ETHICS IN THE BANKING INDUSTRY PART 1

The aftermath of the financial crisis saw a decrease of trust and confidence by the public towards all financial institutions. In an effort to alleviate public concerns and trust, banks took a second look at insuring up to date regulations to financial system and enhancing stability. However; in order for these changes to benefit the public, they have to focus on the financial user and society.

“Policymakers and regulators need to evaluate financial markets according to real outcomes such as: access, safety and resilience, fairness and integrity, performance and efficiency, redress and accountability, and trust and confidence.”

SOURCE: OECD Journal: Financial market trends.

Due to all these changes in financial markets, leaders around the world embrace new ideas and the widespread focus on ethical practices. During a G20 meeting in 2010 some of the following topics were discussed to create awareness about the use of ethics within the banking system:

DISCLOSURE AND TRANSPARENCY

In order for Transparency to take effect in the banking industry, disclosure of all resources must be made available. This will help the financial user make an educated decision about the services of the bank. A great example of this process is how banks handle “runs” (When a lot of depositors withdraw their funds from a bank). The user will either base the run on efficient or inefficient resources; this all depends on how the bank chooses to disclose information to the public. 

The following diagram focuses on bank runs:

 

In an effort to make transparency more efficient, banks need to start disclosing more information by providing all the facts, whether or not they have a negative or positive effect on the consumer. If banks are efficient in the way the handle situations or provide information, this will spread the right ethical idea and in turn it will promote Transparency and trust.

WHAT MADE YOU QUESTION A BANKS TRANSPARENCY?

Because this topic is so complex I will break it up into several postings, coming up next is……..

RESPONSIBLE BUSINESS CONDUCT

REFERENCES:

Wehinger, G. (2013). Banking in a challenging environment: Business models, ethics and approaches towards risks. OECD Journal.Financial Market Trends, 2012(2), 79-88. Retrieved from http://search.proquest.com/docview/1355886335?accountid=3455

 

Semenova, M. (2012). Market discipline and banking system transparency: Do we need more information? Journal of Banking Regulation, 13(3), 241-248. doi:http://dx.doi.org/10.1057/jbr.2011.21

AVOIDING LEGAL HEADACHES

In an earlier posting I emphasize the importance of preparing a strong Legal Strategy when starting a business. If you avoid creating a legal strategy you may be faced with financial loses because of Lawsuits standing from:

WRONGFUL TERMINATION

Many employers terminate employees and base their argument on the “at will” concept. Although this practice is common in most Provinces and States, lots of businesses are unaware of the intricacies of this law. Ultimately landing them in court with heavy fines and back pay, which can be avoided by following a few guidelines.

GUIDELINE 

CLASS ACTION LAWSUITS

Discontent customers can ultimately file lawsuits base on faulty products, services and promises. Avoiding class action lawsuits will protect the image and branding of your company. The laws that dictate class action lawsuits are so complex and vary from industry to industry. In an effort to help you understand and give you some ideas to avoid a lawsuit, I will use the Equipment Finance Industry as an example.

PATENT INFRINGEMENT

Technological companies are competing with thousands of patents in the marketplace nowadays. Poor patent research and assurance that they have a unique idea has a damaging effect on the company’s bottom line. This misconception has trigger countless lawsuits for patent infringement over the last decade. A good way of preventing these scenarios from taking place in your future endeavors is by following a list of guidelines before patenting an idea or invention.

·      Research your invention for any potential infringement red flags

·      Don’t ignore others claim of a patent, it can present unpredictable consequences.

·      Look for Patents you may be infringing upon by looking up competitor’s products or calling them directly and asking for information.

·      Once you find products that relate to your patent, begin to research for flaws that may cause those patents to be expire or lack documentation to exist.

·      Contact lawyer in order to be certain that your review of the patent did not leave any hidden facts to be left uncover.

OTHER LEGAL HEADACHES…..

This is a good start for a topic with many more items of discussions, such as Tax implications, Immigration audits, contracts disputes, and competitor’s disputes.  I’ll discuss these and other topics in further detail as we explore more about legal challenges.

 

Brodzinski, C. (2003). Avoiding wrongful termination suits. National Underwriter, 107(41), 38-40. Retrieved from http://search.proquest.com/docview/228519169?accountid=3455

Donnelly,James C.,,Jr. (2006). Avoiding class action lawsuits concerning lease insurance programs. The Journal of Equipment Lease Financing (Online), 24(3), A1-A11. Retrieved from http://search.proquest.com/docview/214625956?accountid=3455

 

Neustel Law Offices. (n.d.). Introduction on how to Avoid Patent Infringement. Retrieved february 28, 2014, from Neustel : www.neustel.com/patent-infringement/how-to-avoid-patent-infringement.aspx

WORPLACE BULLYING BY UNETHICAL LEADERS

Bullying nowadays is such a big part of our society; it’s evident every time we interact with a group of people or individuals. The Media puts a focus on Bullying towards minorities, young high school students and the elderly. Even thought is a controversial topic in the media, not a lot is mentioned about workplace Bullying and how it affects the workforce.   I found a great source of information about workplace bullying by unethical leadership. I hope to share insight of my personal experience with workplace bullying plus provide facts that will definitely open a forum for discussion.

“Einarsen et al. (2003) define bullying as situations where an employee is persistently exposed to negative and aggressive behaviors primarily of a psychological nature, with the effect of humiliating, intimidating, frightening, or punishing the target.”

Source: Advance Management Journal.

WHAT WORKPLACE BULLYING MEANS TO ME

In the past I’ve experience workplace bullying in many forms, based on this experiences I’ve prepare a mini guide which will show the positive and negative effects of workplace bullying.

·     Unethical Leaders

o   SITUATION: A lot of times managers do not look at the bigger picture but almost focus to much on there own needs. So much so, that they put too much pressure on employees and always set them up for failure. Now matter how well you do at your job is never enough.

§  POSITIVE EFFECT:

·      Increases output (ex. Driving profits, exceed production demands)

·      Pushes individuals to strive for excellence (just keep in mine that this is only for a limited time.)

§  NEGATIVE EFFECT:

·      Employee looses Moral and respect towards their manager.

·      Over time the employee Looses motivation to come to work

·      Engages in counter-productive conversation

·     Jealous Co-workers

o   SITUATION: Co-workers engage in counter-productive conversations about you because you do a great job and exceed expectations.

§  POSITIVE EFFECT:

·      Driven individuals will push themselves harder and succeed

§  NEGATIVE EFFECT:

·      Feeling uneasy about coming to work

·      Hatred towards the work environment

·      Looses motivation

·      Workplace Clicks

o   SITUATION: Coming to a new workplace you are face with co-workers who constantly push you away and make you feel you don’t belong but you see that they have a great time and work well amongst themselves.

§  POSITIVE EFFECT

·      It’s impossible to find how this would be positive

§  NEGATIVE EFFECT

·      Instantly creates hatred towards the workplace

·      Tension and uneasiness

·      Empty Promises by Corporation

o   SITUATION: Employees who are tired of being lye to by top executives initiate a union drive.

§  POSITIVE EFFECT

·      It will shed light on unethical practices within the organization

·      It will encourage employees to speak up and share unethical stories

·      Restore moral throughout the organization

·      Bring hope back to the workplace

§  NEGATIVE EFFECT

·      Consultants and Executives will try to intimidate and ultimately brainwash employees

·      Some people will loose their job

·      Personal opinions will divide and hurt relationships within the workplace

WORDS TO LIVE BY:

The tough boss's agenda is to achieve superior performance by setting high expectations (Glendinning, 2001). The bully boss's goal is to use repeatedly aggressive behavior that causes physical or psychological torment and arises from the unethical, unreasonable, and inappropriate practices in the workplace.

Source: Advance Management Journal.

Resources:

Onorato, M. (2013, Spring). An Emprical Study of Unethical Leadership and Workplace Bullying in Industry Segments. Retrieved February 28, 2014, from S.A.M Advanced Management Journal: http://search.proquest.com/docview/1427268764?accountid=3455

 

Thornton, L. F. (2012, October 3). What is Unethical Leadership? Retrieved February 28, 2014, from Leading In Context: http://leadingincontext.com/2012/10/03/what-is-unethical-leadership/