This report analyses the external and internal business environments that could be the cause of the ethical lapses; giving steps towards mitigating the lapse. Ethical issues and compliance are a challenge facing Bank of America. Ethical issues affect all the stakeholders in a given business. There has been a perception that the financial institutions across the world tend to be more unethical than any other forms of business. This perception could be justified by the issues facing Bank of America.
Complaints of constant lapses in the ethical culture of the bank are rife. The most recent ethical scandal was where the bank is accused to be only interested in short-term returns and not paying attention to the products that are suitable for customers. According to Mujtab (2010:23), the implementation of the Payment Protection Insurance by the Bank of America is an unacceptable measure in respect to the Finance Act (2001). This insurance policy saw overdraft charges being imposed on small business account holders. Interest swaps were also charged on small business holders, a thing that is only done on large corporations by other banking institutions.
On the 25 June 2012, the Financial Services Authority (FSA) announced that it had found numerous errors in the way Bank of America had sold complex financial products to around 25,000 small and medium sized businesses. These interest swabs were designed to protect small-sized business customers. However, the mis-selling by the bank resulted to severe effects on the small businesses. The ethical concerns raised here were that the policy was too complex for the business owners to appreciate and that the product was conditional upon the clients. The bank has come under immense public condemnation calling for cultural and management change.
Table of Contents
Introduction
Executive Summary
The Ethical and Compliance Issues
Internal Business Environment
External Business Environment
Response to the ethical challenges
Strategic Planning and Organizational Structure Change
Management Roles
Functions of the management
Measuring the success of the strategic responses
Possible ethical issues in implementing the strategic plans
Conclusion
Recommendations
Research Objectives and Key Themes
This report examines the internal and external business environments of Bank of America to identify the root causes of recurring ethical lapses and proposes strategic management frameworks to mitigate these challenges through organizational structure changes and improved compliance protocols.
- Analysis of internal ethical failures, including employee behavior and client relationship management.
- Evaluation of external factors, such as technological and social influences, affecting organizational ethics.
- Strategic planning for the implementation of comprehensive ethical codes and training initiatives.
- Definition of management roles and functions to ensure sustained compliance and integrity.
- Methodologies for measuring the effectiveness of ethical strategic responses and behavioral change.
Excerpt from the Book
Internal Business Environment
Bank of America, like many other banking institutions, employees a large number of employees from different backgrounds. This poses the threat of ethical issues resulting from the employee behavior. Some employees spend a lot of time checking personal email accounts at the expense of serving the customers. Some employees in fact, tend to check the accounts of clients and reveal details to unauthorized persons. There are also claims of harassment and it is reported that the respective managers fail to deal with the cases appropriately. There are legal consequences associated with employee behavior. Some of these consequences could prove detrimental to the business. For example, if the Executive Officer discriminated against an employee based on their religion, gender, or ethnicity when making promotional recommendations, the victim could seek legal action. In the event where the bank is at constant legal tussles, a negative image is portrayed and this may cost it client relations.
2. Client Relations
The Chief Executive Officer is also concerned about the ethical issues involved with the relationship between the members of staff and the clients. When dealing with clients, it is expected that the employees demonstrate ethical practices. For example, the marketing and advertising officers have been accused of feeding the clients with false information regarding the products of the bank. The terms of service of the various accounts were not given to the clients as required. The officers were only interested in having a large number of people opening bank accounts so as to earn a large percentage of commission.
Summary of Chapters
Introduction: Provides an overview of Bank of America's corporate hierarchy and its market standing, while identifying the need to address its corporate social responsibility and ethics.
Executive Summary: Highlights recent ethical scandals regarding financial product mis-selling and the resulting public demand for management and cultural change.
The Ethical and Compliance Issues: Investigates the internal and external factors contributing to ethical failures, ranging from employee conduct to the impact of technology and social pressures.
Response to the ethical challenges: Details strategic proposals including the establishment of ethical codes, workforce training, and proactive integrity management.
Management Roles: Defines the specific responsibilities of management levels, including interpersonal, informational, and administrative roles, in enforcing the new ethical standards.
Functions of the management: Outlines the structural functions such as planning, coordinating, and staffing that are necessary to embed ethical practices within the bank's operations.
Measuring the success of the strategic responses: Proposes performance indicators like behavioral observation and complaint reduction to assess the effectiveness of the new ethics strategy.
Possible ethical issues in implementing the strategic plans: Addresses potential risks in the implementation phase, such as employee discrimination or resistance to training.
Conclusion: Summarizes that ethical lapses are a threat to business survival and must be mitigated through robust management oversight.
Recommendations: Suggests practical steps like the creation of a Corporate Ethics office and regular ethical training forums.
Keywords
Bank of America, Ethical Lapses, Corporate Social Responsibility, Compliance, Strategic Management, Organizational Structure, Employee Behavior, Client Relations, Financial Services, Business Ethics, Integrity Management, Stakeholder Trust, Risk Management, Ethical Training, Professional Duty.
Frequently Asked Questions
What is the primary focus of this report?
The report focuses on analyzing the causes of ethical lapses at Bank of America and proposing strategic measures to restore integrity and compliance within the organization.
What are the main thematic areas covered?
The core themes include internal employee behavior, external environmental influences, management functions in ethics, and the implementation of strategic planning to mitigate scandals.
What is the main goal or research question of this study?
The primary goal is to determine how Bank of America can mitigate persistent ethical lapses through organizational structure changes and the establishment of a formal, enforced code of ethics.
Which scientific approach is utilized?
The study uses an analytical approach to review internal business operations and external pressures, applying management theories to design a framework for ethical continuity.
What does the main body of the document address?
It addresses specific causes of ethical failure such as poor staff incentive schemes, technological privacy issues, and political pressures, followed by a detailed implementation plan for management.
What are the characterizing keywords of this work?
Key terms include Corporate Ethics, Compliance, Strategic Planning, Stakeholder Trust, and Organizational Behavior.
How does the report suggest measuring success?
Success should be measured through behavioral monitoring of staff, the reduction of customer complaints, and overall improvement in public and client perception.
Why are the current management roles considered crucial in this context?
Management roles are vital because leadership commitment is necessary to translate written codes of ethics into actual behavioral changes among staff members.
Does the report address the role of the Corporate Ethics Officer?
Yes, the report recommends establishing an Office of Corporate Ethics and a dedicated officer to serve as the contact point for ethical concerns and to oversee the training of employees.
What role do external factors play in the bank's ethics?
External factors such as technological influence (e.g., social media at work), political patronage, and conservative social expectations significantly contribute to the challenges faced by the bank staff.
- Quote paper
- Marvin Namanda (Author), 2014, Ethical Issues And Compliance At The Bank Of America, Munich, GRIN Verlag, https://www.grin.com/document/317965
