Every big company that has a good reputation has an organizational culture on which it bases its operations (Cameron & Quinn, 2011). Before the writing of the Salz report in 2013, Barclays had various operational issues that originated from lack of a proper cultural system. Anthony Salz was commissioned to investigate the situation of Barclays Bank after it was involved in the Libor scandal, which cost the bank £290 million in fines from regulators.
Cultural Decay at Barclays
The findings on organizational culture have recorded that the bank put excess emphasis on short-term financial success. It also failed in formulating a set of values that were accepted across the entire company. This would have translated into the culture of the organization. Instead, it set to allow every business within it to formulate its own standards so that the banking standards rather than those of its own would be applicable. The bank then had an inconsistent performance system that tended to scare away investors due to the risk factors associated to its unpredictability.
The bank also had a culture that prompted workers to escalate matters of concern. According to the report, staff within the company had noted that certain top leadership did not appreciate negative results. The bank was also accused of not being able to attract talents that would be developmental on the efforts of the company. Instead, it attracted those people to whom success was measured in terms of compensation. This led to the deterioration of culture towards the creation of an entitlement culture. The most deep-rooted culture was in the investment bank. Salz discovered a must-win mentality in this section. He argues that such a mentality prevents workers to exhibit allowable moral standards.
To resolve the issues, the Salz report had several recommendations. First, the report required that the bank sets higher standards for its employees. It recommended that the bank’s senior leadership should promote and uphold the trust accorded to it. This way, they will be more capable of upholding the reputation of the bank. It would also involve accommodating more than a financial success mentality in the financial success mentality it was offering. It would instead require to adopt a mentality that would seek to serve the customer and show an acceptable level of moral standards which would help attract more investors towards the company.
The report sees the need to adopt a clear purpose and regularly report on its purpose to ensure that progress is being made. Through this purpose, the bank will be able to stand above its competition and lead towards its ambition of becoming a leader in the banking sector. The senior leadership should be at the forefront of this struggle and should promote and portray the high standards they propose.
The bank should also offer more reliable communication, both internally and externally. In doing this, they should be as transparent and open as feasible. This will help to combat the impact of the negative impact that was brought about by the Libor scandal. The information provided in this regard should be truthful, meaningful, and relevant. The report, however, downplays the process of adopting a new culture. For a large company like Barclays Bank, it would require a lot of effort to change or even adopt a new culture. The change would require a lot of hard work and the entire company would require being involved (Cameron & Quinn, 2011). The company would require incorporating a lot of resources in this regard to enable the culture to be possible. The senior management would also require doing more than just practice the new values, but also play a part in promoting the new culture. It would be very difficult for the workforce to adopt a culture if they do not see how the new culture would help them in the long run.
The report also found that the customer service was less than desired. According to the report, customers had reported that Barclays had been slow in handling customers’ complaints and that the bank staff had been slow to identify problems when they were approached by customers. When several customers made the same complaint repeatedly, the bank did not show a desire to get to the root of the problem. For that reason, the bank had left most of the recurrent problems unresolved. This they proved by seeing that some complaints from customers remained unresolved two months after they had been made. They also noted that the category of customer complaints remained consistent showing that the root of the problem had not been addressed.
The bank also showed a culture of being over defensive where issues of customer service. Of all the customer service complaints forwarded to the Financial Ombudsman Service (FOS) had been resolved in favor of the customer. This showed that the bank showed a high level of unwillingness to resolve issues of the consumer promptly and without taking the long process. The number of complaints that had been forwarded to FOS had increased four times. The company, therefore, showed an increasing level of laxity in regard to customer service.
The report required that the bank avail a clear policy on how customer complaints would be resolved, while at the same time meeting the objectives of the shareholders and those of the bank. The bank should also attempt to analyze customer feedback so as to resolve complaints satisfactorily and help in minimizing the number recurrent complaints. The report also required the bank to report their customer service progress periodically so as to show the importance the bank laid on customer service.
The report also points out to the complexity of the culture between the different businesses within the bank. There have been allegations that the investment bank attempted to influence the retail bank. There has, however, not been substantial evidence to this regard. Instead, evidence to the contrary shows that the retail bank resisted influence from the investment. This was only made possible by the decentralization and launches of values that were inconsistent with each other. The different departments exercised different cultures rather than one set of values. There were, however, practices that were consistent across most departments. The most significant was performance at the expense of perspectives that were more balanced. Success was also obtained by similar means in all departments. It was noted that success was tied to a few individuals who demonstrated an ability to win and cleverness.
The investment Bank has, on the other hand, shown more tremendous growth than any other bank in the past (Treanor, 2013). This happened by ensuring that the team members were always working together and consistently towards the achievement of goals that were distinct to the group. The growth of the investment bank was mostly from the year 2001 to 2012, when it moved from a business that was smaller than the Barclays Business bank to a leading investment bank.
Leaders who were employed in the course of building this investment giant were advantaged by the bank’s lack of a history. This made it possible for the investment bank to adopt new values upon the entry of new leaders. The investment bankers found other businesses within the group slow and un-commercial. They, on the other hand were hard working, competitive and fast. For this reason, the investment bank did not recognize itself as a part of the Group and did not strive to adopt the culture of the group where it existed.
To resolve the cultural conflict within the organization, the bank has adopted a “One Barclays” initiative. The initiative strives to ensure that all the bank’s subsidiaries acted as part of one company and adopted the same values. There are five values that the bank has proposed to entrench throughout the bank. They include:
A detailed plan has been created on how the values will be embedded into the organization. The plan comprises of 1500 champions of values who will help to facilitate the implementation of the new values with the help of all other employees.
The bank recognizes the fact that instilling new values into an already existing company is difficult. It, therefore, sees the need to implement it in such a way that it can be associated to the everyday functions of the company. The company intends to implement it so that the workforce can immediately start applying it in their interactions with clients.
The organization also acknowledges the need for regular assessment. This will help to note where progress is not being made so that changes can be implemented. If there are areas that need further training, the company may opt to request the personnel in charge of training to do it. The company should also include training sessions and discussions so that everyone helps towards the growth of a new culture. The regular assessments will help prevent occasioning a situation as has been seen in the past where the company initiated a scandal. Albeit with a few problems and challenges, the plan is likely to go through.
According to Schein culture has three levels of manifestation. First, there are the organizational behaviors. These consist of outward manifestations and behavior patterns of culture. They include things like awards that are granted within an organization, the level of utilized technology and dress codes. In the case of Barclays, these also include weaknesses in customer services which have apparently changed into a habit. The company has behavioral patterns in the way it operates at the bourse. The win-win mentality has been cultivated using behavioral patterns.
The second attribute of culture comprises cultural values. Organizational values are usually clearly spelled in the company. They sometimes however get changed along the way to accommodate changes and freedoms that arise along the way. Barclays has spelled out new values to go with. It is necessary to keep assessing the company’s workforce to ensure that changes do not alter performance. Maybe if changed, they ought to be improved to accommodate the inclusion of both workers and customers in certain scenarios or to improve productivity.
The last attribute in the three levels of organizational culture according to Schein is fundamental assumptions. These are observed at the deepest level of an organization’s culture. They mostly arise from the values of the company. Eventually, they are taken for granted and accepted at every level of the company. The organization’s competition within the different businesses of the company comprises of this aspect. To manage culture, the company should embrace the three aspects and strive to manage them. Failure to do this will lead to failure in the long-run. The company should put up a mechanism that the three levels of culture are well managed.
Libor scandal at Barclays Bank PLC led to the lose the trust of both consumers
and the investors. The company lost its positive reputation due to poor values
within its investment bank. The scandal, however, helped to expose the culture
gap that had always existed within the company. Exposure of such a deficit has
given the company a chance to correct it. The company has since set out to
implement a set of new values, which are based on respect, integrity, service, excellence,
and stewardship. A detailed plan has also been formulated to implement the
plan. The plan will work as a basis for the running of the culture
transformation program. If every step of the plan is implemented, the
organizational culture will be altered for the better. The company should,
however, be prepared for the challenges of starting a culture in an
organization that has been in operation for a long time. The way forward is to
ensure that errors are identified and corrected along the way.
The situation at Barclays Bank has provided me with a very important understanding of changing organizational behavior. The company was involved in a scandal, necessitating a probe into its operations. The role of the report is to identify the various areas that need mending. The report discovered a culture gap in the operations of the company, which had decentralized its operations, hence, enabling the various leaders a chance to employ their own values hence diverse cultures in the various group businesses.
The diverse cultures have led to distrust among investors regardless of the group’s results. The company, therefore, sees the need to identify new cultural values that will help the company to be consistent in its operations. Culture change involves a lot of involvement in the organization. The entire workforce must change the way they operate in order for the change to be effectual. It will indeed require many resources to be put towards it in order for it to be successful.
For the change to be successful at Barclays, the bank must set aside funds for training, employ new employees to spearhead the cultural change process, and for integrating the entire company’s operations so that the entire company works as one unit. While Barclays is a big organization, the culture change cannot be shunned off as a simple matter. It may indeed lead to a slowdown in the company’s operations in the short-term. However, the company is likely to benefit in the long-term from the new values that will be integrated.
Organizational behavior change has many benefits. In the case of Barclays, it will lead to more consumer and investor trust, hence, leading to more profits and revenue. In this case, the company wants to incur profits by changing the way it operates. The investment bank for example will require obtaining consumer trust for it to operate better than it has done before. While it has been involved in corrupt activities in the past, I am positive that it will require clearing its name and operating within proper morals in the future.
entire organization needs to co-operate towards the adoption of new
organizational values and culture. Values that are similar throughout the
organization are easier to manage and assess. The workforce gets involved in
the implementation process by proposing news changes to their departments that
complement the values of the organization. Their involvement also assists in
the training exercise as more of the employees are involved in the development,
hence, doing away with the need to train.
Cameron, K. and Quinn, R. 2011, Diagnosing and Changing Organizational Culture, 1st edn, Jossey-Bass, San Francisco, CA.
Gill, M. 2013, New Statesman | “Uncomfortable reading”: 7 key extracts from the Salz report into Barclays’ culture, Newstatesman.com. Viewed 10 August 2014, http://www.newstatesman.com/business/2013/04/uncomfortable-reading-7-key-extracts-salz-report-barclays-culture
Peston, R. 2013, Barclays report blames bank culture, BBC News. Viewed 10 August 2014, http://www.bbc.com/news/business-22012261
Stewart, J 2014, ‘Improving Customer Experience Is Now Bankers’ Top Priority: Survey’, American Banker, 179, 117, p. 11, Business Source Complete, EBSCOhost, viewed 10 August 2014.
Treanor, J. 2013, Barclays independent review: bankers tried to ‘win at all costs’, the Guardian. Viewed 10 August 2014, http://www.theguardian.com/business/2013/apr/03/barclays-pay-profits-independent-review-salz
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