to privacy is maintained by ensuring that all the personal and financial information of the customers remain confidential so that it is not accessible by any third party (Westpac Groups Principles for Doing Business, 2014). Westpac also markets its products reasonably by adhering with all the legal and regulatory marketing requirements. Westpac protects the interests of the government by promoting economic development through investing in countrys infrastructure and supporting the industrial development of the country. The ba nking corporation has identified its suppliers as most important in enhancing its substantiality performance and therefore has regarded them as business partners. Westpac maintains its relationship with suppliers through abiding with the Code of Conduct that is to be followed by the bank and its suppliers. This helps them to achieve trust of its suppliers and therefore maximizing their interests (Westpac Groups Principles for Doing Business, 2014). Westpac incorporates the concept of corporate accountability for achieving sustainability by complying with all the corporate laws of the jurisdictions wherein it operates its business activities. The operational activities of the bank are monitored and regulated by the following governmental agencies in Australia, that are, Australian Prudential Regulation Authority (APRA), Reserve Bank of Australia (RBA), Australian Securities and Investments Commission (ASIC), Australian Securities Exchange (ASX) and Australian Competition and Consumer Commissions (ACCC). All these governmental agencies in the country provide guideline to Australian banks for conducting their operational activities. Westpac has to abide by all the legal laws and regulations of these governmental agencies for achieving sustainability in all its business practices (Westpac Groups Principles for Doing Business, 2014). Westpac also complies successfully with all the statutory requirements of New Zealand (NZ) and has t herefore established its subsidiary in the country Westpac New Zealand for providing its financial and banking services to the customers of NZ (Westpac: Annual Report, 2008). The US banking operations of the bank are monitored and supervised by US Federal Reserve and International Banking Act (IBA). IBA act maintains that foreign banks are not allowed to establish a branch in the US without obtaining consent of the US Federal Reserve (Westpac Group: US Resolution Plan, 2013). Westpac has also strived to introduce accountability in all its business operations through providing regular reports on its economic, environment and social performance with adoption of Global Reporting Initiative (GRI). The implementation of such a framework by the bank enables it to adopt Triple Bottom Line (TBL) approach in its sustainability practices. The GRI report developed by the banking corporation aims to provide disclosure regarding its business strategy, governance, ethics and stakeholder engagement. GRI is an international independent organization that established the sustainability reporting standard for the businesses to seek transparency in their operational activities. The incorporation of a sustainable reporting system by Westpac facilitates it in decision-making practices through identifying the risk in its supply chain management practices and developing effective strategies for mitigating them. The banking corporation has applied best practice standards for repo rting its financial, environmental, social and governance aspects. It also publishes its annual performance reporting and benchmark reporting to maintain accountability and transparency in all its business operations (Approach to reporting, n.d.). Thus, it can be stated from the above discussion that Westpac has successfully implemented all the theoretical concepts of sustainability such as sustainable development, stakeholder engagement and corporate accountability in its operational activities. In addition Recommendations Westpac has achieved sustainability in all its business practices but need to ensure its sustainability through effectively meeting the issues and challenges in banking industry. In this context, it is recommended to Westpac to implement effective measures to strengthen its sustainable business practices for ensuring its long-term growth and success. Westpac is recommended to introduce and adopt a sustainability maturity assessment that ennobles it to continually monitor its sustainability initiatives and comparing them with the standards determined. The assessment will effectively evaluate the performance of the bank by identifying the loopholes in its sustainability strategy and redefining its sustainable objectives more accurately (To be good corporate citizens, banks must improve their sustainability reporting, 2012). In addition to this, Westpac is also recommended to undertake sustainability initiative feedback analysis with all its stakeholders. It would help the banking corpo ration to periodically assess the effectiveness of its sustainability measures adopted for protecting the interests of all its stakeholders. The feedback analysis will appropriately meet the demands of all its stakeholders for gaining access to sustainability related information. Westpac also need to emphasize more on its benchmark reporting system that will facilitate the corporation to review the current trends regarding sustainability in the banking sector. Reviewing the current trend in the industry will enable Westpac to identify the most appropriate sustainability strategies that best fits win accordance with its strategic mission and visions. Thus, all these measures are recommended to Westpac for enhancing its sustainability practices (To be good corporate citizens, banks must improve their sustainability reporting, 2012). Conclusion On the basis of the overall discussion, it can be stated that Westpac has strengthened its brand image in the recent years on the basis of implementing sustainability in all its business functions. The banking corporation has ensured the economic, social and environmental development through its business activities. Also, it effectively engages all its stakeholders in the decision-making process for protecting the interest of all the people directly or indirectly connected with the corporation. Westpac maintains accountability and transparency in its business model by complying with all the legal laws in the jurisdictions where it conducts its operations. It also develops and publishes its sustainable report for providing an assessment of its economic, environmental and social performance to all its stakeholders in accordance with the Global Reporting Initiative (GRI) standards. Westpac is recommended to conduct sustainability maturity assessment and sustainability initiative feedbac k analysis for ensuring its sustainable growth by continually monitoring and reviewing its sustainability performance. References Approach to reporting. (n.d.). Retrieved September 7, 2016, from https://www.westpac.com.au/about-westpac/sustainability/the-way-we-work/approach-to-reporting/ Enabling Prosperity: SuccessFactors ForIndigenous Economic Development. (2014). Retrieved September 7, 2016, from https://www.westpac.com.au/docs/pdf/aw/Enabling_Prosperity_Success_Factors_for_Indigenous_Economic_Development.pdf Harrison, J.S. Wicks, A.C. (2013). Stakeholder Theory, Value, and Firm Performance. Business Ethics Quarterly 23(1), 97-124. Keith, N. (2010). Evolution of Corporate Accountability: From Moral Panic to Corporate Social Responsibility. Business Law International 11(3), 247-276. Leigh, L. (2016). 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